In the context of a shrink-wrap license used to package soybean seeds, the U.S. Court of Appeals for the Federal Circuit upheld the district court’s dismissal of soybean farmer Showmaker’s false marking claim. Edward Showmaker v. ADVANTA USA, INC. Case No. 04-1502 (Fed. Cir. Jun. 14, 2005) (Rader, J.). The appeal arose from a final decision of the district court to dismiss the complaint for failure to state a claim upon which relief can be granted. Based on the finding that in its shrink-wrap licenses Advanta did not use either terms of art (or variations of the same) reserved by the Plant Variety Protection Act (PVPA), the Federal Circuit affirmed the lower court dismissal.
Edward Showmaker is a farmer who purchased certain seed variety from Advanta USA, Inc. (Advanta). The variety was neither patented nor certified under the PVPA. However, it was sold in bags marked with the following provisions regarding the seed: "genetics developed, licensed or owned by seller"; (b) the seller retains all rights to make, produce or sell seed products derived from the seed and (c) the buyer acknowledges ownership and agrees not "to resell or supply any of this seed to any other person or entity," is "strictly prohibited from saving or selling, for seed purposes, any grain products from the seed" and agreed "not to alter, or permit the alteration of the seed …through either genetic engineering, conventional breeding activities or other techniques" (the "shrink-wrap license"). The shrink-wrap license did not contain any reference to the PVPA or to any PVPA certificate.
Subsequent to his purchase, Mr. Showmaker informed Advanta of his interest in saving the variety seeds for future crops. Advanta informed Mr. Showmaker that such an act would be considered a breach of contractual and/or intellectual property rights. Mr. Showmaker then filed suit on behalf of a class of farmers from 18 states that had also purchased seed from Advanta, asserting various state and federal claims. The parties eventually agreed to dismiss all claims except the false marking claim.
The Court’s decision emphasizes not only that Advanta failed to engage in those activities expressly prohibited under the PVPA (e.g., referencing the PVPA or any pending application for plant variety protection or issued PVPA certificates when not applicable) but also that Advanta did not engage in any "overt attempt to invoke the protections of federal law for seeds that do not qualify for that protection." The Court found Advanta’s contractual language in no way conveyed PVPA protection nor used any term similar to the terms provided under the PVPA (e.g., "Unauthorized Propagation Prohibited" or "Unauthorized Seed Multiplication Prohibited") in its shrink-wrap license. The Court reasoned that Advanta contractually prohibited buyers from "saving or selling, for seed purposes, any grain products from its seeds" or from altering the seed "through genetic engineering, conventional breeding, or other techniques." Such limitations were found to be mere contractual restrictions which did not put potential purchasers or the public on notice of a plant variety owner’s rights. As such, these terms were found to be binding only on the parties and did not arise to false marking prohibited under the act.
Practice Note: Careful drafting of shrink-wrap provisions may provide crucial protection of seed varieties in addition or in the alternative to federal protections available under the PVPA.
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