(By You Yunting)Introduction to the Case:
Appellant (Defendant at first instance): Jiangsu Xunong Seeds Science and Technology Co., Ltd (the “Xunong”)
Respondent (Plaintiff at first instance): Tianjin Tianlong Seeds Science and Technology Co., Ltd (the “Tianlong”)
Court of first instance: Nanjing City Intermediate People’s Court No.: (2009)宁民三初字第63号
Court of second instance: Jiangsu Province Higher People’s Court No.: (2011)苏知民终字第0194号
On November 10, 2000, a new three-crossbreed hybrid japonica rice named “9优418”, jointly cultivated by the Liaoning Rice Research Institute (the “LRRI”) and the Xuzhou Academy of Agricultural Sciences (the “AAS”), was approved by the National Crop Variety Approval Committee of China (the “NAVAC”).
The “9优418” comes from the female parent “9201A” and the male parent “C418”. The LRRI applied for the right of a new variety of plant with the Ministry of Agriculture on December 30, 2003 and received the approval on May 1, 2007. On the same day, the LRRI authorized Tianlong to the exclusive right of using the C418.
The AAS applied the new variety right of plant for the “9201A” on September 25, 2003 and obtained the approval from the Ministry of Agriculture on January 1, 2007.
On April 3, 2013, the AAS entered a contract with Tianlong and agreed that “the 9201A has already been applied for the right of new variety of plant so that other companies could use the 9201A for test crossing, not commercial development in accordance with the requirement of intellectual property protection and promise not to spread to any third party. Without prior authorization, other companies shall not reproduce the 9201A, otherwise the AAS is entitled to claim for infringement liability. ”
On January 3, 2008, the AAS authorized Xunong with the exclusive right of using the 9201A.
Upon the hearing of the case by the court, the “9优418”, produced by both Xunong and Tianlong, were identical in using the male parent C418 and the female parent 9201A.
Both Tianlong and Xunong lodged lawsuits requesting that the other party were infringing their rights of the new varieties of plants.
Jiangsu Province Higher People’s Court heard the case and held that:
1. Actually the “9优418” itself is not entitled to the right of the new varieties of plants. But the LRRI applied the right of a new variety of plant for the male parent C418 in 2003, meaning that the use of the male parental C418 to produce the “9优418” must be authorized from the LRRI. The AAS also applied for the right in new varieties of plant for the female parent 9201A in 2003. Furthermore, in the law suit, Xunong acknowledged that it had already sealed up all the unauthorized female parent 9201A, thus Tianlong can only use the female parent 9201A to produce the “9优418”.
2. The LRRI, the AAS, Xunong and Tianlong are entitled to use the materials of parent propagation which the other party has received authorization for, and shall exempt the other parties from licensing fees only in producing and selling the “9优418”, not for other commercial purposes.
Jiangsu Province Higher People’s Court heard the case and judged that:
1. Xunong has spent great commercial efforts to popularize its “9优418” and overcome the technology difficulties in planting. But, under the condition that the “9优418” has already gained wide acknowledgement from the market, Tianlong entered into the field of production in order to reduce the costs of popularizing the “9优418”. Therefore, for the purpose of reflecting fairness and reasonability, the court judged that Tianlong shall compensate 500,000 RMB to Xunong.
2. Meanwhile, considering that both the parties respectively produced the “9优418”, market competition and conflicts of interests in reality exist. The court told the two parties by obeying the Anti unfair Competition Law, producing the “9优418” with honesty, fair competition and ensuring quality. The court also noted that the two parties shall clearly mark their business labels, preventing from new disputes, and to pursue their effortsin maintaining the quality of the “9优418”.
Pursuant to Article 27 of the Agreement on Trade-related Aspects of Intellectual Property Rights, China excludes the protection of plant varieties from patentability in the patent law but adopt an independent protection system of plant varieties. The Regulations on Protection of New Varieties of Plants is applied in China, learnt from the 1978s version of the International Convention for the Protection of New Varieties of Plants. However, there are still shortcomings and deficiencies about the legal protection on the new reproduced varieties of plants reproduced from a new variety of plant in the 1978s version of the International Convention for the Protection of New Varieties. In China, with regard to developing and selling another new variety of plant via using a new variety of plant, no authorization shall be obtained from the right holder. Thus such system will do good to protect another new variety of plant bypassing the original new variety of plant, but thus making it difficult for dispute settlement in practice.
Today’s case introduced was an example. Both the plaintiff and the defendant in this case respectively enjoyed an exclusive right of a new variety of plant and then used each other’s new variety of plant to develop another new variety of plant. According to the current laws and regulations in China, the new variety of plant shall, even though it is being developed at the foundation of the two new variety of plants, not apply for prior authorization of the right holder. This means that neither the plaintiff nor the defendant is entitled to claim for ceasing infringement against each other. Therefore, the court encountered judging troubles in solving this dispute in accordance with legislations on new varieties of plants, and finally applied the Anti-unfair Competition Law into this case, judging that one party shall compensate 500,000 RMB on the basis of the principle of fairness.
This case also revealed a deficiency in the protection system on new varieties of plants. The only way to solve this deficiency is to revise laws and regulations so as to consistent with the 1978s version of the International Convention for the Protection of New Varieties. However, there’s no such thing as a free lunch. Revising laws and regulations will make China’s enterprises pay more authorization fees for western companies. Therefore, improving a higher intellectual property protection system is undoubtedly similar of a game process.