Infringement of the Plant Variety Protection Act Requires Notice That the Seed Is a Protected Variety
July 28, 2006
Last Month at the Federal Circuit - August 2006
Judges: Rader, Schall, Gajarsa (author)
[Appealed from: E.D. Ark., Judge Wright]
In Syngenta Seeds, Inc. v. Delta Cotton Co-Operative, Inc., No. 05-1507 (Fed. Cir. July 28, 2006), the Federal Circuit reversed the district court’s denial of Delta Cotton Co-Operative, Inc.’s (“Delta Cotton”) motion for JMOL for infringement under the Plant Variety Protection Act (“PVPA”) and the Lanham Act.
Syngenta Seeds, Inc. and Syngenta Participations AG (collectively “Syngenta”) produce a soft red winter wheat variety known as “Coker 9663.” Coker 9663 is a plant variety certified pursuant to, and subject to the protections of, the PVPA. As such, Coker 9663 is sold with the required PVPA marking notice: “Unauthorized Propagation Prohibited” or “Unauthorized Seed Mulitplication Prohibited.” Syngenta is also the holder of the federally registered trademark “COKER.”
Delta Cotton operates a grain elevator and as part of its business activities buys crops from local farmers, including wheat. Regardless of the source, Delta Cotton places all purchased wheat in the same storage bin. Delta Cotton sells part of the stored wheat as feed wheat, intended to be fed to farm animals and not to be propagated. Such wheat is generally labeled “Delta Co-Op feed” and sold in fifty-pound bags. Delta Cotton also sells Syngenta’s protected Coker 9663 seed.
This suit stems from the sale by Delta Cotton of three sixty-pound bags labeled “Delta Cotton Co-Operative” and “Feed Wheat” to a man hired by Syngenta’s law firm when he entered Delta Cotton’s facility and asked whether Delta Cotton had “any wheat I can plant for deer plots.” According to an agronomist hired by Syngenta, a sample of wheat from those bags contained 90% Coker 9663 seed.
Syngenta brought suit against Delta Cotton for, among other claims, infringement of the PVPA and the Lanham Act, and seeking, in part, damages and permanent injunctive relief. At the close of Syngenta’s case, Delta Cotton moved for directed verdict alleging that Syngenta did not carry its burden of proof on both the PVPA and Lanham Act infringement. The motion was denied. During trial, the judge instructed the jury that what Delta Cotton knew about the source of the seeds was irrelevant and that “[w]hat’s important is whether what was sacked up was Coker 9663, unmarked, in propagatable form.” The jury awarded Syngenta damages of $67,500 on the PVPA claim and $67,500 on the Lanham Act claim, plus interest. After post-trial briefing, the district court granted Syngenta’s motions for permanent injuction and costs, and denied Delta Cotton’s motions for new trial, JMOL, and remittitur.
Applying Eighth Circuit Law, the Federal Circuit explained that a postverdict motion for JMOL cannot raise issues not previously raised in a preverdict motion. Therefore, the Federal Circuit limited the issues on appeal to (1) whether the jury verdicts of infringement under the PVPA and the Lanham Act were supported by sufficient evidence and (2) whether the district court correctly applied § 2567 of the PVPA.
With respect to the PVPA claim, the Federal Circuit concluded that the district court had incorrectly applied the relevant statute. 7 U.S.C. § 2541(a)(6) provides that “it shall be an infringement” of the PVPA to “dispense the [protected] variety to another, in a form which can be propagated, without notice as to being a protected variety under which it was received.” According to the Federal Circuit, § 2541(a)(6) has four components: “(1) dispensation of a protected variety, (2) in a propagatable form, (3) without the notice that it is a protected variety, and (4) under which it was received by the dispenser.” Slip op. at 8. Because the district court erroneously omitted the fourth element and did not require evidence proving that Delta Cotton had notice and failed to provide notice that the seed it dispensed was PVPA protected, the Federal Circuit concluded that the evidence was insufficient as a matter of law to sustain a finding of infringement.
Despite holding that the evidence was insufficient for a finding of infringement, the Federal Circuit nonetheless addressed the issue of damages. The Court explained that § 2567 of the PVPA is analogous to § 287 of the Patent Act. Those damages limitation provisions require the party seeking damages to allege and prove marking or actual notice. Specifically, the Court stated that when seed is not properly labeled, § 2567 places the burden on the plaintiff to demonstrate infringement and “‘actual notice or knowledge that propagation is prohibited’ or that the seed is a protected variety.” Id. at 10. Under this interpretation, Delta Cotton’s knowledge, or lack thereof, that the seed was a protected variety is not an affirmative defense, but an element of damages to be proven by Syngenta. Therefore, the Court concluded that the district court erred as a matter of law in not requiring Syngenta to carry its burden in proving damages.
Finally, regarding the Lanham Act claim, the Federal Circuit concluded that there was insufficient evidence presented at trial to support the jury’s finding of infringement. During trial, the jury found that Delta Cotton infringed under a “reverse palming off” theory. In order to recover under this theory, a “plaintiff must prove: (1) that the work at issue originated with the plaintiff; (2) that origin of the work was falsely designated by the defendant; (3) that the false designation of origin was likely to cause consumer confusion; and (4) that the plaintiff was harmed by the defendant’s false designation of origin.” Id. at 12. The Federal Circuit found that the first two elements were met by Delta Cotton’s packaging of Syngenta’s Coker 9663 seed in bags labeled “Delta Co-Op Feed.” However, the Court concluded that there was insufficient evidence of injury to Syngenta’s reputation to support a finding that Syngenta was harmed and injured under the Lanham Act. Furthermore, the Court acknowledged that the district court did not allow evidence regarding whether Delta Cotton sold the wheat for feed, not propagation, and pointed out that, if true, such facts would make Syngenta’s claim of injury even less likely. Thus, the Federal Circuitconcluded that Delta Cotton’s motion for JMOL on the Lanham Act claim should have been granted.