Is there a relationship between PVP Law and agribusiness?

In the field of intellectual property, it is common to think in trademarks, patents and computer programs as its great representatives. Although that is true, there is a specific area that are both agribusiness and IP subject we are required to understand: the cultivated variety, or just “cultivar”.

Brazilian IP Law bars the protection of natural living beings, in whole or in part, and biological material, when found in nature or isolated, from patent system. Such provision was an option for each signatory of both Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement) and International Convention for the Protection of New Varieties of Plants (the UPOV Convention from 1978). In this regard, plant variety such as sugarcane, cotton, banana, orange and corn, whose harvests were particularly responsible for increase in 3,81% the Brazilian agrobusiness GDP in 2019, have a sui generis protection system.

The Brazilian Plant Variety Protection Law (Law No. 9,456/1997) regards several criteria in order to distinguish the cultivar use and reproduce from another kind of plant. To do so, the article 10 presents actions that are not deemed to be breeder’s right infringement. For instance, a person who stores and plants seeds for his/her own use on his/her premises or on the premises of third parties shall not be considered a PVP infringer. Using the plant as a source of variation in genetic improvement or in scientific research is another exception.

A special treatment is given to small rural producers (familiar agriculture), who are allowed to multiply seeds for donation or exchange in dealings exclusively with other small rural producers, under programs of financing or support authorised by the Government.

But such general provisions do not apply to the cultivation of sugarcane. A specific list of provisions regulates cultivar. The producer who wants to multiply vegetative propagating material, for example, is obliged to secure authorisation from the owner of the right to the plant variety, even for his/her own use. It does not apply just in case the rural property the producer has possession or ownership has less than four modules, according to Law No. 4,504/1964.

To regulate and manage applications for protection, Brazilian PVP Law established the National Plant Varieties Protection Service (SNPC), under the authority of the Ministry of Agriculture, Livestock and Food Supply (MAPA). All responsibilities of this agency are listed at article 3 of Decree No. 2,366/1997, that implements regulations of the Plant Variety Protection Law.

Under article 9 of UPOV Convention, Brazilian PVP Law provides restrictions in the exercise of breeder’s right in two main cases: compulsory license and restricted public use.

The first restriction ensures the availability of the plant variety on the market, at reasonable prices, when the maintenance of a regular supply is being unduly hampered by the title holder. Any part having legitimate interest may request this measure if there is evidence that the requester has attempted, unsuccessfully, to obtain a voluntary license from the holder of the cultivar.

Conversely, the second restriction is declared ex officio by the MAPA, based on a technical opinion issued by the competent agencies. Article 36 of Brazilian PVP Law allows restricted public use declaration in case of national emergency, abuse of economic power or other circumstances of extreme urgency. The cultivar may be exploited directly by the Federal Union or by third parties designed by it.

According to article 6 of the law its provisions also applies to applications for PVP originating abroad and filed within the country by a natural or legal person whose protection is ensured by a treaty effective in Brazil. It is important to note that the person domiciled abroad shall appoint and maintain an agent with power of attorney domiciled in Brazil to represent him/her in dealings with the SNPC.

In addition, the term of protection under Brazilian law is basically the minimum settled at UPOV Convention: fifteen years. For vines and fruit, forest and ornamental trees, including their rootstock, the period is eighteen years. Both periods begin in the date of grant of the Provisional Certificate of Protection issued by SNPC, and at the end of such term the cultivar shall pass into the public domain.

The law also ensures that any person who infringes the rights of a protected plant variety shall be bound to indemnify the title holder as well as shall be deemed guilty of the crime of infringement of the rights of the breeder.

The increasing of agricultural activities depends on plant variety protection for planting and harvesting. Consequentially, nowadays intellectual property has a tight relationship and is becoming a more and more important issue for agribusiness.

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Patent law developments in China

From last year, with the improvement of China’s industrial technological level, as well as tremendous changes in the international competitive environment, China’s patent protection system and patent protection practices were also changed and adapted to the same. With an imminent drug patent link system, patent application ability is being continuously improved, the patent judicial protection system is being further perfected, the amount of infringement compensation has obviously risen, and the punitive damage standard of deliberate infringement is being strongly supported.

The number of patent litigation cases has increased significantly. In 2017, Chinese courts received 213,480 first-instance intellectual property (IP) cases and closed 202,970 cases in total, a rise of 46.04% and 43.13%, respectively from 2016, in which 16,044 cases related to patent rights. In the same period, the IP courts in Beijing, Shanghai and Guangzhou accepted a total of 26,698 IP rights (IPR) cases in the first and second instances, and concluded 22,631 cases. Beijing Intellectual Property Court accepted 1,161 patent administrative litigation cases, an increase of 5.2% on the same period the previous year, and closed 753 cases, an increase of 27.2% on the previous year.

With a tremendous scale in creation and application of various types of IPR, and enhanced values of some IPR, there are IP disputes that are prone to occur frequently, while the supply side of non-litigation dispute resolution mechanisms is insufficient, so that the rigid demand for judicial protection is continuously on the rise.

The IP tribunals have been successively founded to make the patent judicial trials more specialized. After the Supreme People’s Court (SPC) summarized and promoted the practical experience of IP courts in Beijing, Shanghai and Guangzhou last year, the establishment of IP-specialized trial tribunals was approved for cross-regional jurisdiction in 11 cities including Nanjing, Suzhou, Wuhan, Chengdu, Hangzhou, Ningbo, Hefei, Fuzhou, Jinan, Qingdao and Shenzhen to enhance the unification of standards, scales and quality of verdict, and provide better verdict guidelines for the creation and application of IP.

The technical investigator system has been introduced in patent litigation to make patent infringement litigation trials more specialized. In patent case trials, the court often needs to identify a number of technical facts, and conduct in-depth research and comparison of technical solutions. Overcoming complex technical obstacles in the identification of facts is a key point that has long affected enhancement of the quality and efficiency of trials.

In response to this problem, Chinese courts explored establishing a system where technical investigators neutrally perform duties to assist in the trial, and appointed a number of technical investigators from multiple channels such as enterprises and institutions, universities, scientific research institutions, national patent agencies, and patent agent associations. Thus, the “four-in-one” mechanism was jointly participated in by professional people’s jurors, technical investigators and expert assistants, and judicial appraisal agencies for identifying technical facts were constructed to assist judges in cracking technical doubts and clearing technical obstacles to an impartial trial.

The patent link system has been established in view of the fact that patent infringement litigations taking place during the listing approvals of drugs will have certain impact on the approval of generic drugs. In view of the fact that drugs in the process of listing approval may not be examined for patent infringement, drug research enterprises have to resort to legal means to restrain infringements after the listing of drugs by a competitor. However, restricted by the drawbacks of small infringement damage amounts and difficult enforcement under the current patent system in China, such right protections are usually almost in vain.

As stipulated in the Opinions on Deepening the Reform of the Review and Approval System to Encourage the Innovation of Drugs and Medical Instruments issued by the central government, in order to protect the legitimate rights and interests of patentees, reduce the patent infringement risks of generic drugs, and encourage the development of generic drugs, the establishment of a drug review and approval, and drug patent link system, was explored. When an applicant for drug registration submits an application for registration, the applicant must state the relevant patent involved as well as its ownership status, and notify the relevant drug patentee within the specified time limit.

Where there is a dispute over the patent right, the parties concerned may file a lawsuit with the court without aborting the technical review of the drugs during the period. For drugs that have passed technical review, the Food and Drug Supervision Department should make a decision on whether to approve the listing according to the court’s effective judgment, ruling or mediation.

If the effective judgment, ruling or mediation is not obtained within a certain time limit, the Food and Drug Supervision Department may approve the listing. According to the above-mentioned provisions, after the receipt of the notification from the drug listing applicant, the relevant drug patentee who believes that its patent right has been infringed may bring a patent infringement lawsuit to the judicial authority, which to a large extent discourages the generic drug manufacturer to employ the “Bolar case exception” to apply for drug listing before the drug administration department. The establishment and improvement of the drug patent link system may also significantly reduce the time for the drug patent expiration and the drug listing in the near future.

The patent infringement compensation system has been further perfected, which greatly enhances compensation amounts. There are always problems such as difficult investigations and evidence collection, and low amounts of compensation in patent infringement. According to the current patent law, the compensation first follows the “bridge principle”, which is to bridge all the losses of the patentee, and is not punitive to the infringer.

The revised patent law is expected to stipulate that, where the patent right is intentionally infringed, the court may raise the amount of compensation to a maximum of three times, according to the circumstances, scale and damage incurred. As long as the patentee can prove that the competitor is present with intentional infringement (for example the competitor has infringed once and lost the case), a punitive damage judgment may be made against the infringer.

The people’s court may determine the amount of compensation to be more than double and less than three times, based on the above-mentioned method, according to the circumstances, scale and damages incurred from the infringement.

The amount of compensation should also include the reasonable expenses of the rights holder incurred for stopping the infringing act. The amount of compensation should also include reasonable expenses paid by the rights holder to restrain the infringement act.

The Patent Infringement Guidelines (2017), issued by Beijing Higher People’s Court, combine practical needs with the idea of punitive damages for “malicious infringement” behaviour.

The guidelines set out that, where it pertains to malicious infringement, it is possible to support the plaintiff’s appeal within the statutory compensation limit, or determine the amount of compensation at a higher level.

In the judicial practice of patent infringement litigation, compensation for damages to the patentee has increased substantially. For example, in the case of Beijing Watchdata System Company v Hengbao Co Ltd for the infringement of patent rights, Beijing Intellectual Property Court judged that the defendant be compensated for economic losses of RMB49 million (US$7.1 million) and legal fees of RMB1 million, which is the highest amount of damages ever judged since the establishment of the court, and for the first time explicitly supports the time charges of an attorney in the judgment.

Also, in the case of LG v NEC Corporation for the patent for invention titled “Spindle Motor”, Beijing Intellectual Property Court supported the right holder’s compensation request and reasonable expenditure of nearly RMB4 million. In Qingdao, CO-NELE’s case for the patent for a utility model titled “high-efficiency transmission device for planetary stirrer”, supported the rights holder’s compensation request and reasonable expenditure of RMB3.6 million.

In the application of statutory compensation cases, a discretionary compensation mechanism that conforms to the law of the market and meets the requirements for protection of patent rights has been gradually established, so that the amount of compensation for damages matches the market value of the patent right, so as to adapt to the contribution rate of the patent right to the profit of the infringement behaviour.