Since 2005, Australia’s Plant Breeders Rights (PBR) regime has been under review1 by the Advisory Council on Intellectual Property (ACIP) in response to a request from the Commonwealth Government.
The focus of the review has been on the difficulties that PBR owners face in their enforcement of PBRs.
ACIP has now released a final report (Report) on enforcement of PBRs. The Report is based on earlier issues and options papers and extensive consultation with stakeholders.
The Report recommends legislative and procedural reform to address the various changes advocated by stakeholders.
Of particular interest are those reforms recommended under the following parts of the Report:
- Part B Substantive law (including concerns regarding exclusivity, extension and exhaustion of PBRs and farmer’s privilege)
- Part C Procedure (including Federal Court procedure, alternative dispute resolution, criminal sanctions), and
- Part D Evidence & Remedies (including evidence acquisition, import and export and exemplary damages).
It is understood that the Federal Government is now considering a response to the Report. Ultimately, some or all of the Report recommendations may be implemented in an amendment to Australia’s PBR legislation and regulations.
In the meantime, this note summarises the key issues and recommendations under Part B of the Report.
Issue 1 – Rights to purchase propagating material
PBR owners (often Australian small to medium enterprises) may derive revenue in the form of an end point royalty (EPR) that is calculated on the basis of a grower’s harvest. Where there are many growers of a given plant breed (the Report names the wheat industry as an example), it is very difficult for the PBR owner to cost effectively audit each grower’s harvest, thereby obtaining an EPR.
Amend the legislation to provide the PBR owner with a purchase right in respect of particular taxa declared under the regulations. This would allow the PBR owner to license a right to purchase of propagating material to downstream stakeholders (who may well number fewer than growers), thereby requiring parties who receive grain from growers (such as accumulators, traders and processors) to report on and/or collect EPRs to the PBR owner.
Issue 2 – Harvested material
EPRs are generally based on harvested material whereas the PBR is in respect of propagating material. Consequently, EPRs tend to be established through private contract between grower and PBR owners.
Amend the legislation to provide that harvested material that is also propagating material (such as grain) will be considered as propagating material under the legislation, and irrespective of whether the harvested material is to be used for propagation. This will mean that the legislation will provide basis for the agreement between grower and PBR owner. Further in relevant circumstances (such as in relation to grain), royalties will be collected from harvested material, thereby dispensing with a need for private contract between breeder and grower.
Issue 3 – Extended rights & reasonable opportunity
The current legislation provides for extension of the PBR to harvested material where the PBR owner has not had ‘reasonable opportunity’ to exercise the PBR in relation to the propagating material. While the purpose of the relevant provisions is clear—to ensure that the PBR owner has an opportunity to obtain royalty where for example there has been unauthorised use of the propagating material—the meaning of ‘reasonable opportunity’ is considered by many stakeholders to be unclear.
Instead of clarifying the relevant provisions relating to extended rights, the ‘purchase right’ under Recommendation 1. is to deal with this issue.
Issue 4 – Farmer’s privilege
The relevant provision in the current legislation relating to ‘farm-saved seed’ exemption does not explicitly require growers to obtain the authority of breeders to exploit the exclusive rights of the PBR owner, for example to sell reproduced propagating material, harvested material or the product of harvested material. Consequently there is concern particularly amongst PBR owners that there is widespread illegitimate use of varieties and this impacts on EPR calculation.
Recommendations 4, 5 & 6
The exemption is to be preserved. However, the relevant provision is to be amended to expressly state that a farmer of a given variety does not have the right to perform acts that are within the exclusive domain of the PBR owner unless he has obtained authority from the PBR owner. This is to be supported by an education and awareness campaign by IP Australia (the Australian Patent Office including the Registrar of PBR) which currently administers the PBR regime.
Issue 5 – Asexual propagating material & farmer’s privilege
Given the current legislation, there is confusion as to whether farmer’s privilege is limited to sexually reproduced plants. Some in the horticultural and ornamental sectors are currently operating as if farmer’s privilege does not apply to them, exposing breeders to the risk that a grower or nursery could buy a few plants and propagate new ones from a cutting with a view to selling harvested products such as fruit or flowers.
While there is some evidence of confusion amongst stakeholders, the legislation should not be amended at this time to address this. PBR owners should be encouraged to have taxa of which they are concerned to be declared not subject to farmer’s privilege, as the legislation currently permits.
Issue 6 – Essentially derived varieties (EDV)
Under the current legislation, a PBR in respect of an initial variety may extend to a later variety that does not have important features that differentiate it from the initial variety. The process requires the PBR owner of the initial variety to obtain a declaration from the Registrar of PBR that the latter variety is an essential derivation of the initial variety.
A first concern is that if the breeder of the latter variety has not applied for or obtained PBR, the breeder of the initial variety cannot have his PBR extended to cover the latter variety.
Further concerns are what is meant by ‘important (as distinct from cosmetic) features’ under the current legislation and does the Registrar have expertise to issue a declaration, these things being critical as to how a declaration could be decided where cosmetic features are critical (i.e. in the ornamental sector) and the likelihood of a breeder of a latter variety obtaining a disproportionate return relative to the breeder of the initial variety where the threshold test and the robustness of its application are questionable.
Recommendations 8, 9 & 10
ACIP recommends that the PBR regime be adapted to enable EDV declarations to be made in respect of a latter variety, whether subject to PBR application or grant, or not.
In relation to further concerns, the recommendation is to replace the ‘important features’ test with the ‘essential features’ test, thereby bringing the amended legislation into compliance with the UPOV Convention. A further recommendation is to retain the PBR Registrar as the decision maker in respect of EDV declarations, leaving open the opportunity for a Patents Tribunal to consider EDV declarations, should such a tribunal be established in the future.
Issue 7 – Exhaustion of PBR
The current legislation provides that a PBR owner’s rights are exhausted after sale of propagating material. However, rights pertaining to the IP in the propagating material—i.e the right of further production or reproduction—and right of export in prescribed circumstances is not. In summary, the key concern is that there is currently uncertainty as to which generation may have rights exhausted and which generation does not. The outcome is that there is an increased risk of inadvertent infringement of PBR rights and difficulties for the breeder in calculation of EPRs.
The key recommendation is to amend the current legislation to provide that PBR does not extend to an act of purchase of material that takes place after propagating material has been sold by the PBR owner unless that act involves any production or reproduction of the propagating material
Issue 8 – Clarity of PBR legislation
Simply put, the Report acknowledges widespread stakeholder concern as to the meaning of the current legislation, particularly in relation to key aspects including extension of rights, EDVs and propagating material.
The Report recommends the establishment of an Expert Panel to provide guidance and opinions on general issues or specific cases concerning the legislation and case law.