Judicial Determination of Plant Variety Rights Infringement

2011/2/22By Zhou Xiaobing Judge of the IP Division, the No. 2 Intermediate People’s Court of Beijing,[Unfair Competition]

Case Review
On October 21, 2003, the Beijing China-Agri. Seed Co., Ltd. (“China-Agri. Seed”) filed an application with the Ministry of Agriculture for a new plant variety “RS (Recurrent Selection) 987” common wheat. The application was approved on March 1, 2007, and the plant variety was assigned the number CNA20030389.9,.
 
On September 10, 2009, China-Agri. Seed staff members bought a bag of wheat seeds from the Huitong Agricultural Byproducts Dealer Company, Jixian County, Tianjin City. The sales voucher indicated “Product Name: RS987; Unit Price: RMB 1.80; Qty: 50 jin; Amount: RMB 90.” The package was printed with “Shunxin Agricultural Company – Wheat Seed – Net Content: 25Kg – Beijing Shunxin Agricultural Co., Ltd. Yunfeng Seeds Branch.” The product label on the seal of the package indicated on the front side “Shunxin Agricultural Company Seeds Label – Crop Type and Seed Type: Winter Wheat; Variety Name: RS987; Approval No.: Guo Shen Mai 2003417; Place of Origin: Shunyi, Beijing; Date of Production: August 2009; Manufacturer Name: Beijing Shunxin Agricultural Co., Ltd. Yunfeng Seeds Branch; Manufacturer Address: 800 East of Yongjiu Bridge, Shunyi, Beijing.” The back side of the label included a “Variety Brief (RS987)” which indicated Approval Status, Features/ Characteristics, Yield Performance, Scope of Application, and Notices.
 
Plaintiff, China-Agri. Seed brought an action before the No. 2 Intermediate People’s Court of Beijing, claiming that defendant, Shunxin Company Yunfeng Branch (Shunxin) had infringed upon the plant variety right of the plaintiff, by manufacturing and selling the “RS987” wheat seeds, for commercial purposes, without permission from the plaintiff; and the defendant should cease the infringement, make a public apology on Peasants’ Daily and pay compensatory damages and court fees, in the amount of 499,900 Yuan.
 
Defendant Shunxin argued that the seeds concerned in the case, sold, were no longer marketed, and the infringing act had ceased; the defendant had not committed bad faith infringement and had never maliciously damaged the interests of the plaintiff, and would not agree to apologize to the plaintiff in public; and the defendant had never manufactured “RS987” wheat seeds, but purchased the seeds from peasants that the defendant sold; and the defendant had received a profit of less than 4,000 Yuan from selling those seeds, and would agree to pay to plaintiff only 4,000 Yuan to compensate for the economic losses that the plaintiff had suffered.
 
Through in trial, the No. 2 Intermediate People’s Court of Beijing found that Shunxin had manufactured and sold the propagating materials of the “RS987” common wheat for commercial purposes, without permission from the Agricultural Seed Company; that it had infringed upon the plant variety right of China-Agri. Seed; and that it should bear the civil liabilities to stop the infringement and pay damages.
 
The court held: (1)Shunxin is enjoined from infringing the plant variety right of China-Agri. Seed in the “RS987” common wheat; (2) Shunxin is liable for damages and court expenses in the total amount of 80,000 Yuan; and (3) all other claims of China-Agri. Seed were rejected.
 
Analysis
This is a precedent case in Beijing involving infringement comparison in plant variety cases. The trial in this case will provide persuasive guidance to future cases, and also reference materials for academic study.
 
I. Subject Matters for Plant Variety Protection
For judicial analysis of plant variety protection in China, the following are noteworthy: (1) In China, plant variety protection is not restricted to how the protected plant is propagated, that is, plant varieties propagated both sexually or asexually are protected. Infringement is resulted when one cultivates plants from the protected plant variety by asexual means without permission of the rights holder, or when one independently cultivates a plant that is the same as the protected plant variety. (2) The protection is limited to the plant variety rather than the process thereby  to cultivate the plant variety. This is because generally a single traditional cultivating process would be applied to only a single plant variety. When the plant variety is protected, it is equal to protecting the cultivating technology. However, in the case of the GMO (genetically modified organism) process that can be used to cultivate new plant varieties, both the GMO plant variety so cultivated and the GMO process and genes are valuable. (3) Both the breeder’s exemption and the farmer’s exemption are included. As generally believed, the breeder’s exemption has its source in the research exemption under the patent system. The farmer’s exemption is a unique design under the plant variety rights system. Because some crops can propagate themselves, after purchasing the seeds or seedlings of a new plant variety, the farmer may keep the seeds of the harvested crops for use in the next season. In this way, they do not need to purchase the same seeds from the owner of the plant variety or the seeds company. This is the so-called seed-keeping practice. The Chinese legislation follows this practice and permits farmers to keep the seeds by themselves. This practice is not deemed as infringing upon the plant variety rights. Thus, it is called the farmer’s exemption or the farmer’s privilege. Legislatively, the farmer’s exemption is restricted so that he or she can only propagate any new plant varieties for his or her own use. (4) The law provides for two actions that infringe upon plant variety rights: first, one manufactures or sells the propagating material of a protected plant variety, for commercial purposes, without permission from the rights holder; and second, one re-applies the propagating material of a protected plant variety in the propagation of another plant variety or varieties. In the case that one uses the propagating material of a protected plant variety as a parent and propagates it with another parent, it is generally determined as a commercial reuse of the propagating material of the protected plant variety.
 
II. Comparison of Features and Characteristics
When one manufactures or sells the propagating material of a protected plant variety for commercial purposes, without permission from the rights holder, this is an act of infringement upon the plant variety rights. However, whether the propagating material so manufactured or sold is that of the protected plant variety should be determined essentially on the plant variety that is cultivated using this propagating material, i.e., whether the plant variety so cultivated contains the same features and characteristics as the protected plant variety does. In the comparison of features and characteristics, the following points should be noted:
 
(1) To qualify for a grant of a plant variety right, basically a plant variety must be distinct, uniform and stable (commonly abbreviated to “DUS”). However, in judicial practice, the comparison is not a DUS comparison, but between the features and characteristics of the allegedly infringing plant variety and the protected plant variety. In the comparison, both the distinct and the non-distinct features and characteristics are used. Those distinct features and characteristics are particularly significant in the finding of infringement.
 
(2) The comparison should use the features and characteristics of the plant varieties concerned, rather than those of their propagating materials. In general, the features and characteristics of the propagating materials are part of the plant varieties. Several Provisions of the Supreme People’s Court on Specific Law Application Issues in Trying Disputes on Infringement of Plant Variety Rights (Fa Shi [2007] No. 1) provides that if the allegedly infringing product contains features or characteristics as the protected plant variety does, or contains different features or characteristics that are not a result of hereditary variation, then, this allegedly infringing product should be determined by the people’s court as a propagating material that is used to manufacture or sell the protected plant variety for commercial purposes. In fact, this provision confuses the features and characteristics of a plant variety with those of its propagating material.
 
(3) Generally, the features and characteristics of a plant variety mean the visual or natural other than economic features or characteristics. In judicial practice, generally, the features and characteristics that are recorded during the DUS test in the granting of the plant variety right are used in the comparison. In the case here, as authorized by the New Plant Variety Protection Office of the Ministry of Agriculture, the New Plant Variety Testing (Jinan) Sub center of the Ministry of Agriculture conducted a test on the features and characteristics of the “RS987” common wheat between October 2005 and July 2006. The variety (RS987) under the test was planted next to a similar variety (Jing 411). On July 20, 2006, Jinan Sub center issued a test report, which contained the following results (Property: Code & Description, Data): “1 Sheath Color: 1 Green; 2 Seedling Habit: 3 Semi-creeping; 3 Seedling Color: 5 Green; 4 Auricle Color: 1 Green (White); 5 Heading Period: 7 Late; 6 Anther Color: 1 Yellow; 7 Leaf Wax: 1 None; ...; 36 Volumetric Weight: 9 Very High, 793 g /l.” The report concluded that “the plant variety tested is distinct and uniform. The distinctness of the plant variety are as follows (Properties: Description of Variety Tested, Description of Similar Variety): 5 Heading Period: 7 Late, 5 Medium; 7 Leaf Wax: 1 None, 5 Much; 25 Glume Shape: 4 Dome, 3 Square.” These properties, descriptions and data are the features and characteristics of the protected plant variety. In the case here, the allegedly infringing seeds noted on its package the following characteristics and features: “Winter wheat, 258 days of growing, around 80cm high plant, beautiful looking, and elastic stem against lodging; long awn, spindle-shaped head, white shell, and red and hard grain, with 45kg per thousand grains; slow growth before jointing and then fast growth, and fast polarizing, with a high percentage of earbearing tiller; net ear layers and suitable yield structure; resistant against powdery mildew and stripe rust, moderately resistant against leaf blight, and fairly resistant against dry hot winds; fast milking of the late grains of RS987, long functional period of the leaves, maturing and yellowing well with the stem green and living”. The above features and characteristics are generally considered economic, and are not suitable to be used in the comparison for infringement determination.
 
(4) Whether the propagating materials of a plant variety that are manufactured or sold are those of the protected plant variety is generally determined using field observations or the genetic fingerprint testing. In the field observation, generally, the features and characteristics of the allegedly infringing plant variety and the protected plant variety are observed by planting the two varieties next to each other. Also, the features and characteristics of the allegedly infringing plant variety can be observed separately in the field. Then, the observations are used to compare with those of the protected plant variety from the granting process. The genetic fingerprinting method is generally to identify the propagating materials of the plant varieties. Then, the uniformity of the genetic fingerprints of the propagating materials is used to deduce the uniformity between the plant varieties.
 
III. Manufacturing of the Propagating Materials of a Protected Plant Variety
China-Agri. Seed argued that Shunxin manufactured and sold the “RS987” common wheat seeds. Shunxin countered that it had purchased the seeds from farmers before selling the same. Thus, it was only a processor and seller of the seeds. Regarding these arguments, the court found that Shunxin sold the seed products which were marked with “Shunxin Agriculture – Wheat Seed – Beijing Shunxin Agricultural Co., Ltd. Yunfeng Seeds Branch” and “Manufacturer Name: Beijing Shunxin Agricultural Co., Ltd. Yunfeng Seeds Branch.” These marks clearly indicated to the consumer that Shunxin was the manufacturer of the seeds. In addition, the label showed that the place of origin was “Shunyi, Beijing,” which was inconsistent with the argument of Shunxin that the seeds were purchased from farmers in the Changping District of Beijing. Therefore, it lacked evidentiary support to argue that Shunxin was not the manufacturer because the seeds were purchased from farmers. The argument of Shunxin was rejected by the court.
 
The court found that the act of Shunxin constituted manufacturing and selling of the propagating material of the protected plant variety, in accordance with relevant law of China.
 
IV. Civil Liabilities for Infringement of PVR
When deciding disputes on infringement of plant variety rights, the court may rule that the infringer should bear the civil liabilities to stop the infringement and pay for the damages, considering the situation of the case, in accordance with Article 134 of the General Rules of Civil Law. In this case, Shunxin infringed upon the plant variety right of the Agricultural Seed Company by manufacturing and selling the propagating material of the “RS987” common wheat seed for commercial purposes, without permission from the Agricultural Seed Company. The civil liabilities on Shunxin should include an injunction from infringement and payment of damages. However, China-Agri. Seed claimed an excessive amount in damages. The court used its discretion to award 80,000 Yuan as damages for the economic losses that the Agricultural Seed Company had suffered and the reasonable expenses that China-Agri. Seed paid for the case. In the determination, the court considered or took into account the period that Shunxin manufactured and sold the infringing seeds, selling price and profitability; the quantity of the infringing seeds that Shunxin conceded; the different places of origin as indicated on the label of the package and that Shunxin conceded; and the cost of manufacturing, the selling price and the royalty for a license to cultivate the propagating material of the protected plant variety, as China-Agri Seed argued. The court did not support the public apology sought by China-Agri. Seed, because the plant variety right is a property right and because the infringement upon this right, as conducted by Shunxin, did not cause damage to the personal right of Agricultural Seed Company.
 
(Translated by Ren Qingtao)
 

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