On 20 March, the Supreme People’s Court selected 15 cases from those concluded by courts nationwide in 2024 as the fifth batch of Typical Cases on Judicial Protection of Intellectual Property Rights in the Seed Industry by People’s Courts. The case “Dispute over Usage Fees during the Temporary Protection Period and Infringement in respect of the New Apple Plant Variety ‘Scilate’” handled by Lusheng Law Firm was honored to be included.
Case Handled by Lusheng Selected as a Typical Case in the Fifth Batch of Typical Cases on Judicial Protection of Intellectual Property Rights in the Seed Industry by People’s Courts Issued by the Supreme People’s Court
Case Concerning Usage Fees during the Temporary Protection Period and Infringement in respect of the New Apple Plant Variety “Scilate”
[Dispute over Usage Fees during the Temporary Protection Period and Infringement of New Plant Variety Rights between a Certain British International Company and a Certain Agricultural Company]
Case Information
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In the second-instance proceedings involving ENZAFruit’s new apple plant variety Scilate / brand name Envy, the Supreme People’s Court, on the basis of the revised Seed Law of the People’s Republic of China (the “Seed Law”), upheld the landmark first-instance judgment. ENZAFruit is a subsidiary of T&G Global, headquartered in New Zealand, and is an exotic fruit and vegetable operating company.
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In this case, Lusheng Law Firm successfully assisted ENZAFruit in obtaining compensation of RMB 3.3 million, which is a rare amount awarded in civil cases concerning infringement of new plant varieties in China.
Recently, relying on its many years of legal practice experience in the field of new plant varieties, Lusheng assisted ENZAFruit in achieving a landmark victory in the final judgment rendered by the Supreme People’s Court: the first-instance judgment was upheld, and a relatively high amount of compensation in civil cases concerning infringement of new plant varieties in China was awarded — as high as RMB 3.3 million.
The Compensation Amount is Truly Rare
In the first instance, the Lanzhou Intermediate People’s Court of Gansu Province, based on the defendants’ malice and serious infringing acts, decided to calculate punitive damages at twice the amount of the illegal gains generated by the infringing acts. In the second instance, this amount of compensation was endorsed by the Supreme People’s Court.
The final amount of compensation in this case is truly rare in civil cases concerning infringement of asexually propagated new plant varieties in China. According to the results disclosed in the 2023 law enforcement inspection of the Seed Law by the Standing Committee of the National People’s Congress, the average amount of compensation in such cases is approximately RMB 425,000, far lower than the amount awarded in this case.
In Addition to Ordering Cessation of Infringement, the Supreme People’s Court Ordered the Infringers to Cut Off Propagating Material and Carry Out Inactivation Treatment
During the evidence collection process, Lusheng conducted extensive on-site evidence collection in multiple orchards in China, covering both the seedling planting season and the fruit harvesting season. Ultimately, Lusheng collected and completed DNA analysis and testing of the necessary propagating materials, thereby proving the infringing facts and submitting the results to the court.
The final judgment in this case upheld the prior decision rendered in November 2023 by the court of first instance on the protection of ENZAFruit’s new plant variety rights in respect of the apple plant variety Scilate. The Supreme People’s Court held that the defendants’ illegal planting and sale of plant materials of the Scilate variety and apples harvested from such illegal materials seriously infringed ENZAFruit’s intellectual property rights. Therefore, the Supreme People’s Court ordered the infringers to immediately cease all infringing acts, cut off the propagating materials, and carry out inactivation treatment, so as to safeguard the legitimate rights and interests of the right holder.
This judgment of the Supreme People’s Court is of far-reaching significance and has bolstered the confidence of holders of new plant variety rights both domestically and abroad. At the same time, pursuant to the newly revised Seed Law, the scope of protection in this case has been extended from propagating materials to the fruits harvested from the planting of such propagating materials.
In addition, with the defendants’ appeal being dismissed, ENZAFruit may now institute separate proceedings and further claim damages in respect of the infringing acts that the defendants continued to commit after the first-instance judgment in 2023.
Evaluation of the Typical Significance by the Supreme People’s Court
“In this case, the variety right holder is an enterprise from New Zealand, and the adjudication result demonstrates that the people’s courts adhere to the principle of equal protection in accordance with the law. This case treats the act of selling harvested materials as a natural extension of the acts of producing and propagating propagating materials, and, where the infringer mainly obtains illegal gains through the sale of harvested materials, takes the sales profits of such harvested materials as the basis for determining the amount of compensation. This provides an important reference for the calculation of compensation in subsequent similar cases and further strengthens the comprehensive protection of variety right holders. The cessation-of-infringement method supported in this case, namely cutting off infringing propagating material scions and then grafting other non-infringing variety scions, fully takes into account the characteristics of perennial asexually propagated crops, and not only fully protects the interests of variety right holders, but also reasonably balances the restoration of agricultural production and the avoidance of resource waste, thereby making a useful exploration in refining the forms of cessation of infringement in respect of variety rights.”
(The above evaluation is reproduced from the Supreme People’s Court.)
Case Handling Experience of the Lusheng Team
Su Yanhong, person in charge of this case:
“The success of this case highlights the importance of intellectual property protection in China’s agriculture and food industry, both for local and foreign brand owners, especially against the backdrop of market demand for high-quality agricultural products. The judgment in this case fully takes into account the substantial investment of time, capital and human resources required in plant breeding, and fully demonstrates the feasibility of enforcing intellectual property rights in respect of asexually propagated materials such as fruits and horticultural plants. We firmly believe that, with the comprehensive protection afforded by the newly implemented Seed Law, this judgment will strongly encourage domestic and foreign holders of new plant variety rights to actively protect their assets and enhance their confidence in investing in China.”
Xu Liping, senior litigation lawyer:
“This case is a rare one in the field of new plant varieties in which a high amount of compensation was awarded and punitive damages were applied. The Supreme People’s Court elaborated in detail on the impact of harvested materials on holders of new plant variety rights and concluded that calculating damages based on infringing harvested materials can better protect the competitive interests of right holders. At the same time, inactivating and destroying illegal propagating materials is the most effective means of protecting the interests of holders of new plant variety rights.”
Client Feedback
Morgan Rogers:
“This landmark judgment demonstrates China’s firm determination to protect plant variety rights, which has further strengthened T&G’s confidence in our investments in China. Against the backdrop of continuously enhanced intellectual property protection, we will further expand the licensing of excellent varieties such as Envy apples, which will not only benefit Chinese consumers and partners, but also bring new growth opportunities to our business. This judgment will help advance the business development plans of T&G and ENZAFruit and lay a solid foundation for further contributing to the vigorous development of China’s horticultural industry.”
