For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

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Thursday, 5 July 2012

How Farmers Should Pay Up for Infringing Protected Plant Variety Rights - Geistbeck Summary

Not to get too distracted from the possible discovery of the Higgs Boson this week (or to be lumbered in with other pseudo-scientists  trying to cash in on street-cred by being aware of important developments in the fundamental understanding of the universe - oh dear, too late), this new Kat had her paws firmly rooted in anticipation of the ECJ's answer to a preliminary reference on the assessment of equitable remuneration payable to Community plant variety right holders in Case C‑509/10 Geistbeck v Saatgut-Treuhandverwaltungs GmbH. Although a deeper discussion on the balance to be struck between the interests of an IP user who acts in the public interest and an IP right holder may have been welcomed, the judgment should not be disregarded for compost; the court clarified how to calculate reasonable compensation in the case of infringement. The IPKat has had an eye on the case since 2011, and followed up with the release of the Opinion of Advocate General (AG) Niilo Jääskinen in 2012, who quite profoundly noted that '[a]n intellectual property right does not disappear as a result of its being used' (at [30]). The
judgment is now here...

The Proceedings

My farmin' privilegeees shun't
no way no how be restricteeed
The dispute between the farming (brothers?) Geistbeck and Saatgut-Treuhandverwaltungs GmbH (STV), which represents the interests of the holders of the protected plant varieties Kuras (a potato), Quarta (also a potato), Solara (field pea), Marabel (sounds like Merpel but is a cabbage) and Secura (another potato), concerns the relationship between derogation provided for in Article 14 of Regulation (EC) No 2100/94 on Community plant variety, also known as the 'farmers' privilege', and the calculation of the reasonable compensation within the meaning of Article 94(1) payable to the holder of a plant variety right in the event of an infringement. The farmers were found on inspection to have planted more quantities of the protected plant varieties than authorised. A payment corresponding to renumeration was claimed, but the Geistbeck's only paid half. The Geistbeck's appealed on a point of law, which the Bundesgerichtshof referred to the Court for a preliminary ruling.

Questions and Answers

First, the referring court sought clarification on how to determine the amount of 'reasonable compensation' payable under Article 94(1) and the damage due under Article 94(2).  In particular, should the fee payable for licensed production or the fee for authorised planting, which is 50% of the amount payable for licensed production, be the basis for calculating that compensation.

Held on this point; the derogation from the principle of Community plant variety right must be interpreted restrictively and cannot be applied to circumstances other than those expressly specified in that provison (at [29]). As such, the remuneration for authorised planting cannot be taken as a basis for calculating 'reasonable compensation'. A farmer cannot rely on the farmers privilege if there is a failure to fulfil his/her obligations,inter alia, to receive authorisation as required under Article 14: 'In consequence, he must be regarded as a third party who, without authorisation, has carried out one of the acts referred to in Article 13(2) of Regulation No 2100/94' (at [35]). Such an infringement amounts to a loss of at least the fee a third party would be expected to pay for licensed production. 

If there was a prison for farmers who infringed
plant variety rights, it might look like this
Consequently, 'reasonable compensation' in such circumstances is calculated on the basis of an amount equivalent to the remuneration payable for licensed production. Such a calculation was not punitive, but a simple application of the provisions - the farmers were essentially acting as third parties who had not paid for a license to produce. Neither was a reduced amount as the basis of a calculation appropriate as it could potentially operate to favour farmers who failed to fulfil their information obligations under Article 14(3). Further, it is the holders of the right alone that are responsible for the control and supervision of the use of their protected varieties in the context of authorised planting and so depend on the good faith and cooperation of the farmers concerned (at [42]). 

Secondly, on a plain reading of Article 94(1), 'reasonable compensation' is required in the event of the unlawful use of a plant variety but no provision is made for compensation for damage other than that connected to the failure to pay compensation. As such, costs incurred for monitoring compliance cannot enter into the calculation of 'reasonable compensation'. 

It certainly seems that the judgment has clarified the position on reasonable compensation where plant variety rights are infringed, as hoped by the AG. However the expectation of clarification as to the balance to be struck between the interests underlying the rules were absent. What do the IPKat readers think?

Echoing the words of the AG quoted above, '...the propogation of protected material cannot affect the existence of the intellectual property right attaching to that material' (at [38]), which is surely an overarching principle of all intellectual property rights. This fresh to the field Kat wonders about the postmodernist arguments attached to such a finding, and whether artistic appropriation can have any bearing on the idea of intellectual property rights becoming inferior after an initial harvest...

2 comments:

Anonymous said...

I think the Court got this one right. Suppose farmers could get away sometimes with under-reporting how many Merpels they sow and as a result underpay for the seed used in the "farmer's privilege"; and then, when found out, simply cough up what they would have owed if they had been honest in the first place, there would be almost an incentive to under-report the amount of planting. Reasonable compensation on the basis of what a third party unauthorised user would be required to pay seems sensible.

Anonymous said...

Oh, forgot to add, good first post.... even if the subject-matter is not going to set everyone's IP pulse racing.

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