Introduction

European Court of Justice (ECJ) has ruled that using the product of the harvest obtained by planting propagating material as farm saved seed constitutes an infringement of the holder’s plant variety right if the farmer fails to declare and pay or misdeclares (Case C-509/10 - Josef Geistbeck, Thomas Geistbeck v Saatgut- Treuhandverwaltungs GmbH).

In its judgment on 5 July 2012 the ECJ reconfirmed the rights of plant variety right holders.

A farmer who has used propagating material as farm saved seed for the production of harvested material but has not duly fulfilled his obligations to provide the respective information to the holder of the plant variety right (“PVR”) infringes the respective PVR and has to pay reasonable compensation in the amount of the fees for the licensed production of the harvested material. In these circumstances, the farmer cannot rely on the so called “farmer’s privilege”.

The legal background

In principle, authorisation from the PVR holder is required for the production or reproduction of variety constituents or harvested material of a protected variety (Art. 13 of Council Regulation (EC) No 2100/94 on Community plant variety rights (“Regulation No 2100/94”)). The PVR holder can make his authorisation of production of variety constituents or harvested material subject to the payment of license fees (royalties).

According to Art. 94(1) Regulation No 2100/94 in case of an infringement of the rights of the PVR holder, the PVR holder may request the farmer to cease such infringement and to pay “reasonable compensation”.

Art. 14 Regulation No 2100/94 constitutes a derogation from this principle (this derogation is called “farmer’s privilege”). The authorisation is deemed to be granted if the farmer uses the product of the harvest obtained by him for propagating purposes on his own holding (“farm saved seed”) and fulfils the obligations expressly set out in Art. 14(3) of that regulation. The obligations are aimed to provide the PVR holder with the relevant information regarding the use of farm saved seed and with an “equitable remuneration”. According to the regulation, the “equitable remuneration” has to be sensibly lower than the license fee (royalty) charged for the licensed production (regarding the variety in question this

The dispute in the main proceeding

The defendants (the two farmers Josef and Thomas Geistbeck) had used harvested material of a protected plant variety as propagating material on their own holding.

In accordance with Art. 14 Regulation No 2100/94 the respective PVR holder asked the Geistbeck brothers to declare the quantity of farm saved seed they had used for production purposes in order to be able to calculate the equitable remuneration. The Geistbecks declared a certain amount and paid the respective remuneration.

It was not until later when the PVR holders noted that the quantity actually planted by the farmer was significantly higher than the quantity which had been declared.

The judgment

In its judgment of 5 July 2012, the ECJ ruled that a farmer who fails to comply with the obligations regarding the privileged use of farm saved seed can no longer rely on the farmer’s privilege but infringes the respective PVR rights granted to the PVR holder by Art. 13 Regulation No 2100/94. According to Art. 94(1) Regulation No 2100/94, the farmer therefore has to pay “reasonable compensation” for such infringement to the PVR holder.

Furthermore, the ECJ ruled that it is appropriate to base the calculation of the “reasonable compensation” on the amount of “fees payable for the licensed production” (royalties) of the same quantity of propagating material. This means, the Court rejected the Geistbeck brothers’ argument that the calculation should be based on the lower “equitable remuneration” the farmer has to pay in case of an authorised use of farm saved seed. The ECJ also ruled that with regard to the calculation of the compensation, a farmer who fails to comply with the information obligations connected to the farmer’s privilege can no longer rely on the provisions regarding the use of farm saved seed.

Conclusion

With this judgment the ECJ recognises that the PVR holders depend on the good faith and cooperation of the farmers concerned as they do not have a right to control the declarations of the farmers regarding the use of farm saved seed but can only coincidentally discover wrong declarations. The PVR holders alone are responsible for the control and supervision of the use of their protected varieties in the context of farm saved seed. The lack of a right of inspection makes this supervision of the declarations of the farmers almost impossible. Therefore, the Court’s consideration of the difficulties the PVR holders face is well-founded.

Taking - as compensation for a PVR infringement - not the amount equivalent to the full royalty payable for the licensed propagation, but the (lower) amount corresponding to the equitable remuneration for the use of farm saved seed, would remove any incentive for the farmer to duly fulfil his information obligation. Moreover, it would have the effect of favouring farmers who do not fulfil their information obligations to the PVR holder as compared with the honest farmers who correctly declare their use of farm saved seed.