European Union: ECJ Rules On Exhaustion Of Plant Variety Rights

Last Updated: 16 December 2011
Article by Van Bael Bellis

Most Read Contributor in Belgium, October 2018

On 20 October 2011, the Court of Justice of the European Union (the "ECJ") delivered its judgment in case C-140/10 Greenstar-Kanzi Europe NV ("GKE") v Jean Hustin and Jo Goossens, addressing two questions referred to it by the Supreme Court (the "Referring Court"). The questions involve the possibility for a person enjoying the right of exploitation of a plant variety to bring an action for infringement on the basis of Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights (the "CPVR Regulation").

The case at hand concerns the Community plant variety right for apple trees of the Nicoter variety. The apples of these trees are marketed under the trade mark "Kanzi". The plant variety and trade mark rights are held by Better3fruit NV ("Better3fruit") which maintains a strict distribution system to protect the trade mark and the quality of the Nicoter variety. In 2003, Better3fruit and Nicolaï NV ("Nicolaï") concluded a licensing agreement granting Nicolaï an exclusive right to grow and market apple trees of the Nicoter variety. The agreement provided that if Nicolaï wished to dispose of or sell Nicoter trees, the parties also had to enter into a grower's or marketing licence agreement. Despite this contractual provision, Nicolaï sold Nicoter apple trees to Mr. Hustin in 2004 without having concluded a grower's or marketing licence agreement.

In 2005, the licensing agreement between Better3fruit and Nicolaï was terminated and Better3fruit concluded a new agreement with GKE under which GKE acquired the exclusive exploitation rights for Nicoter trees. In 2007, GKE discovered that Mr. Goossens was selling Kanzi apples which had been provided to him by Mr. Hustin. As a result, GKE filed an action for infringement of the Community plant variety rights against Mr. Hustin and Mr. Goossens before the Commercial Court of First Instance of Antwerp. The Court of First Instance upheld the infringement claim. However, upon appeal, the Antwerp Court of Appeal overturned this judgment. GKE further appealed to the Referring Court.

Considering that it was not the plant variety right owner, but GKE which had brought the infringement claim, the Referring Court asked the ECJ to clarify whether the CPVR Regulation makes it possible for the person enjoying the right of exploitation of a Community plant variety right to bring an action for infringement. In particular, the Referring court sought to know whether such an action could be based on a breach of the contractual provisions in the licensing agreement between the holder of the Community plant variety right and the licensee.

Second, the Referring Court also asked the ECJ whether it is of any importance for the evaluation of the infringement that the person concerned is aware or is deemed to be aware of the limitations stipulated in the licensing agreement.

The ECJ held that the right of the person enjoying the right of exploitation to file an action for infringement depends upon the holder of the Community plant variety right. Indeed, the person enjoying the exclusive exploitation right can bring an action in the right holder's place on the basis of Article 104 (1) of the CPVR Regulation.

However, the ECJ underlined that the Community plant variety right can, in principle, not be relied on to prohibit the trade of products for which the rights have been "exhausted", i.e., if the products have been put on the market in the European Union by the right holder or with his consent. The ECJ referred to exhaustion rules under trade mark law and to its judgment in the Copad case (case C-59/08). In that case, the ECJ held that the fact that the goods were put on the market by a licensee does not necessarily exhaust the trade mark holder's rights. Indeed, if the goods were sold in breach of the terms of the licence contract, the goods were not sold with the consent of the right holder and hence the rights are not exhausted.

However, the ECJ maintained that a breach of a provision of the licensing contract does not necessarily imply that the holder's consent has been violated. To prevent exhaustion, the breach must relate to an essential aspect of the plant variety right. As a result, the ECJ concluded that a person enjoying the right of exploitation has the right to bring an action for infringement if the contractual limitations which were breached by the licensee (in this case Nicolaï) relate directly to the essential features of the Community plant variety right in question.

With regard to the second question, the ECJ found that Article 94(1) of the CPVR Regulation, which sets out the conditions under which an action for infringement can be brought in order to receive reasonable compensation and/or enjoin the infringement, does not require any subjective elements to be fulfilled on the part of the alleged infringer. By contrast, such a subjective element is provided for in Article 94(2) of the CPVR Regulation, which permits the right holder to claim "further damages" for intentional or negligent infringement. However, the question at hand relates to Article 94(1) of the CPVR Regulation and according to the ECJ, it is of no significance for the assessment of the infringement under this provision whether the alleged infringer was aware of the conditions or limitations set forth in the licensing contract.

This ECJ judgment confirms that the rules which apply to the exhaustion of trade mark rights are also applicable to plant variety rights.

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.

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