TYGlobe

I. Introduction

New plant varieties refer to new varieties of plants that are artificially cultivated or developed from discovered wild plants, with novelty, distinctness, uniformity, stability and a proper denomination. Entities and individuals that have completed the breeding work enjoy exclusive rights over their authorized varieties, namely the Plant Variety Right. Granting Plant Variety Rights to breeding entities and individuals can encourage investment in the seed industry, facilitate the breeding and extension of new plant varieties, promote the development of agricultural and forestry industries, and enrich plant diversity.

As the economic value of new plant varieties has been increasingly recognized and valued, illegal acts infringing upon plant variety rights occur from time to time, especially in the seed industry where market demand is relatively robust. Such acts of plant variety right infringement not only infringe upon the economic interests and reputation of new plant variety right holders, but also dampen the enthusiasm of breeders, and may even inflict heavy economic losses on farmers.

II. Judicial Status Quo of Disputes over Infringement upon New Plant Variety Rights

Civil litigation is one of the channels for holders of new plant variety rights to seek remedies. By sorting out relevant civil judgments, the author has obtained a clear understanding of the adjudication rules for cases involving infringement upon new plant variety rights, which is conducive to the reasonable and efficient rights protection of right holders.

Overview of Civil Dispute Cases

On the Jufa Case Database, with "infringement of new plant varieties" as the keyword, and selected case causes including "disputes over intellectual property right ownership and infringement", "disputes over unfair competition" and "disputes over tort liability", a total of 1,126 cases were retrieved. Since 2016, the number of such cases has shown a year-on-year increasing trend. There were only 47 cases in 2016, and the number reached 213 in 2020. All plaintiffs involved in the litigation are seed industry companies, while more than 95% of the defendants are seed companies, and a small number of defendants are scientific research institutions, natural persons, companies not engaged in the planting industry, villagers' committees, etc. In terms of regional distribution, Jiangsu Province (244 cases), Henan Province (191 cases), Gansu Province (154 cases), Anhui Province (124 cases) and Shandong Province (48 cases) rank the top five provinces in terms of case volume. Among them, Jiangsu, Henan, Anhui and Shandong are all traditional major grain-producing provinces in China, and courts at all levels in Gansu Province have been ranking at the forefront across China in the protection of new plant variety rights for many years.

2. Brief Analysis of Adjudication Rules

By analyzing existing adjudication rules, we can explicitly define the scope and determination methods of tortious acts in such cases, the determination of liable subjects, the approaches for obligees to prove tort facts, the defense grounds of the alleged infringing parties, the burden of proof borne by both parties, and the extent of compensation, so as to grasp the adjudication rules for similar cases.

(1) Scope and Determination of Torts

According to existing judicial precedents and relevant provisions, infringement acts mainly fall into the following two categories: 1. Producing or selling propagating materials of authorized varieties for commercial purposes without authorization; 2. Repeatedly using propagating materials of authorized varieties to produce propagating materials of another variety without authorization.

The term "without authorization" covers circumstances where an actor produces or sells propagating materials, or repeatedly uses such propagating materials for the production of propagating materials of another variety, either without ever obtaining authorization from the right holder, or after the authorization has expired.

Regarding the determination of "commercial purpose", where the alleged infringer cannot prove the purpose of propagating and expanding the unauthorized propagating materials, it shall be presumed that the party has committed the act of production for commercial purposes without authorization. In the "Meirenyu" case, the people's court held that the determination of "commercial purpose" shall not only be based on the status of the accused party, but also be made in combination with the acts conducted by the subject. The accused party had planted a large quantity of the involved Meirenyu for street greening purposes, failed to prove the lawful source of the relevant propagating materials, and did not meet the subject eligibility requirements for the right to self-propagation and self-use. It may be presumed that its act of self-propagation and self-use by means of cuttage reduced procurement costs and implied commercial interests, which shall be determined as having commercial purposes. This case provides reference value for the determination of commercial purposes. In the subsequent "Shuangji Huaimi" series of cases, all right holders cited the judgment reasoning of this case to support their claims.

Production activities hereof are mainly manifested as self-propagation of propagating materials of the allegedly infringing variety, or entrusting others to propagate such materials. According to relevant provisions, where a farmer reserves seeds on his own without permission, the quantity of seeds he needs to reserve shall be determined based on the number of plots specified in his Rural Land Contract Management Right Certificate. Where the quantity of reserved seeds obviously exceeds the necessary limit and no reasonable explanation can be provided, such act shall be determined as self-propagation. The determination of the act of illegally entrusting others to propagate on one's behalf shall be made on the basis of the flow of propagating materials and planting expenses.

Sales acts are mainly manifested as publicizing under the name of the allegedly infringing variety through online channels and physical seed distribution stores. In the actual sales process, to avoid detection by right holders, sellers usually replace the packaging or change the product name for sales. Some other alleged infringers only conduct publicity targeting the allegedly infringing variety. After a seed purchaser in need reaches a purchase consensus with them, the alleged infringer will arrange for farmers that have sold a large number of propagating materials of the allegedly infringing variety without authorization to deliver the goods and collect payment. Such act shall be determined that the intermediary party has committed a tortious act, rather than contributory infringement. The reason is that the intermediary party has concluded an oral or written sales contract with the purchaser through providing advertising publicity, negotiation and contracting services. Although goods delivery and payment collection are completed by farmers, the acts of farmers are carried out under the instructions of the intermediary party. Farmers play the role of a third party for substitute performance in the transaction, and their declaration of will cannot affect the transaction. In essence, farmers cannot decide or influence the transaction, and are not subjects of the transaction.

Regarding the determination of "propagating material", three conditions must be satisfied, namely "living organism", "capable of propagation", and "the new individuals propagated therefrom have the same characteristics as the authorized variety". The determination of the propagation capability of a specific part depends on the propagation mode of the specific variety. For example, *Ulmus pumila* 'Meiren' can be propagated by cuttings and grafting, so its branches or stems are propagating materials. However, honey pomelo fruits cannot be used for propagation, and shall not be determined as propagating materials.

(2) Determination of the Subject of Liability

Seed production entities accused of infringement rarely organize production on their own, but instead conduct production through entrusted planting. Unauthorized production entities that carry out production organizing acts shall undoubtedly be identified as infringing subjects. However, whether the heads of farmer households and farmer households per se are infringing subjects shall be determined based on the specific facts of individual cases. In Case (2020) Zhi Min Zhong No. 428 of the Supreme People's Court, the court held that the village committee provided assistance for the commission of the infringing act and shall bear joint and several liability. In Case (2016) Gan Min Zhong No. 266, the court held that, as an ordinary farmer, the head of the farmer households had no access to the corn parent seeds for which Anhui Longping Company enjoys the new plant variety right. His acts of participating in seed production and distributing parent seeds to farmer households relied on the convenience brought by his identity as the villagers' group leader, and were not for commercial purposes. Therefore, he shall not be deemed as an infringing subject in this case in accordance with the law. In numerous cases, right holders have not listed farmers participating in the planting as defendants, in consideration of factors such as the infringers' capacity to pay compensation.

Where the responsible person of a farm household fails to prove that he has fulfilled the reasonable duty of care, he shall bear corresponding liabilities. Entities engaging in the production and sale of propagating materials for business purposes shall hold a valid Seed Production License to conduct production activities. The responsible person of a farm household shall verify the licenses and certificates of the aforesaid entities, otherwise he shall bear corresponding liabilities. Right holders of infringed plant varieties face difficulties in enforcing their rights at the production stage. One of the reasons is that responsible persons of farm households assist infringing entities by such means as signing false contracts, refraining from signing contracts, and concealing the source and destination of propagating materials. Therefore, the liabilities of such responsible persons shall be explicitly defined to deter their motivation to engage in infringement.

(3) Methods for Right Holders to Prove Infringement Facts

Whether in the production or sales stage, the most common method for right holders to prove the fact of infringement is notarization. In the production stage, the right holder may conduct random sampling of plant somatic materials and propagating materials obtained from the production plot, and then carry out DUS testing (i.e. new plant variety testing, the process of conducting cultivation identification tests or laboratory analysis and testing on the distinctness, uniformity and stability of the variety) on the aforesaid samples and the propagating materials of the alleged infringing variety. If there is no difference between the two, or the difference loci fall within the specified scope, they shall be deemed as the same variety. The aforesaid sampling site, sampling process and inspection submission process shall be subject to notarization. In the sales stage, the right holder may have the purchase process and inspection submission process notarized.

In addition to notarization, the right holder may also file a report with the relevant administrative departments. The conclusions and supporting grounds of the administrative departments' finding that an infringement has occurred may serve as evidence for the right holder to prove the fact of infringement.

In addition, applying to the people's court for pre-litigation preservation and then conducting DUS testing on the preserved propagating materials is also one of the effective measures.

(4) Grounds for Rebuttal by the Accused

The main rebuttal grounds of the alleged infringing party include the defense of lawful source, the defense of exhaustion of rights, the defense of self-propagation for self-use, challenging the validity of notarization, denying the DUS test results, and claiming that the products they sold are fruits in nature rather than seeds.

Where an alleged infringer claims that the propagating materials involved are obtained from a third party not involved in the case, it shall bear the burden of proving that the aforesaid third party has presented the corresponding licensing certificate thereto. Otherwise, it shall be determined that the accused party has failed to fulfill its reasonable duty of care. In the meantime, where the quantity of propagating materials purchased by the accused party is less than the total quantity of the propagating materials it has sold and the existing propagating materials it possesses, and the accused party is unable to provide reasonable justifications, it shall be determined that the accused party has propagated the alleged infringing propagating materials by itself.

The application of the doctrine of exhaustion of rights is subject to two prerequisites: first, the propagating materials entering the public domain are produced with the authorization of the right holder; second, the use of the aforesaid propagating materials does not involve any further propagation.

Entities eligible for self-propagation and self-use of seeds are limited to rural households only, excluding family farms, cooperatives and rural collective economic organizations. The storage quantity of self-propagated and self-used seeds shall be limited to the amount required for the plots specified in the rural household's Rural Land Contractual Management Right Certificate. Where a rural household contracts additional land from other parties for production, it shall not be entitled to self-propagate seeds for self-use. In accordance with China's Seed Law, where individual farmers have surplus conventional self-propagated and self-used seeds, they may sell or exchange such seeds at local rural fairs, and are not required to obtain a seed production and operation license. However, where the quantity of seeds obviously exceeds the amount required for normal production and multiple cross-regional seed exchanges are conducted, such circumstances may involve unlicensed production and sale of seeds carried out in the name of rural households.

Where the accused party raises an objection to the notarization process or procedure, it shall present reasonable grounds, and the matter shall be determined on a case-by-case basis. Common grounds for denying the results of DUS testing mainly include: the test material is not the propagating material submitted at the time of applying for the examination and approval of the new variety, is not the new variety to which the right holder holds the right, and the test material is not obtained from the allegedly infringing product. However, provided that there are no material defects in the notarization and sampling procedures, the aforesaid rebuttals are hardly admissible. Another ground for denying the results of DUS testing is that the DNA fingerprint authentication opinion concludes that the allegedly infringing product has specificity, thus proving that the two are not the same variety. Pursuant to the relevant provisions of the Supreme People's Court on the trial of cases involving disputes over new plant variety rights, priority shall be given to the admission of DUS testing results.

Whether the products sold by the accused party are fruits or propagating materials shall be ascertained on the basis of the sales price. In general, the requirements for purity, survival rate, moisture content and other relevant indicators of products reserved as propagating materials are higher than those for ordinary fruits. Accordingly, where there is an abnormal act in violation of normal transaction rules whereby the transaction price is higher than that of ordinary fruits, the accused party shall further make a reasonable explanation and adduce corresponding evidence.

III. Conclusion

Prior to the implementation of the new *Seed Law*, infringements upon plant variety rights were relatively prevalent in China. Restricted by the limited protection scope and links of plant variety rights as well as relatively conservative compensation amounts, right holders had low initiative to safeguard their rights and faced considerable difficulties in rights protection. The implementation of the new *Seed Law* has intensified the protection of plant variety rights and encouraged right holders to actively safeguard their rights. Understanding the adjudication rules for relevant disputes helps right holders protect their plant variety rights in a more reasonable and efficient manner, and increases their enthusiasm for breeding.