Guiding Case No. 92

Laizhou Jinhai Seeds Co., Ltd. v. Zhangye Fukai Agricultural Science and Technology Limited Liability Company, A Dispute over Infringement of Rights to a New Plant Variety

GC No.:
92
GC Date of Release:
2017/11/15
GC Batch No.:
17
GC Judge(s):
  • KANG Tianxiang,
  • DOU Guilan,
  • LI Xueliang
Area(s) of Law:
Court(s) of Original Judgment:
Keyword(s):
Attachment:
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Full Text of the Guiding Case

Keyword(s)

Main Points of the Adjudication

According to the NY/T1432-2007 Testing and Determination Standard of the DNA Fingerprinting Method for the Appraisal of Maize Varieties, a standard of the agriculture industry in the People's Republic of China[: if] the number of loci with differences between [the compared] varieties is equal to one, [the compared varieties] are determined to be similar varieties; [if] the number of loci with differences between [the compared] varieties is equal to or greater than two, [the compared varieties] are determined to be different varieties. [In other words, if] the number of loci with differences between [the compared] varieties is equal to one, this is not sufficient to determine that [the compared varieties] are not the same variety. If the number of loci with differences is below two, this, together with other factors, should [be considered to] determine whether the [compared varieties] are different–e.g., increasing the testing loci to carry out additional tests, submitting validated samples for determination, etc. –and the burden of proof is borne by the allegedly infringing party.

Article 16 and Article 17 of the Regulation of the People's Republic of China on the Protection of New Plant Varieties [1]

Basic Facts of the Case

On January 1, 2003, after examination and approval by the Ministry of Agriculture, [2] “Jinhai No. 5”[3] was granted the [status] [4] of a new plant variety in the People’s Republic of China.

The variety number is CNA20010074.2 and the owner of the variety rights is Laizhou Jinhai Crop Research Co., Ltd. [5] On January 8, 2010, the owner of the variety rights granted Laizhou Jinhai Seeds Co., Ltd. [6] (hereinafter referred to as "Jinhai Seeds Company") exclusive authority to produce the hybrid maize variety "Jinhai No. 5" and to operate the [related] business; [it] also authorized Jinhai Seeds Company to bring suit independently and in its own name against [any individuals or entities committing] the infringing act of producing or selling the variety without authorization.

In 2011, Zhangye Fukai Agricultural Science and Technology Limited Liability Company [7] (hereinafter referred to as "Fukai Company") carried out production of maize seeds in the 8th and 11th Communities of Gucheng Village, Shajing Town, Ganzhou District, Zhangye Municipality. On the grounds that Fukai Company's act of producing seeds infringed on [Jinhai Seeds Company's] rights to the new plant variety, "Jinhai No. 5" maize, Jinhai Seeds Company brought suit in the Intermediate People's Court of Zhangye Municipality (hereinafter referred to as the "Zhangye Intermediate Court").

After the Zhangye Intermediate Court accepted [the case], [the court], on September 13, 2011, and based on Jinhai Seeds Company's application, preserved evidence of the allegedly infringing maize planted by the 8th and 11th Communities of Gucheng Village, Shajing Town, by randomly extracting maize ears from live maize plants and sealing them on-site for storage. [On the same day, the court] also entrusted the Maize Seed Testing Center of the Beijing Academy of Agriculture and Forestry Sciences [9] to carry out an appraisal comparing the extracted sample with the standard sample of "Jinhai No. 5" preserved by the Center for the Preservation of New Plant Varieties in the Office for the Protection of New Plant Varieties of the Ministry of Agriculture. The test report issued by the appraisal center concluded that [there was] "no obvious difference" [between the two samples].

The Zhangye Intermediate Court ordered Fukai Company to bear liability for infringement on the grounds that [the company's act] constituted infringement of rights. Unconvinced, Fukai Company appealed to the Higher People's Court of Gansu Province (hereinafter referred to as the "Gansu Higher Court"). After handling [the case], the Gansu Higher Court, on the basis that the facts were not clearly ascertained in the original judgment, ruled to remand [the case] to the Zhangye Intermediate Court for retrial.

After the case was remanded for retrial, the Zhangye Intermediate Court sent a letter to the Maize Seed Testing Center of the Beijing Academy of Agriculture and Forestry Sciences, requesting that [the center] provide a supplementary appraisal or explanation regarding the test report numbered "JA2011-098-006", which had concluded that [there was] "no obvious difference" [between the two samples]. The center replied:

Comparing the test sample with the sample for comparison, Jinhai No. 5, the variety protected by the Ministry of Agriculture, [it was found that] among the 40 loci [used in the DNA fingerprinting test], [the two samples] differed in only 1 locus. Based on the standard [used in] the industry, [the two samples] were determined to be similar, and it was concluded that [there was] "no obvious difference" between the test sample and the sample for comparison. This conclusion should be interpreted as follows: according to the standard [used in] the DNA fingerprinting test, [the existence of] differences in at least two loci [compared between samples] is a sufficient condition to determine that two samples are different. [If] the number of loci with differences [between compared samples] is less than two, this shows that, according to the standard, there is no sufficient condition for determining that the two samples are different. Therefore, it could not be concluded that the test sample and the sample for comparison were different from each other.

After [the test report] was cross-examined, Jinhai Seeds Company did not have objections to the test report. Fukai Company argued that [the fact that] the test report stated clearly that the number of loci with differences [between compared samples] was "1" indicated that it, the defendant, had not infringed on the [the plaintiff's] rights and, therefore, that the test report could not be accepted as evidence in this case.

Results of the Adjudication

By the (2012) Zhang Zhong Min Chu Zi No. 28 Civil Judgment,[10] the Intermediate People’s Court of Zhangye Municipality decided: [the court] rejects the litigation requests of Laizhou Jinhai Seeds Co., Ltd.  Unconvinced, Laizhou Jinhai Seeds Co., Ltd. appealed.  On September 17, 2014, the Higher People’s Court of Gansu Province rendered the (2013) Gan Min San Zhong Zi No. 63 Civil Judgment: [11]

  1. [The court] revokes the (2012) Zhang Zhong Min Chu Zi No. 28 Civil Judgment [rendered by] the Intermediate People’s Court of Zhangye Municipality.
  2. [The court orders] Zhangye Fukai Agricultural Science and Technology Limited Liability Company to immediately cease the act of infringing on Laizhou Jinhai Seeds Co., Ltd.’s rights to the new plant variety, [Jinhai No. 5,] and to pay Laizhou Jinhai Seeds Co., Ltd RMB 500,000 as compensation for economic losses.

Reasons for the Adjudication

In the effective judgment, the court opined: [12] where [an entity or individual], without permission from the owner of the variety rights, produces or sells for commercial purposes the propagation material of a [new plant] variety for which rights have been granted, this is an act of infringing on the rights to the new plant variety.  To determine whether a new plant variety’s propagation material that an actor produces or sells is the propagation material of the variety for which rights have been granted, the core [consideration] lies in whether the features and characteristics of the new plant variety cultivated by using [the actor’s] propagation material are the same as the features and characteristics of the variety for which rights have been granted.

In this case, entrusted by the people’s court to [carry out] an appraisal, the Maize Seed Testing Center of the Beijing Academy of Agriculture and Forestry Sciences issued its appraisal opinion, which showed that there was “no obvious difference” between the test sample and the sample for which rights have been granted but that [there was/were] difference[(s)] in one locus among the 40 loci used for comparison in the DNA fingerprinting test.  According to the NY/T1432-2007 Testing and Determination Standard of the DNA Fingerprinting Method for the Appraisal of Maize Varieties, a standard of the agriculture industry in the People’s Republic of China: [if] the number of loci with differences between [the compared] varieties is equal to one, [the compared varieties] are determined to be similar varieties; [if] the number of loci with differences between [the compared] varieties is equal to or greater than two, [the compared varieties] are determined to be different varieties.  According to the [above-mentioned] standard [used in] the DNA fingerprinting test, [the existence of] differences in at least two loci is used as the standard for determining whether two varieties are different.  [In other words, if] the number of loci with differences between [the compared] varieties is equal to one, this is not sufficient to determine that [the compared varieties] are not the same variety.

There is no direct correspondence between the loci [used in] DNA testing and [those used in] DUS (field observation testing).  If the number of loci with differences is below two, this, together with other factors, should [be considered to] determine [whether the compared varieties are different]–e.g., increasing the testing loci to carry out additional tests, submitting validated samples for determination, etc.  At that point, the burden of proof should be borne by the allegedly infringing party.  The granting of the rights for the new plant variety [involved in this case] was based on DUS testing and not on an appraisal of DNA fingerprints [such as the one] used by the laboratory [in this case].  Therefore, if Zhangye Fukai Agricultural Science and Technology Limited Liability Company had submitted contrary evidence proving that the DUS testing had been passed, [meaning that] the features and characteristics of the allegedly infringing [variety cultivated by using Fukai Company’s] propagation material and the features and characteristics of the variety for which rights have been granted were different, the aforementioned conclusion could then be reversed.

According to the ascertained facts, appellee Fukai Company, after [the court's] clarification, [13] still could not provide contrary evidence, nor did it have the conditions to [go through] the DUS testing.[14] Article 2 Paragraph 1 of the Several Provisions of the Supreme People's Court on Issues Concerning the Specific Application of Law in Handling Disputes over Infringement of Rights to New Plant Varieties provides:

Where [an entity or individual], without permission from the owner of the variety rights, produces or sells for commercial purposes the propagation material of a variety for which rights have been granted or repeatedly uses for commercial purposes the propagation material of a variety for which rights have been granted in the production of the propagation material of another variety, a people's court should determine that [this] is an infringement of the rights to the new plant variety.

Therefore, according to the [aforementioned provision], the court should determine that Fukai Company's act constituted infringement of [the plaintiff's] rights to the new plant variety[, Jiahua No. 5].

[Finally, the court addressed] the issue of liability for infringement.  Based on Article 6 of the Several Provisions of the Supreme People’s Court on Issues Concerning the Specific Application of Law in Handling Disputes over Infringement of Rights to New Plant Varieties, Fukai Company should bear civil liability [by which it is required] to cease its infringing [act] and to pay compensation for the losses [caused by its infringement].  Since the infringing act in this case occurred three years ago, the two parties [to this case] could not adduce sufficient evidence on the losses suffered by the party whose rights were infringed due to the infringement, nor on the profits obtained by the infringer as a consequence of the infringement.  The court ascertained that the number of planting mu [16] of the infringing variety was 1,000 mu.  Considering various factors comprehensively, including the time, nature, and circumstances of the infringing act, [the court], in its discretion, determined that the compensation [should] be RMB 50,000 and ordered [Fukai Company] to cease its infringing act.

 

Endnotes

*      The citation of this translation of this Guiding Case is: 《莱州市金海种业有限公司诉张掖市富凯农业科技有限责任公司侵犯植物新品种权纠纷案》 (Laizhou Jinhai Seeds Co., Ltd. v. Zhangye Fukai Agricultural Science and Technology Limited Liability Company, A Dispute over Infringement of Rights to a New Plant Variety), Stanford Law School China Guiding Cases Project, English Guiding Case (EGC92), Jan. 22, 2018 Edition, http://cgc.law.stanford.edu/guiding-cases/guiding-case-92.  The original, Chinese version of this case is available at 《最高人民法院网》(www.court.gov.cn), http://www.court.gov.cn/zixun-xiangqing-74142.html.  See also 《最高人民法院关于发布第17批指导性案例的通知》 (The Supreme People’s Court’s Notice Concerning the Release of the 17th Batch of Guiding Cases), issued on and effective as of Nov. 15, 2017, http://rmfyb.chinacourt.org/paper/images/2017-11/25/03/2017112503_pdf.pdf.

This document was primarily prepared by Dr. Mei Gechlik, with research support from Zhaoyi Song; it was finalized by Peter Witherington, Dimitri Phillips, and Dr. Mei Gechlik.  Minor editing, such as splitting long paragraphs, adding a few words included in square brackets, and boldfacing the headings, was done to make the piece more comprehensible to readers; all footnotes, unless otherwise noted, have been added by the China Guiding Cases Project.  The following text is otherwise a direct translation of the original text released by the Supreme People’s Court.

[1]           《中华人民共和国植物新品种保护条例》 (Regulation of the People’s Republic of China on the Protection of New Plant Varieties), passed and issued by the State Council on Mar. 20, 1997, effective as of Oct. 1, 1997, amended two times, most recently on July 29, 2014, effective as of July 29, 2014, http://www.gov.cn/gongbao/content/2016/content_5139623.htm.

[2]           The name “农业部” is translated herein as “Ministry of Agriculture” in accordance with the translation used on the English website of the Ministry of Agriculture of the People’s Republic of China, http://english.agri.gov.cn.

[3]          The name “金海5号” is translated herein as “Jinhai No. 5” in accordance with the product logo used on Laizhou Jinhai Seeds Co., Ltd.’s website, http://www.jinhai.net.cn.

[4]           The original text reads ““金海5号”被授予[...]植物新品种权” (““Jinhai No. 5” was granted the rights to a new plant variety”), whereas, “Jinhai No. 5” being a plant variety, the “status of a new plant variety” was likely meant.

[5]           The name “莱州市金海农作物研究有限公司” is translated here literally as “Laizhou Jinhai Crop Research Co., Ltd.”  This company does not appear to have an official English name.

[6]           The name “莱州市金海种业有限公司” is translated herein literally as “Laizhou Jinhai Seeds Co., Ltd.”, with “Jinhai Seeds” based on the logo shown on the company’s website, http://www.jinhai.net.cn.  This company does not appear to have an official English name.

[7]           The name “张掖市富凯农业科技有限责任公司” is translated herein literally as “Zhangye Fukai Agricultural Science and Technology Limited Liability Company”.  This company does not appear to have an official English name.

[8]           The name “玉米种子检测中心” is translated herein literally as “Maize Seed Testing Center”.  This entity does not appear to have an official English name.

[9]           The name “北京市农科院” is translated herein as “Beijing Academy of Agriculture and Forestry Sciences” in accordance with the English name appearing on the institution’s website, http://www.baafs.net.cn.

[10]           The first-instance judgment has not been found and may have been excluded from publication.

[11]           The second-instance judgment has not been found and may have been excluded from publication.

[12]           The original text does not specify which court opined.  Given the context, this should be the Higher People’s Court of Gansu Province.

[13]           For a discussion of the court’s role in providing parties to a case with clarifications, see, e.g., 迟晓然 (CHI Xiaoran), 法官的释明权在实际中的应用 (The Application of Judges’ Power of Clarification in Practice), 《法律图书馆》(law-lib.com) (Oct. 16, 2012), http://www.law-lib.com/lw/lw_view.asp?no=22328.

[14]           It is not clear from the Guiding Case what these conditions were.

[15]           《最高人民法院关于审理侵犯植物新品种权纠纷案件具体应用法律问题的若干规定》 (Several Provisions of the Supreme People’s Court on Issues Concerning the Specific Application of Law in Handling Disputes over Infringement of Rights to New Plant Varieties), passed by the Adjudication Committee of the Supreme People’s Court on Dec. 25, 2006, issued on Jan. 12, 2007, effective as of Feb. 1, 2007, http://www.npc.gov.cn/npc/xinwen/fztd/sfjs/2007-01/17/content_356715.htm.

[16]           The original text reads “亩” (“mu”), which is a Chinese unit of area.  One mu is equal to approximately 667 square meters. See, e.g., 农业统计(9)(Agricultural Statistics (9)), 中华人民共和国国家统计局 (National Bureau of Statistics of the People’s Republic of China) (Jan. 5, 2018, 4:39 PM), http://www.stats.gov.cn/tjzs/cjwtjd/201308/t20130829_74323.html.