Public interest in Plant Variety Rights. How high is the bar for the grant of a compulsory license?

IPkat has previously reported on the background and contents of the first compulsory license application. Now, as  we finally have the decision itself (Decision nr NCL 001, of the 16^th of March 2018), there are a number of interesting points to discuss.

Background of the case

On 12 October 2009, Smith Kline Beecham Limited ( “GSK” ) filed a Community plant

variety right (CPVR) application No 2009/1980 for the variety ‘Ben Starav’ of the species Ribes nigrum L.. By Decision No (EU) 35825 of 8 July 2013, the Office granted a CPVR. By request of 18 November 2014, GSKasked the Office to effect the recordal of the transfer of rights to Lucozade Ribena Suntory Limited( “LRS”).  

On 16 March 2017, the Office received an application for a compulsory licence by Pixley Berries (Juice) Limited ( “the applicant”) pursuant to Article 29 of Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights (Basic Regulation) (the Council Regulation (EC) No 2100/94 of 27 July 1994),.

Public Interest

Article 29(1) of the Basic Regulation provides that a compulsory licence shall only be granted on the ground ofthe public interest. Article 41(2) of the Proceedings Regulation (of Commission Regulation (EC) No 874/2009 of 17.9.2009.) further provides three circumstances  that may, in particular, constitute a public interest:

a) The protection of life or health of humans, animals and plants;

b) The need to supply the market with material offering specific features;

c) The need to maintain the incentive for continued breeding of improved varieties.

The CPVO clarifies in its decision that it is the applicant that has the burden of proof regarding whether there is a public interest, and thus clarifies that the CPVO will not proceed with an independent investigation, but will  base its decision solely  on the facts and arguments raised by the parties to the proceedings.

The protection of life or health of humans, animals and plants (Article 41(2)(a) of the

Proceedings Regulation)

The applicant claimed that there is a public interest  based on the benefit that ‘Ben Starav’ provides to the public health when used for the production of 100% juices, as the consumption of said juices is associated with a healthy lifestyle. Second, due to the climate change, it would be in the public interest to use a variety that adapts well to different climatic conditions, as it is the case for ‘Ben Starav’.

According to the CPVO, the applicant  failed to show the specific benefits provided by ‘Ben Starav’ to public health. The general statement provided by the applicant is not enough (“healthy lifestyle”), since it fails to prove that “Ben Starav” presents better characteristics than other blackcurrants. Furthermore the use of the concept “healthy lifestyle” was considered by the CPVO to be too generic, since it refers to a general way of life covering, for instance, everything from a balance between work and private life to stress control and personal hygiene, rather than pointing to the specific nutritional characteristics of the particular  plant variety.

Furthermore, the applicant’s argument that “Ben Starav”, adapts well to climatic zones, and thus also guarantees good harvests throughout different seasons, does not provide any concrete evidence of a public interest.

The need to supply the market with material offering specific features (Article 41(2)(b) of the Proceedings Regulation)

The next step in the evaluation of the CPVO consists of determining whether the characteristics that are of importance from a public interest perspective are unique for the specific plant variety. The applicant claimed that ‘Ben Starav’ has unique characteristics, which make it unlike any other blackcurrant varieties, namely i) a consistent high yield of good quality fruit, ii) harvest season not in conflict with other cultivars , iii) even ripening at harvest, iv) even bud-break across a range of winters , v) good juice quality from an organoleptic point of view, vi) good compositional analysis and vii) excellent colour .

The CPVO concluded, however, that the evidence provided by the parties is clear in that the alleged characteristics of “Ben Starav” are not unique to the specific plant variety.   As such, the CPVO ruled that the alleged unique characteristics of the variety “Ben Starav” do not fulfil the requirement of Article 41 (2) of the Proceedings Regulation  since these features are also offered by other varieties of blackcurrant.

On the need to supply the market with material from ‘Ben Starav’

The applicant claimed in brief that there is a need to supply the market. Taking into consideration that it has been shown that there are a number of available blackcurrant varieties, and that the characteristics of importance from a public interest perspective are shared by several other varieties of blackcurrant, the CPVO  concluded  that there is no need to supply the market with “Ben Starav”.

On the public funding of the variety ‘Ben Starav’

Worthy of discussion is  the fact that “Ben Starav” is the result of a partly state-funded breeding program. LRS answered  that this fact  does not in itself mean that a third party may exploit the research results by means of a compulsory license.  The question thus posed to the CPVO was whether state funding could have an impact on the grant of a compulsory license. In other words, can partial public funding of the “Ben Starav” breeding programme  constitute a  public interest sufficient  to justify the grant of a compulsory license?

The CPVO concluded that this is not necessarily the case. A state authority may choose to invest in a breeding programme for reasons of public interest but at some point needs to determine whether to claim the legal rights on the variety or to allow a private entity to protect and own the plant variety protection, as in this case. When such a decision is reached, the public (e.g., consumers and competitors) may not then raise any claim to the variety in question. Thus, granting a compulsory licensing should abide by the same rules irrespective of whether the breeding programme leading to the variety was 100% private or 100% state funded.

Interest of the case 

An important question that the CPVO answered is whether alternatives to the variety are an important part of the evaluation whether to  grant a compulsory license. The CPVO concluded  that although the determination of the existence of alternatives belongs  to competition law (theory of essential facilities), it is  also important for the determination of whether the requirements for the grant of a compulsory license are fulfilled.

 In fact, where alternatives exist, the need to supply the market with the specific plant variety becomes much more difficult to prove.  In support of this argument, the CPVO points to the ruling of the German Federal Court of Justice ruling of 11 July 2017 regarding a patent on the antiviral agent “Raltegravir”. There, the Court stated that “a compulsory licence cannot be granted if the public interest can be satisfied with other, essentially equivalent alternatives”. It is  interesting how the CPVO chose to seek guidance  by reference to  parallels between patents and intellectual property rights. Moreover, this decision  points to  the growing importance of competition law principles in the application and interpretation of intellectual property law provisions.