Plant variety rights in the distribution chain

Under the system of plant breeders rights, also known as plant variety rights, the breeder of a new variety can obtain an exclusive right to perform certain acts with respect to material [1]  of his protected variety. This exclusive right comes in the form of a certificate which is granted by a body mandated to do so,[2] provided that the variety meets the grant criteria laid down in the law. Upon grant of the certificate, and sometimes ever even before, only the breeder of the protected variety[3] is entitled to (re)produce material from the variety, condition it for the purpose of propagation, offer it for sale, sell it or otherwise put it to market, export it, import it, or stock it for any of these purposes. Subject to a number of exceptions and unless authorization from the breeder is obtained, these acts are thus reserved for the breeder of the protected variety. They are referred to as the ‘reserved acts’.
 
When a third party performs any of these reserved acts, he or she infringes the breeder’s plant variety right.  If the infringer does not voluntarily stop performing his infringing activities, the breeder is entitled, amongst various other available remedies (such as claiming damages), to undertake legal action to have the infringement stopped by means of a permanent or interim injunction, possibly accompanied by additional measures such as customs detention, market recall or even destruction of the illegal plant material.  Most often, action is undertaken against the person who has (re)produced material from the protected variety, but this is not necessarily always the case.

Supermarkets, gardening centers and local florists, beware!
 
With acts like offering for sale, selling and importing material of the protected variety being included in the list of reserved acts, virtually anyone in the distribution chain of the infringing material can be held to infringe the plant variety right covering that material.  Supermarkets, gardening centers, the local florist around the corner and pretty much all other wholesalers and retailers: they all have the duty to respect the plant breeder’s rights, regardless of their size. Good faith is not an excuse.  Some courts have even held that any company specialized in the commercialisation of products which may constitute an infringement of an intellectual property right, is under an obligation to verify by itself that these products do not infringe such a right prior to commercialising them. Thus, a gardening center in Germany, which had been held to infringe a plant breeder’s right for a specific variety of the Calluna Vulgaris species, was also held liable for not having thoroughly verified that the plants it had bought from a Dutch company were not infringing a plant variety right, but instead having relied solely on the declarations and reputation of the Dutch company.[4]  Transport companies, auctions and other intermediaries, beware as well!
 
Plant breeders are also in a position to take action against so-called intermediaries. This includes the possibility to impose an injunction upon the intermediary or to make him disclose information about the origin and distribution networks of the infringing material. Intermediaries are broadly defined in the law as those persons who provide, on a commercial scale, services used in infringing activities.[5] In other words: persons whose services are used by a third party to infringe e.g. a plant variety right.   Examples of such intermediaries are transport companies and auctions.
 
Transport companies generally have the products they transport, e.g. the plants, under their possession for only a limited period of time.  During the transport, the transporter’s only activity is to bridge the geographical distance between point A and point B.  They will normally not be considered as carrying out any of the reserved acts referred to above, since these acts will normally be committed by the consignor at point A resp. the consignee at point B. The actions of the transporter will have no material effect on the subject-matter of the breeder’s exclusive rights. However, the mere fact that they do not themselves infringe a plant variety right does not exonerate transporters from cooperating in the safeguarding of intellectual property rights.  For example, a shipping company who transports a consignment of infringing flowers from Israel to Antwerp, can be ordered to deliver up these flowers because its services are being used by a person illegally reproducing material of the protected flower variety to infringe the breeder’s plant variety right in the European Community, e.g. by importing the infringing flowers into the Community. Knowledge or intent by the intermediary are not required for him to be confronted with an injunction to deliver up the infringing products for destruction.[6]
 
Similarly, auctions who provide a platform for various third parties to trade in e.g. vegetables, may be confronted with a court order to reveal the identity of the person who offered the vegetables for sale or of the person who bought them at the auction.  It is not relevant that the auction is not the owner of the infringing plants, nor that it does not have any other right with respect to the plant material which would allow them to realise its economic value. The mere fact that its services are being used for trading infringing vegetables, is sufficient for the breeder of a protected variety to apply for measures against it.[7]

Intermediaries can even be held liable under general tort law. Thus, in a trade mark case concerning the parallel import of a famous brand of shoes from China into the European Community, a Belgian court[8] held that the handling company responsible for unloading and temporarily storing the goods at Brussels airport, was liable under Article 1384 of the Belgian Civil Code. This Article, which also exists in other countries, such as France, provides that one is not only liable for the damage resulting from one’s own acts, but also for goods which are under one’s custody. Thus far, this provision had mostly been relied upon in cases dealing with goods showing a material defect. However, the court held that it should also apply to goods with legal defects, such as goods infringing an intellectual property right.  Since the handling company had these goods under its custody in its warehouse at Brussels airport, it was held liable.

Importance of contracts
 
This line of case law, as well as the increasing amount of customs actions[9], has prompted several intermediaries to wisely stipulate in their contractual terms and conditions and standard contracts with consignors or consignees that, in the event of an allegation of infringement of an intellectual property right, whether by a private entity or through a customs action, the consignor/consignee will be informed of this event, but that the goods will be abandoned to be taken out of commerce or destroyed, if no reaction is received. Such initiatives have been taken by intermediaries to avoid the type of court proceedings which are increasingly being initiated against them by intellectual property right holders, including plant breeders. However, since court proceedings cannot entirely be avoided, various other clauses have been incorporated into contracts, such as hold harmless clauses, exculpatory clauses, exemption clauses or indemnity clauses, under which the consignor or consignee undertakes to intervene in the proceedings brought against the intermediary and to compensate the latter for any harm or liability arising from these proceedings.
 
Summary
 
Any person who is somehow involved in the chain of commercialisation of plant material, whether as a distributor or a mere intermediary, should put everything into place to safeguard the legitimate interests of plant breeders. They should take into account that various remedies are available to the plant breeder to enforce his rights, not only against those who illegally (re)produce the protected variety, but also against those who commercialise or facilitate the commercialisation of that illegally (re)produced material, regardless of whether they act in good faith. A good contractual framework is highly recommendable.