Case about dispute over infringement upon the right to a new plant variety

Laizhou Jinhai Seed Industry Co., Ltd. v. Zhangye Fukai Agricultural Science and Technology Co., Ltd.
(Issued on November 15, 2017 as deliberated and adopted by the Judicial Committee of the Supreme People's Court)
Guiding Case No. 92
Keywords

civil; infringement upon the right to a new plant variety; identification of corn varieties; DNA fingerprint testing; similar varieties; burden of proof

Key Points of Judgment
In accordance with the provisions of the Standards for Testing and Determination of DNA Fingerprint Methods of Corn Varieties NY/T1432-2007 (an agricultural industry standard of the People's Republic of China), where the number of difference loci between varieties is 1, it may be identified that the varieties are identical ones; where the number of difference loci is not less than 2, it may be identified that the varieties are different ones. If the number of difference loci between varieties is 1, it is insufficient to identify that the varieties are identical ones. Where the number of difference loci is not more than 2, other factors should be taken into full account for identifying whether they are different varieties, for example, additional tests by expanding testing loci and submission of approved samples for testing, and the burden of proof should be borne by the alleged infringing party.
Legal Provisions
Articles 16 and 17 of the Regulation of the People's Republic of China on Protection of New Varieties of Plants
Basic Facts
On November 1, 2003, with the approval of the Ministry of Agriculture, “Jinhai 5” was granted the right to a new plant variety of the People's Republic of China with the variety No. CNA20010074.2 and the variety owner Laizhou Jinhai Crops Research Co., Ltd. On January 8, 2010, the owner of the variety authorized Laizhou Jinhai Seed Industry Co., Ltd. (hereinafter referred to as “Jinhai Seed Industry Company”) to exclusively engage in the production and operation of the corn hybrid “Jinhai 5” and authorized Jinhai Seed Industry Company to independently file a lawsuit in its own name for infringement of producing and selling the variety without licensing. In 2011, Zhangye Fukai Agricultural Science and Technology Co., Ltd. (hereinafter referred to as “Fukai Company”) conducted production of hybrid corn seeds in Cooperatives No. 8 and No. 11 of Gucheng Village, Shajing Township, Ganzhou District, Zhangye City. Jinhai Seed Industry Company filed a lawsuit with the Intermediate People's Court of Zhangye City on the ground that Fukai Company's production of hybrid corn seeds infringed upon its right to the new plant variety of “Jinhai 5.” After accepting the lawsuit, according to the application of Jinhai Seed Industry Company, on September 13, 2011, the Intermediate People's Court of Zhangye City extracted the corn ears randomly from living plants of the alleged infringing corns cultivated in Cooperatives No. 8 and No. 11 of Gucheng Village, Shajing Township, conducted evidence preservation by means of on-site safe-keeping, and authorized the Corn Seed Testing Center of the Beijing Academy of Agriculture and Forestry to conduct the comparison and identification of the extracted samples and the standard samples of “Jinhai 5” preserved in the New Plant Variety Preservation Center of the New Plant Variety Protection Office of the Ministry of Agriculture. The testing report issued by the Corn Seed Testing Center concluded that “there was no significant difference.”
The Intermediate People's Court of Zhangye City rendered a  to order Fukai Company to assume the liability for infringement on the ground that the act of Fukai Company constituted infringement. Fukai Company refused to accept the  and appealed to the Higher People's Court of Gansu Province. Upon trial, the Higher People's Court ruled to remand the case to the Intermediate People's Court of Zhangye City for retrial on the ground that the fact-finding in the original  was unclear.
After the case was remanded for retrial, the Intermediate People's Court of Zhangye City sent a letter to the Corn Seed Testing Center of the Beijing Academy of Agriculture and Forestry and required the latter to conduct a supplementary identification or explanation on the conclusion of the testing report (JA2011-098-006) that “there was no significant difference.” The Corn Seed Testing Center replied that “Upon comparison between the samples to be tested and the reference samples of ‘Jinhai 5' under the variety protection of the Ministry of Agriculture, there is only one difference locus among 40 loci. According to the industry standards, they are identified as similar varieties and the conclusion is no significant difference between the samples to be tested and the reference samples. This conclusion should be interpreted as follows: According to the DNA fingerprint testing standards, at least two difference loci are the sufficient conditions for identifying two different samples. Where there are less than two difference loci, it shows that the conditions for identifying two different samples according to such standards are insufficient. Therefore, the conclusion of difference between the samples to be tested and the reference samples cannot be drawn.” Upon cross-examination, Jinhai Seed Industry Company raised no objection to this testing report. Fukai Company deemed that the testing report specified that the number of difference loci was “1,” which meant that the act of defendant did not constitute infringement, and thus the testing report could not serve as evidence in this case for admission.
Judgment
The Intermediate People's Court of Zhangye City rendered a civil  (No. 28 [2012], First, Civil Division, IPC, Zhangye) to dismiss the claim of Jinhai Seed Industry Company. Jinhai Seed Industry Company refused to accept the  and appealed. On September 17, 2014, the Higher People's Court of Gansu Province rendered a civil  (No. 63 [2013], Final, Civil DivisionIII, HPC, Gansu) that: (1) the civil  (No. 28 [2012], First, Civil Division, IPC, Zhangye) rendered by the Intermediate People's Court of Zhangye City should be set aside; (2) Fukai Company should immediately cease the infringement upon Jinhai Seed Industry Company's right to the new plant variety and compensate Jinhai Seed Industry Company CNY500,000 for its economic losses.
Judgment's Reasoning
In the effective , the Court held that: Without the licensing of the owner of the variety, the production or sales of propagation materials of the authorized variety for commercial purposes, was an act of infringement upon the right to a new plant variety. To determine whether the propagation materials of the new plant variety produced and sold by the actor were those of the authorized variety, the core issue was whether the features and specialties of the new plant variety cultivated by applying the propagation materials were identical with those of the authorized variety. In this case, upon authorized identification by the people's court, the identification opinion issued by the Corn Seed Testing Center of the Beijing Academy of Agriculture and Forestry showed that there was “no significant difference” between the samples to be tested and the authorized samples; however, there was one difference locus among 40 difference loci in the DNA fingerprint testing and comparison. In accordance with the provisions of the Standards for Testing and Determination of DNA Fingerprint Methods of Corn Varieties NY/T1432-2007 (an agricultural industry standard of the People's Republic of China), where the number of difference loci between varieties was 1, it could be identified that the varieties were similar ones; where the number of difference loci was not less than 2, it could be identified that the varieties were different ones. According to the DNA fingerprint testing standards, the difference loci of not less than 2 served as the standard for identifying two different varieties. One difference locus between varieties was insufficient in identifying that the varieties were identical. There was no direct correspondence in difference loci between the DNA testing and the field observation testing (DUS). Where the number of difference loci was not more than 2, a  should be made by taking into full account of other factors, for example, additional tests by expanding the testing loci and submission of approved samples for measurement. The burden of proof at this time should be borne by the alleged infringing party. Since the authorization of the new plant variety was based on DUS testing other than DNA fingerprint identification in laboratories, if the counterevidence provided by Fukai Company could prove that through the DUS testing, the features and specialties of the alleged infringing propagation materials were not identical with those of the authorized variety, the aforesaid conclusion may be overturned. According to the found facts, upon explanation, appellee Fukai Company still failed to provide counterevidence and it did not satisfy the condition for DUS testing. Therefore, in accordance with the provisions of paragraph 1 of Article 2 of the Several Provisions of the Supreme People's Court on Issues concerning the Application of Law in the Trial of Cases involving Disputes over Infringement upon New Plant Variety Rights that “where, without the licensing of the owner of the variety, the propagation materials of an authorized variety are produced or sold for commercial purpose, or are repeatedly used for producing the propagation materials of another variety for commercial purpose, the people's court shall affirm the infringement upon the rights to new plant varieties,” it should be determined that the act of Fukai Company constituted infringement upon the right to a new plant variety.
With respect to the liability for infringement, in accordance with the provisions of Article 6 of the Several Provisions of the Supreme People's Court on Issues concerning the Application of Law in the Trial of Cases involving Disputes over Infringement upon New Plant Variety Rights, Fukai Company should assume the civil liability of ceasing the infringement and compensating for losses. Since the infringement involved occurred three years ago, at the time, both parties failed to produce full evidence for proving the losses the infringed suffered from the infringement or the profits gained by the infringer from the infringement. The court found that the cultivation area of the infringing variety was 1,000 mu. By taking into full account of the time, nature, and circumstance of the infringing act, the court determined that the amount of compensation should be CNY500,000 and ordered that Fukai Company should cease the infringement.
(Judges of the effective : Kang Tianxiang, Kou Guilan, and Li Xueliang)