On 11 December 2019, the Intellectual Property division of the Supreme People’s Court (SPC) published its highly anticipated decision on the Plant Variety Rights (PVR) infringement case of Cai Xin Guang (Appellant) vs. Guangzhou Runping Company Limited (Defendant).
This case raised the untested question whether PVR covers material harvested from propagating material offered for sale for final consumption.
Background
The Appellant is the holder of PVR in the pomelo variety San Hong (三红蜜柚 variety). The Appellant discovered that its variety was being extensively propagated and grown by farmers, and also that the Defendant (trading as RT-Mart) was retailing fruit of the San Hong variety in its supermarkets on a large scale. The Appellant chose to initiate action for PVR infringement directly against the Defendant retailer rather than against many small farmers across an extensive area, which would have been expensive and time-consuming.
The Guangzhou Intellectual Property Court dismissed the Appellant's claim in March 2019. On 11 December 2019 the SPC dismissed the appeal. This is disappointing for breeders who want to see PVR protection extended to the fruits of harvest - although regulations proposed this year (see What next? below) include protection for harvested material.
However, the judgment significantly clarifies the scope of PVR in China, which is a welcome development for the industry. It also demonstrates a high level of commitment being brought to bear in providing judicial guidance for PVR in China - the panel of SPC judges engaged extensively with experts in coming to their decision, with the judgment undergoing 16 revisions.
The arguments and Court's reasoning
The SPC bench consisted of Deputy Chief Judge Zhou Xiang, as the Presiding Judge, Judge Luo Xia and Judge Jiao Yan.
The key question before the Court was whether the San Hong pomelo fruit sold in the Defendant’s supermarkets constituted “propagating material”, propagating material being the limits of the scope of protection under China's current PVR Regulations.
The Court noted the scope of the right in China, being confined to certain acts performed in relation to propagating material, namely sales, production, propagation and the repeated use in the production of another variety for commercial purposes.
The Court further noted the definition of propagating material under Article 5 of the Implementing Rules (Agricultural Part) being planting or propagating material or another part of the plant that can be used to propagate a plant, including seeds, fruit, roots, stems, seedlings, buds, leaves, etc.
The Appellant argued that, although the San Hong Pomelo is usually propagated through the grafting method, the tree stem and buds, the fruit stem, the juice vesicles, explants, etc. can be used to carry out propagation through tissue cultivation technology. The Appellant claimed that these items are "part of the fruit", and "can be used to propagate a plant" and therefore fall within the definition of propagating material.
The Court referred to the provision on propagating material extracted above, as well as under other laws and regulations, and concluded that these provisions only list types of propagating material, and do not clearly determine how to judge when material will be propagating material. On this basis, the Court determined that the Appellant’s claim lacked legal basis.
In reaching its decision, the Court provided clarity on what constitutes “propagating material” and thereby the scope of PVR in China. The Court provided guidance on the following points:
1. How to determine what is "propagating material"?
The Court determined that in order to be the propagating material of a certain variety, in addition to being an item of propagating material as defined above, the material must also satisfy the following conditions:
- be living;
- possess propagating ability; and
- be able to propagate a plant which possesses the same traits and characteristics as the protected variety (i.e., propagate the variety true-to-type).
2. Whether "propagating material" can be determined by the theory of totipotency
According to the theory of totipotency, the DNA sequence of a variety can be replicated outside the plant and be used to propagate further plant material. However, the Court held that in order to be the propagating material of a PVR protected plant variety, the material must be able to propagate the same traits and characteristics as the protected variety, in other words must be able to propagate that PVR protected variety true-to-type. The Court concluded that simply declaring a variety to be propagating material based on totipotency does not accord with the legal requirements for PVR in China, and would result in the situation where all plant material, without distinction, is classified as propagating material.
3. Whether harvested material is protected by PVR in China?
The Court noted the scope of the right in China is limited to propagating material and that there is no concept of harvested material under the current scope of the right.
4. If material can be both propagating material and harvested material, how to determine whether there has been an infringement?
Where material can be used as both propagating material and as harvested material, and the conduct involves sales, the Court determined that the seller’s actual intention must be examined, that is whether the seller’s intention is to sell the material as propagating material or as harvested material. The Court further determined that where a user counter-argues that their use is not an infringing act of “production”, the court is to examine what the conduct is in reality, that is whether the harvested material will be directly used for consumption or in the propagation of the variety.
5. Whether growing propagating material of the variety without the rights holder's permission constitutes infringement?
Other than as determined by relevant laws and administration regulations, the Court held that if propagating material of a protected variety is “grown” without the rights holder’s permission, this constitutes the infringing conduct of “producing” the protected variety.
The Courts determination on the facts
Based on the above conception of propagating material, the Court determined that the Defendant's sales of the San Hong pomelo fruit in supermarkets did not infringe the Appellant's PVR for the following reasons:
The fruit of the San Hong variety could not be used to propagate the variety true-to-type. The Court determined that the fruit seeds and the juice vesicles could not easily be used to propagate the variety true-to-type, and therefore did not fall within the definition of propagating material in this case. In reaching this conclusion, the Court relied on expert assistance which found that it would be difficult to propagate the variety true-to-type from the seeds because not all seeds in the pomelo fruit possess propagation capabilities, furthermore, those seeds that do possess propagation capability do not always propagate the variety true-to-type. With respect to the juice vesicles, the Court held that under the current state of technology, the juice vesicles could not always propagate the variety true-to-type.
Even if the fruit of the San Hong variety could propagate the variety true-to-type, the intention of the seller was to sell the fruit for final consumption and not for propagating purposes. The clarified scope of the right
In summary in order to be considered propagating material, and fall within the scope of the right in China, the following conditions must be satisfied:
- the material must be living;
- the material must possess propagating ability; and
- the material must be able to propagate a plant which possesses the same traits and characteristics as the protected variety (i.e., propagate the variety true-to-type).
If the material can be both propagating material and harvested material, and sales are involved, the court will examine what the seller's actual intention is, that is whether the intention is to sell the material as harvested material or propagating material. If the alleged conduct is "production", and the user claims that the conduct is use and not production, the court will examine what the conduct is in fact, that is whether the material will be used directly for consumption or for propagation.
Importantly, the Court clarified a long debated question in China, as well as in other UPOV member countries, whether growing propagating material constitutes the infringing act of “producing” propagating material? In other words, whether planting and growing a tree, in order to produce harvested material, constitutes the infringing act of “producing” propagating material. To the satisfaction of breeders worldwide, the Court determined in the affirmative, holding that growing propagating material constitutes the infringing act of producing propagating material.
What next?
The judgment provides welcome clarity on the scope of PVR in China - more so than in many other countries.
This is the first PVR infringement case since the establishment of the Intellectual Property Rights Tribunal under Supreme People’s Court at the end of 2018. The legal clarity it provides is indicative of the significant progress being made in relation to PVR in China.
In early 2019, China released a draft revision to its PVR Regulations which drew from years of research into PVR systems globally and in China itself. The draft is progressive and forward looking, and it includes protection for harvested material if the rights holder has not had a reasonable opportunity to exercise its rights over the propagating material.
The revised regulations are expected to be released this year, and we look forward to reporting on this and other developments in China.
Source: BakerMcKenzie
For more information:
Andrew Sim
Partner, Baker McKenzie Beijing
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Email: Andrew.Sim@bakermckenzie.com
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Alanna Rennie
Associate, Baker McKenzie Sydney
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Email: Alanna.Rennie@bakermckenzie.com
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