The Series So Far
In our first post, we set out the context of development of seed varieties in Canada.
In our second post, we examined the current PBRA and the rights conferred on a breeder by obtaining registration.
In our third post, we began a detailed examination of Bill C-18 and the way it would alter the scope of rights afforded to the owner of a registered variety.
The Farmer's Privilege – Current Practice and Policy Considerations
In this post, we will discuss how the exclusive rights afforded to plant breeders in Bill C-18 may be restricted in certain circumstances to permit farmers to save seeds of registered varieties and use them to grow subsequent crops, without the need for a license from the plant breeder. This exception to the exclusive rights of plant breeders is commonly known as "farmer's privilege".
Traditionally, the practice in Canada has been that, unless precluded by contract, farmers would have the right to save seed from a crop of a registered variety, and replant that seed, and to repeat that process indefinitely. This practice has not been governed by regulation: the current version of the PBRA is silent with respect to whether farmers are entitled to save seeds of registered varieties in light of the exclusive rights afforded to plant breeders. This is likely because UPOV 78, the international convention on plant breeders' rights that the current version of the Act seeks to implement, is also silent when it comes to the conflict between the ancient practice of seed saving and modern intellectual property rights.
Nonetheless, farmers who wish to purchase proprietary seed for planting are often required to agree to contractual restrictions on their ability to save and re-plant seed from the crops that they grow. As well, many crop types are now dominated by hybrid varieties which, by nature, cannot simply be replanted. As a result, the right to save seed is more limited than a simple description of the right to save and replant seed might suggest.
In considering the scope of the farmer's privilege, and how broad the scope should be, one must consider competing interests. On the one hand, it has been a traditional right of farmers in Canada to be able to save seed and replant it. The National Farmers Union and others have expressed concern about the increased costs that can be passed along to producers if seed companies have the power to impose royalty obligations on generations of seed that they did not sell.
On the other hand, the seed industry (and many farmers and farmer groups) recognize that without protection of intellectual property, there is little incentive for plant breeders to invest in creating improved plant varieties. Improvements can include better nutritional value, disease, herbicide and pest resistance, better climate tolerance, shorter growing seasons and other variations that lead to better performance or more specialized (and higher value) end-uses. Plant breeding is time consuming and expensive, as is the process of obtaining regulatory approval for new plant varieties.
How Would Bill C-18 Affect the Farmer's Privilege?
The "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, is the international convention which Bill C-18 seeks to implement through amendments to PBRA. UPOV 91 gives contracting nations the option to restrict plant breeders' rights in order to allow farmers to exercise farmer's privilege. UPOV 91 is clear, however, that farmer's privilege should be subject to reasonable limits and that efforts should be made to safeguard the legitimate interests of breeders.
Canada has decided to incorporate farmer's privilege into its regulatory scheme for registered seed varieties. The relevant provision proposed in Bill C-18 is as follows:
5.3 (2) The rights [to exclusively produce and reproduce propagating material of a registered variety and to exclusively condition propagating material for the purpose of propagating a registered variety] do not apply to harvested material of the plant variety that is grown by a farmer on the farmer's holdings and used by the farmer on those holdings for the sole purpose of propagation of the plant variety.
On the face of the provision, there are several criteria necessary for farmers' privilege to apply. Firstly, the privilege applies only to harvested material from crops grown by a farmer on his or her holdings and by that farmer on their own holdings to grow another crop. The privilege cannot be acquired from nor transferred to another person through gift or sale. A "farmer's holdings" presumably includes both leased land and owned land, although the provision is unclear in this regard as "holdings" is not defined. It is particularly unclear whether farmer's privilege may be asserted with respect to crops grown under a "crop share" leasing arrangements.
Secondly, the privilege, and the consequent exception to plant breeders' exclusive rights that would normally exist, applies only if the harvested material saved is used to grow a second generation crop, and no other purpose. The only exclusive plant breeder rights that are displaced by the privilege are the rights to produce propagating material and the right to condition for the purpose of producing propagating material.
Essentially, the farmer's privilege provision allows farmers to:
- purchase and plant seed of a registered variety under license from the plant breeder;
- harvest propagating material from the first generation crop
grown from registered seed; and then:
- condition that harvested propagating material so that it may be planted; and
- plant the harvested propagating material to grow a second generation crop (and store the propagating material in the meantime),
without license or authorization from the plant breeder, who ordinarily would have the exclusive right to produce, reproduce, and condition propagating material of their registered varieties.
It is important to note that the farmer's privilege does not grant any exceptions to a plant breeder's right with respect to harvested materials from the second generation crop. Plant breeders may, and almost certainly will, attempt to enforce their exclusive rights against farmers selling second generation harvested material grown from "farmer's privilege" propagating material. Plant breeders will likely demand a royalty from the farmer on the second generation harvested material.
Of course, plant breeders may avoid the hassle of dealing with enforcing their rights against crops grown from farmer's privileged propagating material by prohibiting farmers from saving propagating material in the first place. Plant breeders may (and frequently do) include such a term in the initial licensing contract. Another way of contractually preventing farmers from saving propagating material is to require them to sell 100% of the materials harvested from registered seed back to the plant breeder under what is commonly known as a "closed loop" contract. This is already a common practice for certain varieties used to make specialized products, such as specialized canola used to make high Omega-3 canola oil.
The Big Unknown – What Will the Regulations Say?
It is impossible to know at this stage precisely what the farmer's privilege scheme in Canada will entail. Pursuant to Bill C-18, the Governor in Council (cabinet) would be empowered to make regulations respecting:
- the classes of farmers or plant varieties to which farmer's privilege would not apply; and
- the use of harvested material with respect to farmer's privilege, including any circumstances in which that use is restricted or prohibited and any conditions to which that use is subject.
Thus, any regulations that modify the farmer's privilege are likely to do so in a manner that restricts its availability. Draft regulations have not yet been produced, although it may be likely that they will follow the guidelines set out by UPOV council. UPOV suggests that the size of a farmer's holding is a relevant consideration in establishing reasonable limits and safeguarding breeders' rights1. It is conceivable that certain farmers – perhaps those with large holdings or high profits – will be altogether prevented from exercising farmer's privilege.
UPOV cautions that farmer's privilege should not be universal, and that it may be inappropriate to extend farmer's privilege to certain agricultural or horticultural sectors – such as fruits, vegetables, or ornamentals – where farmers have not traditionally saved harvested materials2. Rather, UPOV suggests that farmer's privilege should apply only to crops where farmers have historically saved seeds for the purpose of propagation, such as cereal crops like wheat.
Cabinet may also place restrictions on the amount of harvested material which may be saved for future propagating use or the frequency in which this may be done. It is also possible that the regulations may establish a specific royalty scheme as a condition to the exercise of farmer's privilege – it is simply too early to tell.
It will be interesting to see what form the regulations take. They are certain to generate controversy, no matter their contents.
Update on Status of the Bill
Bill C-18 has proceeded through:
- First Reading: December 9, 2013
- Second Reading and Referral to Committee: June 17, 2014
- Presentation of Committee Report (Standing Committee on Agriculture and Agri-Food): November 5, 2014
- Concurrence at Report Stage (November 19, 2014)
Status of the Bill can be followed here.
The next step would be third reading. When a bill passes through third reading, it is considered to be passed by the House of Commons. The subsequent steps would be consideration and passage by the Senate, passage of any Senate amendments by the House, Royal Assent and coming into force (on a date selected by Cabinet, which would not occur until after the relevant Regulations are finalized). Because Bill C-18 is comprised of amendments to many existing Acts, it likely would not all come into force at the same time; rather, when the government is ready to bring amendments to a particular Act into force, it would proclaim that portion of Bill C-18 as it has been passed.
Unless there are significant amendments, this concludes our planned examination of the proposed amendments to the PBRA. We will post updates as the Bill continues to progress. If there are aspects of the proposed amendments not covered in this series that readers would like us to examine further, please contact the writers and we would be pleased to consider further posts.
1. International Union for the Protection of New Varieties of Plants, "Guidance for the Preparation of Laws based on the 1991 Act of the UPOV Convention", at page 73.
2. Page 72.
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.