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Thursday, 29 March 2012

The root of the problem: equitable remuneration for use of a plant variety

The Opinion of Advocate General Niilo Jääskinen in Case C-509/10 Josef and Thomas Geistbeck v Saatgut‑Treuhandverwaltungs GmbH was published this morning. This Opinion follows the referral to the Court of Justice of the European Union of some questions from the German Bundesgerichtshof for preliminary ruling on the interpretation of Articles 14(3) and 94(1) and (2) of Council Regulation 2100/94 on Community plant variety rights (the CPVR Regulation) and Articles 5 and 8 of Commission Regulation 1768/95 (the Community Planting Regulation) implementing rules on the agricultural exemption provided for in Article 14(3) of Regulation 2100/94.

The IPKat doesn't know the background to the reference. The questions referred for the preliminary ruling were however as follows:
"(a) Must the reasonable compensation which a farmer must pay to the holder of a Community plant variety right in accordance with Article 94(1) of the CPVR Regulation because he has used propagating material of a protected variety obtained through planting and has not fulfilled the obligations laid down in Article 14(3) of the CPVR Regulation and Article 8 of the Community Planting Regulation, be calculated on the basis of the average amount of the fee charged for the licensed production of a corresponding quantity of propagating material of protected varieties of the plant species concerned in the same area, or must the (lower) remuneration which would be payable in the event of authorised planting under the fourth indent of Article 14(3) of the CPVR Regulation and Article 5 of the Community Planting Regulation be taken as a basis for the calculation instead? 
(b) In the event that only the remuneration for authorised planting must be taken as a basis for the calculation: in the circumstances described above, may the holder, in the event of a single intentional or negligent infringement, calculate the damage for which he must be compensated in accordance with Article 94(2) of the CPVR Regulation as a lump sum based on the fee for the grant of a licence for the production of propagating material? 
(c) Is it permitted or even required, when assessing the reasonable compensation due under Article 94(1) of the CPVR Regulation or the further compensation due under Article 94(2) of the CPVR Regulation, for the special monitoring costs of an organisation which protects the rights of numerous holders to be taken into account in such a way that double the compensation usually agreed, or double the remuneration due under the fourth indent of Article 14(3) of the CPVR Regulation, is awarded?".
Frustratingly, the Opinion is available in 15 languages of the European Union, including Maltese, but not in English.  According to Google Translate (as tweaked by this Kat), the Advocate General has advised the CJEU as follows:
"The equitable remuneration which, under Article 94(1) of Regulation 2100/94 the farmer is obliged to pay the holder of a right to Community plant variety protection for using propagating material of a protected variety obtained by culturing without fulfilling the obligations laid down in Article 14(3) of Regulation 2100/94 and Article 8 of Regulation 1768/95 (as amended), must be calculated based on the average amount charged for the licensed production of propagating material of protected varieties of the plant species concerned in the same region. Because, first, calculating the amount of equitable remuneration on the basis above puts the holder back in the position before the breach and reparation for the consequences of infringing his rights, and, further, the costs of monitoring and surveillance should be considered as having been included by the licensee in the licence fee, payment of these fees may be charged by the owner to the extent that it is extra-litigation or litigation related to the review of a particular case of infringement for which reimbursement may be required under and subject to the conditions provided for in Article 94(2) of Regulation 2100/94".
The IPKat appreciates that not every reader of this weblog is excited by Community plant variety rights and that they are something of a minority interest. He feels however that it is important to know what is happening in some of the less prominent areas of IP since the livelihood of many business and traders is affected by them.  He is also conscious of the possibility of transplanting the reasoning of the CJEU with regard to the payment of reasonable remuneration from an obscure field such as this to more prominent areas of IP such as copyright and to the calculation of damages under the IP Enforcement Directive.  Accordingly he invites readers who know a bit about the background to this reference to share their knowledge with the rest of us.

2 comments:

A Country Cat said...

If confirmed, this looks like good news for PVR holders. An exemption exists in European PVR legislation for farmers to use the product of their own harvest for propagation in certain species, which include most of the major agricultural crops. In doing so the farmer has to pay equitable remuneration to the rights holder often through a collecting society. The remuneration has to be 'sensibly lower' than the royalty charged for licensed propagation of the variety in the relevant territory. The legislation sets a default for sensibly lower of 50%. What. I think the AG is saying is that where a farmer fails to declare and pay or misdeclares, the collecting society can charge him the full licensed royalty rather than the 50% sensibly lower and can also recoup from him any additional legal costs over and above its usual costs of collection. More legal correspondents will be able to confirm.

Chris Green said...

I was indeed interested by the AG opinion as carried in your article (29th March). This whole area of equitable remuneration (royalty on farmer saved seed) is a bit of a nightmare for plant breeders especially as we are challenged to have the burden of proof of usage. Part of the problem is of course of our own making in that we are more interested in the activity of breeding than we are about managing our IP. And that starts with the first point of sale. Recognising some of the difficulties this company pioneered a new contract based approach with growers of our protected varieties signing a contract on their first purchase of certified seed where they agreed to pay the equitable remuneration on any seed used on their holding as farm saved seed. This is permissible under Article 14 (3) which allows for a direct contract between breeder and grower. There was some resentment from the National Farmers Union but our growers accept this as a new business model and one where we can have a direct and dynamic relationship with those who are growing our varieties.

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