*AI-generated translation, for reference only.

[Keywords]

Civil; Plant variety infringement; Sales conduct; Infringing conduct; Punitive damages

[Judgment Digest]

Where the accused infringer organizes the buying and selling of the accused infringing seeds and in fact takes the lead in determining specific transaction terms such as the transaction price, transaction quantity, and time of performance, thereby constituting the organizer and decision-maker of the transaction, it may be determined that the accused infringer has directly engaged in the sale of the accused infringing seeds.

[Case Facts]

Jiangsu Jin [REDACTED] Seed Technology Co., Ltd. (hereinafter referred to as "Jin [REDACTED] Seed Company") claimed: Jin [REDACTED] Seed Company is the exclusive licensee for the implementation of the plant variety right for the rice variety "Jinjing 818". Jiangsu Qin [REDACTED] Agricultural Industry Development Co., Ltd. (hereinafter referred to as "Qin [REDACTED] Agricultural Company") recruited members and charged service fees, and sold "Jinjing 818" rice seeds packaged in plain white bags to its members by posting "agricultural industry chain information matching service" messages in member WeChat groups, thereby constituting infringement of the plant variety rights at issue. Jin [REDACTED] Seed Company accordingly requested that the court order Qin [REDACTED] Agricultural Company to cease the infringement and, applying punitive damages, order it to compensate for economic losses and reasonable expenses for rights protection totaling RMB 3 million (same currency hereinafter).

Qin [REDACTED] Agricultural Company argued in defense: it had not sold the accused infringing "Jinjing 818" rice seeds; it had merely provided information on farmers’self-retained seeds to both the supply and demand sides, leaving them to conduct transactions independently.

Upon trial, the court found that: a certain research institute in Tianjin is the holder of the plant variety right for the rice variety "Jinjing 818" bearing variety right number CNA20******.* . In October 2017, the said research institute issued a Letter of Authorization granting Jin [REDACTED] Seed Company the exclusive right to implement the variety.

On May 21, 2019, investigators commissioned by Jin [REDACTED] Seed Company inquired via WeChat with personnel of Qin [REDACTED] Agricultural Company about the price of "Jinjing 818" seeds; Qin [REDACTED] Agricultural Company's personnel replied that "Jinjing 818" seeds in plain white bags were priced at RMB 2 per jin. On May 25 of the same year, the investigators informed Qin [REDACTED] Agricultural Company's personnel via WeChat that they "hoped to sign a contract the next day" and inquired about the delivery time for seeds including 10,000 jin of "Jinjing 818" seeds; Qin [REDACTED] Agricultural Company's personnel immediately undertook to fulfill this request. On May 26 of the same year, Jin [REDACTED] Seed Company, through notarial preservation, obtained one copy of a "United Farm Franchise Agreement" and one receipt from a seed store in Suqian, Jiangsu Province. Party A under the agreement was Qin [REDACTED] Agricultural Company, and Party B was the investigator commissioned by Jin [REDACTED] Seed Company. The agreement stated that Party A operates a comprehensive agricultural industry chain service platform, providing one-stop planting services including collective procurement of agricultural inputs, base services (tillage, planting, harvesting, pesticide application, fertilization, drone plant protection, etc.), credit support (agricultural insurance and loans), contract farming, and grain banking; currently serving over 2 million mu of farmland and reaching over 4,600 large-scale farmers across the four provinces of Jiangsu, Shandong, Henan, and Anhui, with annual transactions exceeding RMB 200 million; in order to reduce production costs and increase economic returns, Party B joins Qin [REDACTED] United Farm to enjoy zero-markup collective procurement of agricultural inputs; Party A acts as Party B's agricultural input procurement department, globally sourcing high-quality and cost-effective agricultural inputs and supplying them to Party B at collective procurement prices (ex-factory prices), with Party A committing to saving Party B RMB 30–50 per mu per year on agricultural input costs; Party B franchises Qin [REDACTED] United Farm with an actual cultivated area of 470 mu, enjoys zero-markup collective procurement services for agricultural inputs, and bears a service fee of RMB 10 per mu per season (RMB 20 per mu per year), totaling RMB 4,700. On the day the agreement was signed, the investigators of Jin [REDACTED] Seed Company paid Qin [REDACTED] Agricultural Company a one-season franchise service fee of RMB 4,700, and Qin [REDACTED] Agricultural Company issued one receipt to the investigators. Qin [REDACTED] Agricultural Company acknowledged that the store recorded in the notarial certificate was operated by it.

On May 28 of the same year, personnel of Qin [REDACTED] Agricultural Company confirmed to the investigators that they had arranged the seed source for "Jinjing 818" and provided the mobile phone number of the alleged "supplier", a person surnamed Zhou. On May 30 of the same year, the investigators informed Qin [REDACTED] Agricultural Company's personnel via WeChat that they had made contact with Zhou, and Qin [REDACTED] Agricultural Company's personnel replied to confirm. On June 2 of the same year, Jin [REDACTED] Seed Company, through notarial preservation, obtained 10,000 jin of the accused infringing seeds, which were delivered and payment collected on behalf of the supplier by a third party, who also provided a receipt. The receipt recorded "Jia [REDACTED] Agriculture delivers rice seeds (Jinjing 818): 250 bags x 40 = 10,000 jin x 2 = RMB 20,000.00", and also recorded the name and mobile phone number of the person surnamed Zhou.

During the first instance proceedings, at the request of Jin [REDACTED] Seed Company, the Intermediate People's Court of Nanjing, Jiangsu Province commissioned a plant variety testing center in Hangzhou to conduct an identification of the variety of the accused infringing seeds. The identification opinion concluded that the accused infringing seeds and the standard sample of "Jinjing 818" rice seeds were "extremely similar varieties or identical varieties".

[Judgment]

On January 22, 2021, the Intermediate People's Court of Nanjing, Jiangsu Province rendered Civil Judgment No. (2020) Su 01 Min Chu 773: First, Qin [REDACTED] Agricultural Company shall, from the date this judgment takes effect, immediately cease infringing upon Jin [REDACTED] Seed Company's exclusive implementation right for the "Jinjing 818" plant variety; Second, Qin [REDACTED] Agricultural Company shall, within 15 days from the date this judgment takes effect, compensate Jin [REDACTED] Seed Company for economic losses and reasonable expenses for rights protection totaling RMB 3 million. Following the judgment, Qin [REDACTED] Agricultural Company disagreed and appealed to the Supreme People's Court. On August 25, 2021, the Supreme People's Court rendered (2021) SPC IP Civil Final 816: the appeal is dismissed, and the original judgment is upheld.

[Reasoning for Judgment]

The disputed issue in this case is: whether the conduct of Qin [REDACTED] Agricultural Company infringed upon the plant variety rights for "Jinjing 818".

Generally speaking, where both parties to a transaction reach a consensus on the terms and conditions for the sale of the subject matter, the sales contract is established in accordance with law, thereby constituting a sale in the legal sense. In the transaction at issue, Qin [REDACTED] Agricultural Company published seed supply information through WeChat groups; the investigators commissioned by Jin [REDACTED] Seed Company learned from Qin [REDACTED] Agricultural Company that "Jinjing 818" seeds packaged in plain white bags were available for sale; after signing the "United Farm Franchise Agreement" and making payment, Qin [REDACTED] Agricultural Company provided the alleged "supplier" information to Jin [REDACTED] Seed Company; and Jin [REDACTED] Seed Company obtained the accused infringing seeds in accordance with arrangements made by Qin [REDACTED] Agricultural Company. Throughout the transaction process, the quantity of seeds and the approximate delivery time were confirmed by Qin [REDACTED] Agricultural Company, and the price of the seeds was determined by Qin [REDACTED] Agricultural Company. Qin [REDACTED] Agricultural Company engaged in the conduct of publishing specific sales information for the accused seeds and negotiating and determining the transaction terms for the seed purchase and sale, including the packaging method, price, quantity, and time of performance. The sales contract was duly established in accordance with law. Qin [REDACTED] Agricultural Company constituted the organizer and decision-maker of the transaction involving the accused infringing seeds, and it may accordingly be determined that Qin [REDACTED] Agricultural Company directly engaged in the sale of the accused infringing seeds, thereby constituting infringement of the plant variety rights for "Jinjing 818". The so-called signing of the franchise agreement and delivery by a third party were intended to conceal the fact that Qin [REDACTED] Agricultural Company had directly engaged in the sale of the accused infringing seeds.

Qin [REDACTED] Agricultural Company is a professional operator of seeds and agricultural inputs. Being fully aware of the infringing nature of selling propagating materials of authorized varieties without authorization, it nonetheless sold the accused infringing seeds using plain white bags bearing no variety name; it organized the buying and selling parties through information networks, concealing its sales conduct under the guise of "information matching"; and it disguised the substance of the infringement under the pretext that farmers were selling surplus conventionally bred seeds that they had self-propagated for their own use. Its claim of serving over 2 million mu of farmland and reaching over 4,600 large-scale grain farmers across the four provinces of Jiangsu, Shandong, Henan, and Anhui, together with other evidence, establishes that its infringement was broad in scope and large in scale. Qin [REDACTED] Agricultural Company constitutes willful infringement with serious circumstances, and punitive damages shall accordingly be applied.

[Legal Provisions]

Article 28 and Article 37 of the Seed Law of the People's Republic of China (Amended in 2021) (The provisions applicable to this case are Article 28 and Article 37 of the Seed Law of the People's Republic of China as revised in 2015)

Article 4 and Article 12 of the Provisions of the Supreme People's Court on Several Issues Concerning the Specific Application of Law in the Trial of Cases Involving Disputes over Infringement of Plant Variety Rights (II) (Fa Shi [2021] No. 14)