The fourth amendment to the China Seed Law (“Amendment”) will come into force on 1 March 2022.
The Amendment, released on 24 December 2021, focuses on the protection of intellectual property rights in new plant varieties (“PVR”), extends the scope of protection to harvested materials, adds the concept of essentially derived varieties (“EDV”) and increases the amount of civil compensation for infringement. The farmers’ right to plant granted varieties for their own consumption remains unchanged. Although China has not yet agreed to 1991 Act of the UPOV Convention (“UPOV 1991”), the Amendment addresses some of the key contents of the UPOV 1991 for PVR protection.
What is the benefit for PVR holders to extend protection to harvested materials?
The scope of protection for PVR is extended from propagating material to harvested material obtained through the unauthorized use of propagating material of protected varieties, unless the PVR holder already had a reasonable opportunity to exercise its rights in respect of the propagating material. This change is in line with UPOV 1991, except that protection is not extended to products made directly from infringing harvested materials.
Previously, PVR holders could only claim infringement over propagating material for protected varieties. The important changes in the Amendment enable PVR holders to act against unauthorized harvested material. In order to prove non-infringement, the suspected user/distributor of harvested material will need to prove their material came from a legitimate source. The Amendment also provides avenues for PVR holders to collect evidence of infringement from harvested material that is being sold or stored, which is likely to be much easier than collecting evidence from the propagating material.
Protection for PVR under the Amendment has been extended from production, breeding and sale to production, breeding and processing for breeding, offering for sale, sale, importing, exporting, and storing. This means that PVR holders can act against the different stages in the supply chain and have greater ability to decide which jurisdiction to bring actions in by joining multiple co-defendants from different links in the supply chain.
What is the impact on EDV breeders?
The Amendment adopts definitions from the UPOV 1991 and the ease of obtaining PVR registrations is likely to be increased. Under the Amendment, EDV will be protectable as soon as PVR is granted, while seeds bred simply by imitation and embellishment may not be approved as PVR.
China has developed technologies for identifying EDV and evaluating infringing plant material, such as DNA fingerprinting based on molecular markers, a DNA fingerprinting database of more than 10,000 varieties and molecular evaluation standards for 35 species. This will mean that evaluations can be completed more quickly and with simpler procedures than DUS testing.
An officer of the Ministry of Agriculture and Rural Affairs Science and Technology Development Center’s New Plant Variety Testing Division mentioned at an international seminar that the government is revising its new variety protection regulations, preparing EDV evaluation guidelines and establishing dispute resolution procedures. All of this will improve the impact and efficiency of PVR protection. The Regulations on Protection of New Varieties of Plants has not been amended since 2014 and so an updated version is expected. In the meantime, the government released a draft of the revised Regulations in 2019, which for the first time addressed the concept of EDV.
Deterrence against infringement by increasing damage cap
The China Civil Code explicitly provides that punitive damages shall apply in IP cases when the infringement is deemed “serious”. The Amendment increases those punitive damages from 1-3 times to a maximum of 5 times of the basic compensation in “serious” cases of PVR infringement. Basic compensation would consist of the actual losses suffered by the PVR holder or the gains of the infringer. When either of those amounts is difficult to determine, the compensation may be determined at a reasonable multiple of the royalty for the PVR in dispute.
The Amendment also increases maximum statutory damages from CNY 3 million to CNY 5 million (approx. USD 460,000-770,000) where the profits from infringement are difficult to determine. From 2016 to 2020, Chinese courts concluded a total of 781 civil cases concerning disputes involving new plant varieties, including disputes over ownership, infringement and contract disputes. 85% of those cases involved PVR infringement and more than 70% of these infringement cases were decided in favour of PVR holders. The Amendment’s increase in the punitive damages and the statutory damage will further strengthen deterrence against infringement.
How farmers’ rights will be limited?
UPOV 1991 leaves it to contracting parties’ discretion to decide whether farmers are permitted to use infringing plant varieties for propagating purposes on their own land. China has adopted the farmers’ rights to use propagating material of protected varieties for self-consumption without license from the PVR holder.
Although the Seed Law remains unchanged in terms of the farmers’ rights, the second “Several Provisions on the Specific Application of Law in the Trial of Dispute Cases of Infringement on the Right to New Plant Varieties” issued by the Supreme People’s Court on 5 July 2021 limits the farmers’ rights. It states that farmers can reproduce and use the propagating material of protected varieties for self-consumption, so long as this is carried out on their own land and is agreed to by the rural collective economic organizations, village committees or village groups. If farmers deviate from the scope of use, the court will determine if it is an exceptional situation by considering all relevant factors such as the purpose, scale, and presence of profit. These court provisions are aimed at preventing infringements from the abuse of farmers’ rights.
China is improving the PVR protection environment. The scope of protection, the criteria for evaluating the approval of PVR grants and for evaluating infringement are all more specific. With the increase in PVR grants and the development of new testing technologies, whether China will join UPOV 1991 and what implementing measures will adopted after accession may soon become a hot topic. We are keeping a close eye on the legislative developments and will provide updates in future articles.
yxu@lushenglawyers.com
