Via NPR, a new law in New Mexico creates an area of origin law for its famous Hatch Chilies. Consumers love Hatch chilies and they pay a premium for them. And whenever there is a premium to be had, counterfeiters sell cheaper imports which defraud both the grower and the consumer.
Pre-existing law had the potential to stop Hatch chile counterfeiting. A false designation of origin claim is already a violation of federal trademark law. It is also common law fraud. Existing laws, however, fail to protect the producers or consumers for a very practical reason. No individual farmer can bear the expense of persecuting fraudsters using the old laws. No single entity bears the responsibility for policing the market and maintaining the reputation of the product.
New Mexico’s solved the enforcement dilemma by creating an independent board with the ability to enjoin chile counterfeiters so that individuals and farmers don’t have to. The statute grants the New Mexico Department of Agriculture the legal standing in state court to seek injunctions against violators to bar the sale of false chilies. The law also grants agents of the Department the authority to inspect the products and audit the sales records of the state’s chile vendors and distributors in order to preempt frauds from occurring.
Several other states have adopted the same method of protecting their important crops. We have all heard of Idaho potatoes, Kona coffee, and Vermont maple syrup. Each of those products is produced and inspected under a special set of laws and regulations which protect the growers investment and the customers expectation. They have all designated or created a specific agency with the legal standing and the budget to enjoin fraud. It is gratifying to see New Mexico identify and emulate a successful strategy.
