*AI-generated translation, for reference only.

Keywords: civil; plant variety rights ownership and infringement; infringement of plant variety rights; measures to prevent the expansion of losses; processing into commodity grain; inactivation treatment; discretionary reduction of damages based on circumstances

Case Facts

Hebei [REDACTED] Seed Industry Co., Ltd. (hereinafter "Hebei [REDACTED] Company") is the holder of plant variety rights for the "Wannuo 2000" corn variety.

In September 2020, the Zhangye Municipal Bureau of Agriculture and Rural Affairs conducted an on-site inspection and collected sample evidence from a seed corn field located in Zhangye City, based on a report filed by Hebei [REDACTED] Company, and submitted the samples to the Zhangye National-Level Corn Seed Production Base Seed Quality Supervision and Inspection Center for testing. It also questioned Zhao [REDACTED], a villager in the relevant locality in Zhangye City, who stated that the 122 mu plot of land in question was planted with corn by himself through a transfer of contracted management rights, and that the variety was waxy-type seed corn. The Zhangye National-Level Corn Seed Production Base Seed Quality Supervision and Inspection Center issued a variety authenticity test report, concluding that the sampled specimens, when compared against "Wannuo 2000" across 40 comparison loci, showed zero differing loci. Hebei [REDACTED] Company accordingly filed a lawsuit requesting that Zhao [REDACTED] cease the infringement and claiming that the amount of compensation should be determined based on the per-mu yield of seed production commissioned by Hebei [REDACTED] Company from a Gansu seed company and its actual profit margin, with economic losses of RMB 700,000 (same currency unit hereinafter).

Zhao [REDACTED] defended as follows: While acknowledging that an infringement occurred, Zhao [REDACTED] contended that the planting area was relatively small. After receiving the rectification order from the Zhangye Municipal Comprehensive Agricultural Administrative Enforcement Team, Zhao [REDACTED] promptly processed the accused infringing seeds into commodity grain. The amount of compensation claimed by Hebei [REDACTED] Company was excessive and should be reduced.

On July 14, 2021, the Lanzhou Intermediate People's Court of Gansu Province rendered Civil Judgment (2021) Gan 01 Zhi Min Chu No. 9: (1) ordering Zhao [REDACTED] to immediately cease producing and selling reproductive materials of the "Wannuo 2000" corn plant variety; (2) ordering Zhao [REDACTED] to compensate Hebei [REDACTED] Company for economic losses in the amount of RMB 662,517.46 within ten days from the date on which the judgment becomes legally effective; and (3) dismissing Hebei [REDACTED] Company's other claims. Zhao [REDACTED] appealed on the grounds that he had already processed the accused infringing seeds into commodity grain and that the amount of compensation determined by the court of first instance was excessive. On October 30, 2024, the Supreme People's Court rendered Civil Judgment (2023) SPC IP Civ Final No. 2846: (1) affirming item 1 of the first-instance judgment; (2) revoking item 3 of the first-instance judgment; (3) modifying item 2 of the first-instance judgment to read: Zhao [REDACTED] shall compensate Hebei [REDACTED] Company for economic losses in the amount of RMB 122,000 within ten days from the date on which this judgment becomes legally effective; and (4) dismissing Hebei [REDACTED] Company's other claims.

Judge's Opinion

The central issue in this case was whether Zhao [REDACTED]'s measure of processing the infringing seeds into commodity grain may serve as a factor for the discretionary reduction of the amount of infringement damages.

Pursuant to *Article 15* of the *Tort Law of the People's Republic of China* (as incorporated in *Article 179* of the *Civil Code of the People's Republic of China*), the forms of tort liability include cessation of infringement, compensation for losses, and others, which may be applied individually or in combination.

*Article 73(3)* of the *Seed Law of the People's Republic of China* as amended in 2015 (renumbered as *Article 72(3)* after the 2021 amendment) provides: "The amount of compensation for infringement of plant variety rights shall be determined according to the actual losses suffered by the rights holder as a result of the infringement; where the actual losses are difficult to determine, the amount may be determined according to the profits obtained by the infringer as a result of the infringement. Where both the losses of the rights holder and the profits of the infringer are difficult to determine, the amount may be reasonably determined by reference to an appropriate multiple of the licensing fees for the plant variety rights in question. The amount of compensation shall include the reasonable expenses paid by the rights holder to stop the infringing conduct …" *Article 14* 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)* provides: "Where the People's Court, having established the facts of infringement of variety rights, finds that the infringement is established, it may first render a judgment ordering the cessation of infringement, and may, according to the request of the parties and the specific circumstances of the case, order the infringer to take measures such as inactivation to prevent the spread and reproduction of the accused infringing materials." Accordingly, taking measures such as processing into commodity grain or inactivation to prevent the spread and reproduction of accused infringing materials constitutes one of the specific measures falling under the infringer's obligation to cease infringement, and is also a duty requirement to prevent the further expansion of the harm caused by the infringement. The obligation to bear civil liability for compensation presupposes that the infringing conduct has caused harm to the variety rights holder. Where the infringer takes measures such as processing into commodity grain or inactivation to prevent the spread and reproduction of the accused infringing materials, the harmful consequences of the infringement are less severe than those that would result from the infringing seeds actually entering the seed market; accordingly, the amount of infringement damages may be reduced at the court's discretion based on the circumstances.

In this case, Zhao [REDACTED] produced the accused infringing seeds over an area of 122 mu without authorization, which constitutes a relatively large scale. The infringing conduct itself encroached upon the variety rights holder's market space — including the seed market share and commodity grain market share that the variety rights holder might otherwise have realized — thereby causing harm to the variety rights holder, for which Zhao [REDACTED] shall bear corresponding liability for compensation. Hebei [REDACTED] Company sought to determine the amount of compensation based on the per-mu yield of seed production commissioned from a Gansu seed company and its actual profit margin; however, given that the accused infringing seeds in this case have been processed into commodity grain, the harmful consequences are less severe than those that would result from the seeds actually entering the seed market, and the amount of infringement damages may be reduced at the court's discretion based on the circumstances. Pursuant to *Articles 73(3) and 73(4)* of the *Seed Law* as amended in 2015, and taking into account comprehensively the nature and circumstances of the infringement, with appropriate weight given to the fact that all of the accused infringing seeds have been processed into commodity grain and that the harmful consequences have thereby been mitigated, the court determines at its discretion that Zhao [REDACTED] shall compensate Hebei [REDACTED] Company for economic losses in the amount of RMB 122,000.

Judgment Digest

In cases involving disputes over infringement of plant variety rights, where an infringer takes measures such as processing into commodity grain or inactivation to prevent the spread of accused infringing materials, thereby preventing further expansion of losses, and the resulting harm to the variety rights holder is ultimately less severe than the harm that would result from the infringing seeds actually entering the seed market, the amount of infringement damages may be reduced at the court's discretion based on the circumstances.

Related Index

*Article 179* of the *Civil Code of the People's Republic of China* (The provision applicable to this case is *Article 15* of the *Tort Law of the People's Republic of China* as effective July 1, 2010)

*Article 72* of the *Seed Law of the People's Republic of China* (The provision applicable to this case is *Article 73* of the *Seed Law of the People's Republic of China* as effective January 1, 2016)

*Article 14* 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)

First Instance: Lanzhou Intermediate People's Court of Gansu Province, Civil Judgment (2021) Gan 01 Zhi Min Chu No. 9 (July 14, 2021)

Second Instance: Supreme People's Court, Civil Judgment (2023) SPC IP Civ Final No. 2846 (October 30, 2024)