Limiting Infringement Liability for
Handling Protected Seed Varieties

Growers as well as custom seed cleaners and conditioners must be aware of plant variety protection and utility patents, because they can be held liable for infringements. This publication will look at reasons for and laws governing plant protection, and steps to reduce the likelihood of infringement liability.

Background

Development of new plant varieties takes a great deal of research effort, time, and money. Because seed of many crop species are easily reproduced and sold, it is often difficult for developers to recover their development costs, much less earn a profit. Without incentives to develop new varieties, our country, and farmers in particular, would not have the many new varieties developed to date and could not expect to receive the benefits of future varietal development.

The principal incentive for research and development of new varieties is granting an exclusive right to reap the financial rewards of that effort for a limited period of years. There are two methods by which developers of plant varieties may profit from their development efforts. These methods are protection through a certificate of plant variety protection under the Plant Variety Protection Act (PVPA) and a utility patent.

Plant Variety Protection

The PVPA protects plant varieties that reproduce either by seed or by tuber propagation. The PVPA is administered by the Plant Variety Protection Office, a part of the U.S. Department of Agriculture. Certificates of plant variety protection are currently issued for 20 years for most crops. Infringement occurs when the variety is reproduced, sold, or offered for sale, without the permission of the variety owner. Other acts, including cleaning seed for others, may also constitute infringement of the PVPA.

The 1970, or original PVPA, applies to varieties protected before April 4, 1995. Under the 1970 PVPA, a farmer may save seed of a protected variety to plant back on his or her own holdings. Holdings are land owned, rented, or leased. If farm plans change, the farmer may sell that saved seed, but the amount planted plus the amount sold may not exceed the amount required to plant his or her own holdings.

The U.S. Congress amended the PVPA in 1994. Varieties for which protection was filed on or after April 4, 1995 fall under these new regulations. According to the amended law, a farmer may save enough seed of a protected variety to plant back on his or her own holdings, but even if farm plans change, none of the saved seed may be sold without permission of the variety owner. The label or container will indicate which PVPA regulations apply to the purchased seed. Growers should be aware that all seed sales, regardless of PVPA protection level, must follow state seed laws. Contact the NCDA Seed Division at 919-733-3930 for further information.

Under both the original and amended PVPA, it is an infringement to clean, bag, or stock farmer-saved seed, if the quantity exceeds what the farmer can legally save for planting purposes. The conditioner can be held liable for PVPA infringements.

Utility Patent Protection

Congress has authorized the U.S. Patent and Trademark Office to issue a patent to any person who invents a product or process that is novel, nonobvious , and useful. For a product or process to be novel it must be new, meaning that no other person has made, sold, or published a description of the product or process prior to the application. The courts and the Patent and Trademark Office have determined that a living organism or a part of a living organism may be patented. Indeed, many patents have been granted for genes of particular organisms. A gene is a component of the genetic code of an organism. Some plant varieties, like Roundup Ready soybeans and Bt cotton, now contain patented genes.

Patent protection is available for a specific number of years. During that period, the owner of the patent has the exclusive right to make, use, or sell any product or process that contains or uses the patented technology. Any other person who makes, uses, or sells any part of that patented technology is an infringer. An infringer is liable to the patent owner for damages even if the infringer was unaware of the patent or the infringement.

If a variety is patented or contains a patented gene, a farmer may not save any seed for planting purposes. Likewise, a custom cleaner or conditioner may not clean any seed of patent protected varieties. To do so is an infringement of the patent, even if the conditioner is not aware that the material being cleaned is patented.

For Custom cleaners: To Avoid Infringement Liability

There are a number of steps that a custom cleaner or conditioner may take to reduce the likelihood of infringement liability. Take all correspondence indicating an infringement of PVPA or patent laws seriously. Generally, an attorney should be consulted before responding to such a letter. Ignoring these communications can infer willful infringement, which may result in the assessment of triple damages and attorney fees.

Listed below are some items that a custom cleaner may wish to include in statements for growers to sign:

• Identity of the seed to be cleaned, including the variety name, the company that sells the variety, the farm from which the seed came, and the name and address of the person requesting cleaning services.
• Whether the seed is subject to patent protection, or protection under the 1970 or the 1994 Plant Variety Protection Act.
• If the variety is protected under the Plant Variety Protection Act, will the customer use the seeds to replant his or her own acreage. If the variety is protected under 1994 law, growers should also sign a statement to the effect that they will not resell the seed for reproductive (planting) purposes. If the seed are the subject of patent protection, the cleaner should refuse to handle them because any preparation for reproductive uses is an infringement.
• Indemnification for damages, legal fees, and costs. Custom cleaners may include language that requires the customer to reimburse them for court-ordered damages, attorney fees, and costs against the custom cleaner, should a court find such an infringement. Such an agreement should also provide for the customer to pay attorney fees and costs where the custom cleaner must take legal action against the customer in order to enforce this agreement.

Besides written documentation, the custom cleaner should also save a small sample (one-half cup) of the unprocessed seed. The seed should be placed in an envelope and the envelope should be sealed with the signature of the seed producer across the seal. In case of ownership disputes, this seed sample may be useful.

While taking these steps will not eliminate the risk of infringement, it will substantially reduce its likelihood. Additionally, it should also reduce the chance that the custom cleaner could be found a willful infringer.