In Spain, Plant Breeders’ Rights Criminal Cases Draw Fines, Jail Terms, Acquittal

In several separate judicial proceedings this year, Spanish courts have handled prosecutions for alleged criminal infringements of plant breeders’ rights. This article briefly reviews five cases in which courts imposed fines and prison terms, and one case upholding a finding of innocence.

PLANT BREEDERS’ RIGHTS IN SPAIN. In Spain, breeders of certain novel plant varieties that are distinct, uniform, and stable may apply for a sui generis form of intellectual property protection for their creations. A breeder may elect between the national Spanish plant breeders’ rights regime, ¹ which is administered by the Spanish Plant Variety Office, a unit of Spain’s Ministry of Agriculture, Food, and Environment, or the European Community plant variety rights regime, ² which is administered by the Community Plant Variety Office (CPVO). Each system grants the owner of a registered variety certain exclusive rights within the relevant territory, including the rights, with respect to materials of the protected variety, to–

• produce or reproduce (multiply);
• condition for the purpose of propagation;
• offer for sale;
• sell or otherwise market;
• export;
• import; and
• stock for any of the above purposes.

Under both regimes, the breeder’s exclusive rights are subject to several exceptions, one of which allows farmers to use for planting, on their own farms, seed saved from the harvest of a prior crop planted on their own farms. ³

CRIMINAL INFRINGEMENT OF PLANT BREEDERS’ RIGHTS UNDER SPANISH LAW. The Spanish plant breeders rights regime and the Community plant variety rights regime create rights that are civil in nature. However, Spain’s Penal Code also protects those rights with criminal sanctions. Penal Code Article 274.3 provides that–

Whoever, for agricultural or commercial purposes, without the consent of the owner of a new plant variety title and being aware of its registration, produces or reproduces, conditions with a view to production or reproduction, offers on sale, sells or otherwise commercializes, exports, imports or possesses, for any of the purposes mentioned, plant material for reproduction or propagation of a protected plant variety pursuant to the laws on protection of new plant varieties shall be punished…. ⁴

A companion provision of the Penal Code, Article 274.4,  provides that it is a separate crime for one to engage in an act described in Article 274.3 “using plant material for reproduction or for propagation that does not belong to the variety stated, under the denomination of a protected plant variety.” ⁵ Articles 274.3 and 274.4 were added to the penal code in Spain’s Organic Law 15/2003, dated November 25, 2003. ⁶ The maximum period of incarceration for a violation of either article is two years.

All six of the cases discussed below involve plant varieties protected either by Community plant variety rights or by Spanish plant breeders’ rights. Several of the cases also featured the involvement of Gestión de Licencias Vegetales, A.I.E (GESLIVE), a Madrid-based association of owners of plant breeders’ rights.

VALLADOLID. According to a press release by GESLIVE, on September 10, 2012, a criminal court in Valladolid sentenced a representative of a grains company to six months in prison for reproducing, commercially producing, conditioning, and commercializing seed of three protected barley varieties (VOLLEY, BLANCHE, and HISPANIC) and one protected wheat variety (APACHE) without authorization from the owners of the varieties. ⁷ The court also imposed a fine of €2,160.

LLEIDA. On July 9, 2012, an appellate court in Lleida upheld a lower court’s judgment acquitting  Movigrup S.A. and its manager of violating article 274.3. ⁸ In its judgment, the court explained that in an October 6, 2005 search of Movigrup’s premises, officers of Spain’s specialized environmental police unit SEPRONA found quantities of barley and wheat seed of protected varieties. The court of first instance held that Movigrup was lawfully engaged in two separate activities: (1) manufacturing of animal feed; and (2) conditioning and cleaning of seed for subsequent planting by farmers who were exercising their right, as an exception to the breeders’ exclusive rights, to plant their own farm-saved seed. That court judged credible the defendant’s testimony that the seed seized by SEPRONA belonged to a farmer whom the defendant identified by name. Therefore, the court of first instance acquitted the defendant. The prosecution appealed, but the appellate court wrote that it could not substitute its judgment regarding the defendant’s credibility for that of the judges who had actually been present for the defendant’s testimony. Accordingly, the court upheld the acquittal.

BURGOS. A court in the city of Burgos sentenced a seed warehouse manager to a suspended prison term of six months, plus substantial fines, for criminally infringing plant breeders’ rights. ⁹ In this case, SEPRONA, acting on a complaint by GESLIVE, inspected the defendant’s warehouse and found 1500 kilograms of barley seed in 50 kg. bags, that had been treated with insecticides but was unlabeled. An analysis demonstrated that 90% of the seed was of the GRAPHIC variety; the varietal identity of the remaining 10% undetermined.  SEPRONA also discovered 4,000 kilograms of seed of the protected VANESSA barley variety. In a separate location under the defendant’s control, SEPRONA discovered a further 10,000 kilograms of GRAPHIC seed, which was treated but unlabeled.

In his defense, the defendant argued that he was an authorized seed processor and the seized seed belonged to several farmers who had brought it to the defendant’s place of business for processing so that the owners could use it for planting. However, none of the seed in question appeared in the defendant’s receipts or other records. Evidently there was no proof that the seeds belonged to any of the defendant’s customers. The court concluded that the defendant had warehoused the seed with knowledge that it was of protected varieties, and with the purpose to sell the seed for planting.

GRANOLLERS. A GESLIVE press release reported that on February 29, 2012, a court in this Catalonian city near Barcelona imposed a six month prison term, a €1,080 fine, and a €5,709 restitution award against a warehouse manager whom the court found to have infringed plant breeders’ rights in two protected barley varieties (GRAPHIC and CULMA) and one protected wheat variety (ISENGRAIN). ¹⁰ Although the court’s judgment provides few details, it does conclude that the defendant possessed 21 pallets of protected barley seed with the intent to sell the seed without the variety owner’s knowledge or consent.

CUENCA. On February 22, 2012, in an appeal from a sentence imposed under Penal Code Section 274.3, an appellate court in the Province of Cuenca  ¹¹ affirmed a one-year prison term, a fine of €5,475, and restitution awards of €19,506 to GESLIVE and €3,960 to Marisa S.A. (the owner of one of the registered varieties). The defendant had been found in possession of approximately 280,000 kilograms of conditioned and bagged barley seed. Laboratory tests showed that the seed was of several protected varieties, including VOLLEY, HISPANIC, and ESTEREL.

The court of first instance concluded that the defendant had prepared and stored the seed for distribution and sale to farmers at prices below the cost of legitimate seed of those varieties. The appellate court affirmed this conclusion, observing that the defendant’s conduct was not shielded by any applicable exception to the variety owner’s exclusive rights. According to the court, the defendant could not have been conditioning and saving seed from his own harvest for planting his own fields, because the amount of seed seized was 255,970 kilograms more than what he would have needed for planting. The court also rejected the idea that the defendant was merely providing conditioning services to other farmers exercising their right to plant farm-saved seed. According to the court, the defendant’s operations complied with none of the legal requirements applicable to such service providers. ¹²

SEVILLE. On January 17, 2012, a court in the Andalusian capital sentenced two individuals to six-month jail terms and fines of €2,160 each for unlawfully reproducing, in an 8,000 square meter greenhouse, three protected carnation varieties known as HILNATA, HILNATWI, and WHITE LIBERTY. ¹³

In their defense, the defendants contended that they had not known that the carnations were of protected varieties. The court rejected these arguments. It noted that a 2007 decision of an appellate court in the Province of Teruel ¹⁴ explained that, although one of the elements of a violation of  Penal Code Article 274.3 is that the defendant was “aware of [the] registration” of the variety, it is not necessary for the prosecution to show an express recognition by the defendant of that awareness. Instead, the court reasoned that in most cases, the defendant’s awareness will have to be shown by circumstantial evidence–

… because it will be difficult to obtain an explicit recognition by the accused. Moreover [the defendant’s] knowledge need not be exhaustive and detailed. It suffices that he be conscious that he is producing or commercializing in any manner a registered variety, even if he does not know precisely which registration applies to the variety or the extent of its protection.

In the present case, the court found sufficient circumstantial evidence to conclude that the defendants knew they were cultivating protected varieties. The court observed that both defendants were experienced nurserymen and members of Guadalquivir Cooperative (evidently an association of nurseries) and, as such, had “within their reach adequate means to obtain knowledge of protected carnation varieties.” In addition, the court pointed out, the registration of the HILNATA and HILNATWI varieties had been published in Spain’s Bulletin of the Register of Protected Varieties, “a public bulletin which may be consulted by all citizens.” The WHITE LIBERTY variety was registered by the CPVO and appeared in that European agency’s bulletin, which is distributed in Spain in the Spanish language. A final factor that undermined the defendants’ credibility in the court’s eyes was that since 2004, there had been a significant amount of publicity, both in the printed media and on the Internet, regarding disputes between GESLIVE and farmers in the region over the illegal cultivation of carnations. According to the court, the defendants could not have been unaware of such information.

OBSERVATIONS.

• There is no single database from which comprehensive information regarding Spanish prosecutions for plant breeders’ rights infringements can be obtained. Therefore it is likely that the above list of criminal infringement cases during calendar year 2012 to date is incomplete.

• Although publicly available information about the above cases is limited, it appears that each case in which a court imposed criminal liability involved commercial-scale plant breeders’ rights infringements, rather than merely small-scale violations.

• The number and severity of the sentences suggest that aggressive rights owners’ associations such as GESLIVE can be very effective in identifying and aiding in the prosecution of criminal infringements.

• The decision of the court in Cuenca illustrates that the farm-saved seed exception to the rights of a plant variety owner provides little cover for an unlawful seller of brown-bagged seed. Where the amount of seed in the defendant’s possession greatly exceeds what would be needed to plant one’s own field, the court may infer that the defendant intends to commercialize the seed in an unlawful manner. ¹⁵ Similarly, Spain’s record-keeping requirements for providers of third-party seed conditioning services make it difficult to raise a false defense that one is lawfully conditioning seed for others.

by Shawn N. Sullivan, Oct. 8, 2012.