The amendment, published on December 24, 2021, focuses on the protection of intellectual property rights in new plant varieties (“NPVs”), extends the scope of protection to harvested materials, adds the concept of essentially derived varieties (“EDVs”) VDE”) and increases the amount of the civil indemnity for infringement. The right of farmers to plant granted varieties for their own consumption remains unaffected. Although China has not yet agreed to 1991 Act of the UPOV Convention (“UPOV 1991”), the Amendment addresses some of the main content of UPOV 1991 for the protection of PVRs.
What is the benefit for PVR holders of extending protection to harvested materials?
The scope of protection of the PVR is extended from propagating material to harvested material obtained by the unauthorized use of propagating material of protected varieties, unless the holder of the PVR has already had a reasonable opportunity to exercise his rights in the propagating material. This change is consistent with UPOV 1991, except that protection is not extended to products made directly from infringing harvested materials.
Previously, PVR holders could only claim infringement for propagating material of protected varieties. Significant changes in the Amendment allow PVR holders to take action against unauthorized harvested material. In order to prove the absence of infringement, the alleged user/distributor of the harvested material will have to prove that his material comes from a legitimate source. The amendment also provides means for PVR holders to gather evidence of infringement from harvested material that is sold or stored, which is likely much easier than gathering evidence from propagative material.
The protection of PVRs under the Amendment has been extended from production, breeding and sale to production, breeding and processing for breeding, offering for sale, sale, import, export and storage. This means that PVR holders can act against different stages of the supply chain and have greater ability to decide in which jurisdiction to sue by joining multiple co-defendants from different links in the supply chain.
What is the impact on EDV breeders?
The Amendment adopts the definitions of UPOV 1991 and the ease of obtaining PVR recordings is likely to be increased. Under the amendment, EDV will be protectable as soon as PVR is granted, while seed produced simply by imitation and embellishment cannot be approved as PVR.
China has developed technologies to identify essentially derived varieties and assess counterfeit plant material, such as DNA fingerprinting based on molecular markers, a DNA fingerprinting database of over 10,000 varieties, and assessment standards molecular for 35 species. This means that evaluations can be carried out more quickly and with simpler procedures than DUS examinations.
At an international seminar, an officer from the New Plant Variety Trials Division of the Science and Technology Development Center of the Ministry of Agriculture and Rural Affairs mentioned that the government was revising its new regulations on variety protection, to prepare guidelines for the evaluation of EDVs and to establish procedures for the settlement of disputes. All of this will improve the impact and effectiveness of PVR protection. The Plant Breeders’ Rights Regulations have not been amended since 2014 and an updated version is therefore awaited. In the meantime, the government published a revised draft regulation in 2019, which for the first time addressed the concept of VDE.
Violation deterrence by increasing the damage cap
China’s Civil Code explicitly provides that punitive damages apply in intellectual property cases when the infringement is deemed to be “serious”. The amendment increases these punitive damages from 1 to 3 times to a maximum of 5 times the base award in “serious” cases of PVR violations. The basic compensation would be made up of the actual losses suffered by the holder of the PVR or the gains of the infringer. Where either of these amounts is difficult to determine, the compensation may be set at a reasonable multiple of the fee for the PVR in dispute.
The amendment also increases the maximum statutory damages from CNY 3 million to CNY 5 million (approximately $460,000 to $770,000) where the profits of infringement are difficult to determine. From 2016 to 2020, Chinese courts concluded a total of 781 civil cases involving disputes over new plant varieties, including disputes over ownership, infringement, and contract disputes. 85% of these cases involved a violation of a PVR and more than 70% of these violation cases were decided in favor of the PVR holders. The increase in punitive damages and damages provided by the amendment will further strengthen the deterrence against infringement.
How will farmers’ rights be limited?
UPOV 1991 leaves it to the discretion of contracting parties to decide whether farmers are allowed to use infringing plant varieties for propagation on their own land. China has adopted the right of farmers to use propagating material of protected varieties for home consumption without a license from the PVR holder.
Although the Seed Law remains unchanged with regard to farmers’ rights, the second “Several Provisions on the Specific Application of the Law in the Prosecution of Disputed Cases of Infringement of the Right to New Plant Varieties” published by the Supreme People’s Court on July 5, 2021 limits farmers’ rights. It stipulates that farmers may reproduce and use the propagating material of protected varieties for their own consumption, provided that this is done on their own land and with the agreement of rural collective economic organizations, village committees or village groups. If farmers deviate from the scope of use, the court will determine whether it is an exceptional situation taking into account all relevant factors such as purpose, scale and presence of profit. These legal provisions aim to prevent attacks on the abuse of farmers’ rights.
China is improving the PVR protection environment. The scope of protection, the criteria for assessing PVR grant approval and assessing infringement are all more specific. With the increase in PVR subsidies and the development of new testing technologies, China’s accession to UPOV 1991 and the implementation measures adopted after the accession may soon become a hot topic. We are closely monitoring legislative developments and will provide updates in future articles.