In our last post, we outlined the rights granted to plant breeders under the current Plant Breeders' Rights Act (PBRA). In this blog post, we propose to outline how Bill C-18, if it became law, would change the scope of these rights.
Click the following links for our first and second posts on this subject.
As we identified earlier, one of the federal government's stated objectives in amending the PBRA is to bring Canada into compliance with the most recent "Act of the International Union for the Protection of New Varieties of Plants", which was enacted in 1991 and is commonly known as UPOV 91. The United States, European Union, Japan, Australia, and other countries have already implemented UPOV 91. In contrast, the PBRA has not been substantially amended since it came into force in 1990, and only implements UPOV 78, UPOV 91's predecessor act from 1978.
New Exclusive Rights
There are substantial changes from UPOV 78 to UPOV 91 in the scope of rights afforded to plant breeders of registered varieties. Bill C-18 incorporates these changes and proposes that registrants be afforded the following rights:
(a) the exclusive right to produce and reproduce propagating material of the variety;
(b) the exclusive right to condition propagating material of the variety for the purposes of propagating the variety;
(c) the exclusive right to sell propagating material of the variety;
(d) the exclusive right to export or import propagating material of the variety;
(e) the exclusive right to make repeated use of seed of the variety as part of commercial production of another variety;
(f) the exclusive right to use part of the variety as propagating material in the production of ornamental plants or cut flowers;
(g) the exclusive right to stock propagating material of the variety for the purpose of doing any of the foregoing; and
(h) the exclusive right to license others, conditionally or unconditionally, to do any of the foregoing.
New rights are identified above by bold text, and each of them will be discussed in further detail below.
But first, it is important to note that under Bill C-18 exclusive rights do not apply to harvested materials of registered varieties (including harvested seeds) unless:
(a) the harvested material is obtained through the unauthorized use of propagating material; and
(b) the right holder did not previously have a reasonable opportunity to exercise his rights against the propagating material or, if he did have such an opportunity, did not fail to do so.
This means that, unless a plant breeder specifically controls (by contract prior to the sale of registered seed) the uses to which a farmer may put materials or seeds harvested from a registered variety, the plant breeder will be unable to enforce exclusive rights against the farmer to prevent him from, for example, selling the seeds that represent the harvest of the first crop that the farmer grows from the seeds of the registered variety.
Exclusive Right to Reproduce
Registrants will now have exclusive rights to reproduction, along with the existing exclusive right to production. In the industry, reproduction typically refers to multiplying a small amount of "foundation" seed of a protected variety to commercial quantities for the purpose of selling seed. It is unlikely that the addition of the term "reproduction" makes any substantive difference to plant breeders' rights in Canada as production of propagating material for the purpose of sale is already prohibited under the PBRA.
Exclusive Right to Condition for Purpose of Propagating
Registrants will also have the exclusive right to "condition" seed for the purpose of growing a crop. It is not yet clear what actions will be considered "conditioning". The precise boundaries of this right will be delineated in regulations, and, as is the norm, no draft regulations to accompany Bill C-18 have yet been published.
We do, however, expect that the Canadian definition of conditioning will be similar to other UPOV countries. In Australia, conditioning is defined as "cleaning, coating, sorting, packaging or grading of the material; or any other similar treatment, undertaken for the purpose of preparing the material for propagation or sale." (Plant Breeder's Rights Act 1994 (Australia), section 3). The Australian courts have held that the inclusion of the word "sale" at the end of the Australian definition makes no commercial sense, as clearly farmers should be able to condition their harvested crops to make them saleable as food. Perhaps with this in mind, the drafters of Bill C-18 have clearly specified that it is conditioning for the purposes of growing, rather than conditioning for the purpose of sale (or any other purpose) that is prohibited. Aside from this common sense difference, we expect the Canadian regulations will likely adopt a definition similar to Australia's.
The inclusion of conditioning as an exclusive right undoubtedly expands the rights of registrants and strengthens their ability to monitor how farmers use the harvested crops originating from seed of registered varieties. Registrants will have the ability to intervene at an earlier stage to protect their exclusive rights. Previously, registrants had to wait until unauthorized production or sale before taking action, but the new scope of rights allows them to intervene if they suspect that seed from a registered variety is being conditioned for unauthorized uses, such as the "brown-bag" sale of seed of a registered variety to another farmer.
Exclusive Right to Stock Propagating Material
Under Bill C-18, farmers are also prohibited from "stocking" seed for the purpose of selling, producing, reproducing, conditioning, exporting, and importing seed (among other things). Like the new conditioning right, this also marks a significant expansion in scope of registrants' rights and will allow for earlier intervention if unauthorized uses are suspected.
Stocking is not defined in the Canadian, American, or Australian legislation. Strictly speaking, a plant breeder's exclusive right to stock seed of registered varieties would prohibit farmers from storing harvested seeds without permission for any reason or for any length of time – including as a result of an inability to find elevator space, difficulties in securing truck or rail transport for delivery, or a desire to wait for a higher market price – even though storing seeds for these reasons does not necessarily relate to future unauthorized uses of seeds. However, we do not foresee that the exclusive stocking right will be interpreted in this manner, particularly because plant breeders do not have rights over harvested materials unless they were obtained from unauthorized uses (such as unauthorized production) and the plant breeder did not previously have an opportunity to claim rights. In short, where farmers have properly obtained permission to use registered seed, they are unlikely to be prohibited from stocking it or its harvested seed unless explicitly prohibited by the contract with the plant breeder. It is also likely that farmers will be able to stock harvested seeds of registered varieties for the purpose of using them to grow subsequent crops, a practice which is known as "farmer's privilege" and which we will discuss at length in our next post.
Exclusive Right to Import and Export
Lastly, registrants will have the exclusive right to import and export registered varieties under Bill C-18. If they wish, plant breeders may restrict the abilities of producers to sell crops from registered varieties across the border in the United States, a now commonplace activity in Canada's global agricultural landscape. However, as discussed, if the plant breeder does not contractually prohibit export in the first instance (which can be important with respect to crops grown from genetically modified seeds, as some jurisdictions have imposed import bans), it seems unlikely that it will be able to seek remedies at law.
Expansion of the scope of rights
Bill C-18 doesn't just add new rights – it also expands the scope of existing rights.
Under the PBRA, exclusive rights exist for 18 years. Bill C-18 provides exclusive rights for either 20 or 25 years, depending on the variety.
Further, as discussed above, exclusive rights may now also be invoked with respect to any material, including whole plants or parts of plants, harvested as a result of the unauthorized use of seed of a registered variety. If a farmer uses a registered variety as seed without paying a royalty fee or obtaining the agreement of the breeder, the breeder can claim the exclusive right to sell the harvested crop (along with the other rights described above). The exception to this is the farmer's privilege scheme.
Lastly, registrants can invoke their exclusive rights with respect to any plants which are essentially derived from the registered variety, not clearly distinguishable from the registered variety, and whose production requires repeated use of the registered variety. This allows registrants to more fully protect their registered varieties – they will be able to profit from knock-off varieties which display little innovation largely rely on the registrant's research and development.
Transition
Bill C-18 will apply to plant varieties registered after it has come into force. It will also apply to applications for plant breeders rights that are in progress when Bill C-18 comes into force. The current PBRA and its narrower scope of rights will apply to plant varieties which were registered prior to the coming into force of Bill C-18. As the new scheme will only apply to new varieties, it may be some time before we have a thorough understanding of how plant breeders and farmers are affected by C-18.
Status of Bill C-18
As of May 27, 2018, Bill C-18 had yet to complete Second Reading. There have been two sessions of debate on the Bill (March 3 and May 26, 2014). We will post an update when there is further progress concerning the Bill.
As mentioned above, our next post will focus on the new "farmer's privilege" scheme established by Bill C-18. We will discuss the future of farmer's privilege in Canada and how it will affect the rights of both seed companies and farmers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
