Chilean Court Awards US$4.4 Million for Plant Variety Rights Infringement

On November 14, 2012, a trial court in Talagante, a province in the Santiago Metropolitan Region in central Chile, ordered two agricultural companies to pay nearly US$4.4 million for infringing the plant variety rights of José Domingo Godoy Huidobro, the breeder of a popular plum variety known as Constanza. Sentencia, Rol N°. 1155-2010 (Segundo Juzgado de Letras de Talagante Nov. 14, 2012). In the course of a 106-page opinion, Judge Gerardo Mena also ordered the defendants to deliver to Godoy more than 27,000 trees and plants of the protected variety, which the court found were being unlawfully exploited by the defendants.

PLANT VARIETY RIGHTS & THE UPOV SYSTEM. In 1961, the entry into force of the International Convention for the Protection of New Varieties of Plants (the “UPOV Convention”) established a form of intellectual property protection for new varieties of sexually reproducing and tuber-propagated plants that are distinct, uniform, and stable. The purpose of plant variety protection (also known as plant breeders’ rights) is to promote and incentivize the creation of new plant varieties and to encourage their introduction in countries that recognize and protect the rights of plant breeders.

CHILE’S PLANT VARIETY RIGHTS REGIME. In 1995, Chile became a signatory to the 1972 and 1978 Acts of the UPOV Convention. See UPOV Notification No. 49, Accession by the Republic of Chile. Chile had previously enacted a plant variety rights law, Ley 19.342 sobre los Derechos de Obtentores de Nuevas Variedades Vegetales, and an implementing regulation, Decreto Nº 373 de 1.996, Reglamento de Ley Nº 19.342, which are consistent with the 1978 Act. The plant variety rights regime is administered by the Agriculture and Livestock Service (Servicio Agrícola y Ganadero) of Chile’s Ministry of Agriculture. Among other things, Ley 19.342 grants the breeder of a variety inscribed in Chile’s Registry of Protected Varieties the exclusive rights, for a limited period, to multiply, produce, offer for sale, import, or export certain materials of the variety. Those exclusive rights are subject to a number of exceptions, including a statutory right for other breeders to use the protected variety in their breeding operations to create new and distinct varieties, and the rights to use a protected variety for experimental uses or private, noncommercial uses.

THE VARIETY. The distinguishing characteristics of Constanza plums include a pleasing taste, large size, late harvest, slow maturation, and reduced post-harvest dehydration. Because of these prized traits, the Constanza variety commands a premium price in the domestic and international fruit markets. Constanza plums are exported throughout Latin America, as well as to Europe, Asia, and the United States.

REGISTRATION OF THE VARIETY. In the Talagante court, Señor Godoy testified that he developed the Constanza variety over a period of 25 years. This process involved crossing multiple plum varieties, selecting the progeny, and repeating the process many times until a uniform and true-to-type plant of the desired genetic combination was achieved. Thereafter, to ensure that the genetic makeup did not change, the plants were reproduced only asexually–through grafting and budding.

Señor Godoy applied to the Agriculture and Livestock Service for registration of Constanza as a protected variety. Sociedad Agrícola Unión Limitada, one of the firms later sued by Godoy for plant variety rights infringement, opposed his attempt to register the variety, contending that it was already growing a plum variety with the same characteristics as Constanza. The Service rejected Agrícola Unión’s opposition, holding that it failed to establish the “legitimate provenance” of the supposedly preexisting plum variety and finding that the plum trees grown on Agrícola Unión’s plantations “corresponded to the Constanza plum variety.” The Agriculture and Livestock Service provisionally registered the Constanza plum variety in the Register of Protected Varieties in the name of Señor Godoy in 2003. The registration was made definitive in 2006.

SEÑOR GODOY’S CLAIMS. Señor Godoy filed a civil action against Agrícola Unión, Sociedad Fantuzzi y Villasante Ltda., and their owners. Claiming that the defendants were reproducing, selling, and exporting plants and fruit of the Constanza variety without his permission, Godoy asked the court to order them to pay him US$ 60 million in restitution. In addition, proceeding in rem (acción reivindicatoria) against the allegedly unlawfully produced plum trees and fruit, Godoy sought a court order directing the defendants to deliver possession of those trees and fruit to him.

THE COURT’S RULING. The defendants challenged Godoy’s ownership of the Constanza variety, suggesting among other things that he was not its breeder. The court dismissed this argument and pointed out that a plant variety right “is not acquired by the fact of having bred the variety, but by the fact of inscribing it in the registry.” Based upon expert testimony, the SAG’s 2006 determination, and molecular analyses of the materials planted on the defendants’ plantations, the court also rejected the defendants’ contention that the plum variety they grew was not of the Constanza variety but of another, unregistered variety purportedly known as “Late Angelino.” The court observed that the defendants had no “license from the owner to produce and market the Constance variety, this being the only means provided by law for anyone other than the right holder to use, enjoy and dispose of the variety….”

The court wrote that a plant variety right under Ley 19.342 “possesses the same characteristics as property in general,” and therefore “is a right of dominion” (i.e., a jus in rem). Among the consequences of the variety owner’s having a right of dominion over the variety are that–

1. The plant variety right “carries a correlative duty that affects all others, which is to refrain from using or multiplying the variety without permission of the owner;”
2. The owner of the variety is also the “owner of the fruits that it produces;”
3. The variety owner may pursue an in rem action (acción reivindicatoria) for recovery of unlicensed trees and fruit of the variety; and
4. The civil law doctrine of accession–according to which ownership of a thing includes by accession the ownership of everything that it produces or is united with it (see Código Civil de Chile Art. 643, et seq.)–is inapplicable in the context of protected plant varieties.

Finding the defendants liable for plant variety rights infringement, the court directed the defendants to provide restitution to Señor Godoy in the amount of US$4,391,010—representing the total of US$1,891,512 in unlawful profits earned by the defendants during the period 2004-2007, and US$2,499,498 in unlawful profits during the period 2008-2011. The court also ordered the defendants to deliver to Godoy 27,000 trees and plants that the court found were being unlawfully exploited.

NOTES: The following notes provide additional information regarding the Constanza variety, the status of plant variety rights in Chile, and differences between the 1978 and 1991 Acts of the UPOV Convention.

1. UPTO Proceedings regarding the Constanza Variety. The Constanza plum variety is protected in the United States by U.S. Plant Patent No. 17,637. This patent was the subject of a reexamination request filed in the U.S. Patent and Trademark Office. The requesting party contended that the invention was anticipated by Godoy’s prior plant variety rights application in Chile, and because farmers in Chile had grown the variety for years prior to Godoy’s plant patent application. In a decision dated March 16, 2012, the USPTO denied the request for inter partes reexamination. See Plum Tree Named “Constanza,” Application/Control No. 95/001,942 (USPTO Mar. 16, 2012).

2. 

   Controversy Concerning Chile’s Accession to 1991 UPOV Act. Following its accession to the 1978  UPOV Act, Chile executed free trade agreements with the United States, the European Union, and Japan, all of which required the country to agree to accede to the 1991 UPOV Act. In 1998, then-President Michelle Bachelet presented to the national congress a proposal for accession to the 1991 Act. See Mensaje Nº 1435-356 (Mar. 3, 2009).  In 2011, Chile’s Senate approved the proposed accession. See Chilean Senate approves plant variety protection convention, FreshFruitPortal.com (May 18, 2011). However, a group of dissenting senators filed an action in the country’s Constitutional Court, contending that accession to the 1991 UPOV Act–which, in many ways, strengthens the exclusive rights of plant breeders over their novel varieties–would violate a number of guarantees under the national constitution. The court challenge was the subject of a wide-ranging public consultation involving representatives of the agribusiness industry, leaders of indigenous farmer groups, and a variety of nongovernmental organizations. In a June 24, 2011 decision that spanned 158 pages, the Constitutional Court found no constitutional impediment to Chile’s accession to the 1991 UPOV Act. Requerimiento de 17 Senadores respecto de la constitucionalidad del Convenio Internacional para la Protección de Obtenciones Vegetales (UPOV-91).

3. Differences Between the 1978 UPOV Act and the 1991 UPOV Act. The Talagante court based its decision in favor of Señor Godoy on Chilean law reflecting the provisions of the 1978 UPOV Act. As noted above, there are several important differences between the 1978 and 1991 Acts, some of which include the following:

• The 1978 and earlier UPOV Acts do not require that the system be applied to all botanical genera and species, but allows each member state to establish plant breeders rights protection only for crop genera that they consider important.  The 1991 Act requires existing member states to protect all plant genera and species five years after adhering to the 1991 Act.
• The period of protection under the 1978 Act is a minimum of 18 years for trees and vines, and 15 years for other plants. Under the 1991 Act, these periods are extended to 25 years for trees and vines and 20 years for all other plants.
• The 1978 Act gives grants the breeder of a novel variety the exclusive rights of commercial marketing, offering for sale, and marketing of propagating material of a protected variety. The 1991 Act adds to those rights the exclusive rights of exportation, importation, stocking, and processing the protected material. The 1991 Act also extends these protections to a variety’s harvested material and to products made directly from the harvested material.
• The 1978 Act allows anyone, without the breeder’s permission to use a protected variety as a source of initial variation to develop further varieties, which are free of the rights of the breeder of the original protected variety. The 1991 Act extends the breeder’s exclusive rights to varieties that have been essentially derived from the protected variety.
• The 1978 Act does not forbid farmers to save and exchange part of their harvest and to use seed from that harvest for planting. The 1991 Act allows member states, “within reasonable limits and subject to the safeguarding of the legitimate interests of the breeder, [to] restrict the breeder’s right in relation to any variety in order to permit farmers to use for propagating purposes, on their own holdings, the product of the harvest which they have obtained by planting, on their own holdings, the protected variety.”

by Shawn N. Sullivan, Dec. 14, 2012.