A trademark hang-up is complicating Georgia’s efforts to break into the American $30-billion-per-year wine market.

Wine is one of Georgia’s chief exports, with over 14.8 million bottles shipped abroad in 2010. A Russian embargo, imposed in 2006, closed off Georgia’s main export destination for wine, forcing Tbilisi to cultivate new markets. It has proven slow going for Tbilisi.

The Georgian government applied earlier this year to the US Patent and Trademark Office (USPTO) for trademarks on 18 Georgian wines. But Georgian officials were chagrined to find that two of the country’s most popular types of wine -- Khvanchkara and Kindzmarauli –were already trademarked, with the distribution rights belonging to an Elizabeth, New Jersey,-based company, Dozortsev & Sons. In the case of Khvanchkara -- a semi-sweet, ruby-red wine made with grapes from the remote Georgian mountain regions of Racha and Svaneti – the company’s rights do not expire until 2016.

Tbilisi doesn’t want to wait that long before being allowed to market the alcoholic beverage under what officials insist is a proprietary name: Khvanchkara is to Georgia what Champagne is to France and Rioja is to Spain, they contend. “We cannot wait until 2016 when Dozortsev’s right will expire,” said Irakli Gvaladze, director of Geopatent, Georgia’s trademark and patent agency. “We claim our national treasure back right now because wines’ geographic appellations are national property, and nobody can hand them over [to a private firm] -- neither from a legal nor from a moral point of view.”

According to Gvaladze, the USPTO does not recognize so-called “geographic appellations” as a basis for granting trademark protection. That means Tbilisi must negotiate with Dozortsev & Sons, a firm frequently misrepresented in Georgian media as a Russian company. According to the company president, Eugene Dozortsev, discussions are stuck in neutral.

“There are no negotiations whatsoever,” Dozortsev said. “They just expect me to hand it [trademark rights] over.”

He explained that he first began importing the Georgian wines 14 years ago. Since then he has spent an uspecified amount of money marketing the wines in the United States, especially to émigrés from the former Soviet Union living in and around New York City. In addition, he sought trademarks to defend Georgian-produced Khvanchkara and Kindzmarauli from having its reputation damaged by counterfeit versions made in Bulgaria, Moldova and Romania.

“I am a businessman. I just want fair compensation,” Dozortsev said. “I spent a lot defending and promoting the two brands. … Now, they [Georgian officials] come along and want to take them [the trademarks] back.”

Dozortsev contended that he approached the Georgian government years ago, asking officials to take steps to protect the image of Khvanchkara and Kindzmarauli wines. When the government didn’t act, he took matters into his own hands.

“Where was the government when I repeatedly asked it to protect Khvanchkara and Kindzmarauli from counterfeit wine flowing in from Romania, Ukraine and Bulgaria to America?” Dozortsev asked. “They spoiled the image of Georgian wine, and nobody helped me solve this problem. I had no other way than to ask my Georgian partners who produce Khvanchkara and Kindzmarauli to give me the exclusive right to their distribution.”

Gvaladze, the Georgian trademark agency official, claimed that Dozortsev obtained the rights using inaccurate registration documentation that listed a Georgian winery, Racha Wines, as holding the Georgian trademark to Khvanchkara. Former Racha Wines Director General Omar Chelidze, who allegedly signed the cited documents, claimed he merely intended to grant Dozortsev the exclusive US distribution rights for Racha Wines’ products.

“How could I grant Dozortsev rights to the Khvanchkara brand when it is national property?” Chelidze asked. “I just granted him the exclusive right to distribution of Khvanchkara bottled by my company. Anyway, this was what the content translator told me; I myself do not know enough English to understand a legal document written in English.”

It would appear that Georgia’s ability to reclaim the name Kindzmarauli, a semi-sweet red made with Saperavi grapes, will be much easier. Dozortsev & Sons lost trademark rights to the brand 2009, but the USPTO says it must process some additional paperwork before the trademark can be awarded to a Georgian-government-related entity.

Georgia seems closer to registering all 18 of its wines in the European Union. After four years of negotiations, the two sides wrapped up a tentative trademark deal in 2010. The pact is awaiting ratification, which, according to Gvaladze, should come by the end of this year.

Ultimately, securing trademarks to Khvanchkara and Kindzmarauli will only be a small part of the challenge that Georgian entities face in trying to raise the profiles of the brands in the United States and Western Europe.

“Importers, wholesalers and retailers will not bother with ‘a category’ without great wines, of consistent quality and outstanding value, with a proven pedigree and a serious story,” noted Keith Johnsen, president of Washington-based Daqopa Brands, which imports Georgian wines to the United States. “ These are the qualities that must be presented, and when that is accomplished, any so-called counterfeit wines will be forced out of the picture naturally.”