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Breeders Rights What
constitutes a sale under the Plant Breeder’s Rights Act 1994?
What constitutes a sale under the Plant Breeder’s Rights Act 1994?
The Plant Breeder’s Rights Act, 1994 (PBR Act) is clear about how the “sale” of plant material
affects the registration of a variety. Section 43 of the PBR Act sets out the requirements
for a plant variety to be registrable. One requirement is that the variety has not been exploited
or has been only recently exploited. Under the PBR Act a plant variety is taken not to have been
exploited if, at the date of lodging the application for PBR in the variety, propagating or
harvested material of the variety has not been sold to another person by, or with the consent
of, the breeder (or successor in title) outside the specified time periods. That is, sale
in Australia is permitted for up to one year prior to applying for PBR and sale overseas is
permitted in tree and vine varieties for up to six years (four years for all other varieties)
prior to applying for PBR.
The above information has being widely distributed in workshops, the “General Information on
Plant Breeder’s Rights For Applicants and Qualified Persons” and elsewhere since 1994. Despite
this, it appears that some in the industry have chosen to make their own interpretations of the
legislation and suggest that only sales to the “public” or in “commercial quantities” constitute
a sale. These interpretations are wrong, ill-founded and could result in an application for PBR
being refused.
The interpretation of what types of activities may or may not constitute a sale have been tested
previously by the Federal Court and the outcomes have supported the long-standing view of the
PBR office.
For example, on 16 July 1991 Sun World Inc made an application for the grant of plant variety
rights under the now repealed Plant Variety Rights Act 1987 (PVR Act). The application related
to a grapevine variety generally known as ‘Sugraone’.
The Registrar decided that, pursuant of section 14 to the PVR Act, the company could not be
granted rights because the grapevines had been sold, with the authorisation of the breeder,
more than six years before the making of the application. Although this case involved
interpretation of “sale” under Sections 3 and 14 of the PVR Act it is also applicable
to Sections 3 and 43 of the PBR Act.
Ultimately Sun World appealed the decision in the Federal Court. The Single Judge of the
Federal Court affirmed the Registrar’s decision and awarded costs.
Sun World appealed the decision. The Full bench of the Federal Court heard the appeal on 20 March 1998.
Full transcripts of these judgments are available on the Federal Court website:
http://www.austlii.edu.au/cgi-bin/disp.pl/au/cases/cth/federal%5fct/1998/1260.html?query=sugraone
The outcome of the Federal Court judgment assists in the interpretation of what constitutes a
sale for the purposes of PBR. The definition of “sale” was the turning point for the Registrar’s
decision.
The Registrar argued that goods (vines) had been exchanged for money and that such an exchange
is a sale.
Sun World argued that
- where the vines of the variety are exchanged as an element in a larger transaction (for
example when the transaction also includes fruit marketing rights) that there is no sale, and
- as restrictions have been placed on the sale of fruit and further distribution of vines,
that the general property of the vines has not been transferred, and
- the price paid for the vines was not the real “commercial value” therefore no sale had
occurred, and
- while documents are entitled “Sales of Plants” and the language is that of sale
and purchase, the substance of the documents extends to other than that of the transfer
of vines and therefore cannot be considered as conclusive evidence of sale
The appeal by Sun World International to the full bench of the Federal Court against the
Registrar’s decision to refuse the grant of rights, was rejected.
The grounds for the rejection were that ‘sale’ had occurred more than six years prior to the
application being lodged.
The definition of sale was taken to include ‘letting on hire or exchanging by way of barter’.
The Federal Court rejected the notion that for the purposes of the Act “sale” could only be in
terms of the exchange of goods for money. Also the court found that the “sale” of ‘Sugraone’
vines was not invalidated by the fact that the sale agreements placed additional restrictions
on the way the vines could be used.
On 19 December 2002 the PBR Act was amended to exclude certain activities as
being considered as sales. The amendments were introduced inter alia
to address the practice of testing varieties in farmers’ paddocks before application
lodgement. Often farmers exchange the use of their land for the residue of the
harvest once the experiment is completed and these (and other similar) practices
may previously have qualified as ‘sales’. This lead to the possibility that
eligibility of varieties for PBR was endangered even though such ‘sales’ are
related to multiplication, research, etc. The PBR Act now provides that in certain
circumstances the disposal of materials derived from multiplication/testing/research
activities are not considered as sales and therefore do not limit a variety’s
eligibility for PBR. In addition, the exclusion is extended beyond propagating
and harvested material to also include products obtained from harvested material.
If you are unsure as to whether a specific activity constitutes a sale, you should contact the
PBR office and take private legal advice before embarking on any substantive action.
Conclusion
The Federal Court judgments confirm the view that the supply of propagating or harvested
material in exchange for money, goods, by way of let or barter (and barter could include services)
constitutes a sale under the PBR Act, provided that it is done with the consent of the breeder.
It is immaterial whether or not the exchange occurs privately, to the public, to wholesalers,
in small numbers or below market value. In certain circumstances, some specific activities relating
to the exchange/disposal of materials derived from multiplying and evaluating the variety are
excluded from consideration as a sale.
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