Case Number
CA 10717/05
Date Decided
9-3-2013
Decision Type
Appellate
Document Type
Full Opinion
Abstract
[This abstract is not part of the Court's opinion and is provided for the reader's convenience. It has been translated from a Hebrew version prepared by Nevo Press Ltd. and is used with its kind permission.]
This is an appeal on a judgment of the Tel Aviv District Court, in which the appellants’ action for a permanent injunction against the respondents, which would prohibit them from utilizing (within the meaning of this term in the Plant Breeders’ Rights Law, 1973) protected varieties of “gerbera” seedlings and flowers (hereinafter: “the protected varieties”), the registered rights in which are held by the appellants (Dutch corporations). Respondent no. 1 admitted (in 2005) that since purchasing some 20,000 protected seedlings from a registered agent of the appellants in 1999, he has been propagating them repeatedly “until today,” but he claims that he has done so with the permission of the appellants.
The Supreme Court (per Justice H. Melcer, Justices S. Joubran and E. Rubinstein concurring) granted the appeal on the following grounds:
Upon registration, the breeders’ right in a protected variety is deemed to be intellectual property – similar to a patent. Following registration, the breeder acquires a property right in the variety, giving him the power to prevent anyone else from utilizing, without his permission or unlawfully, the variety in which the right is registered. The scope of the right is prescribed in sec. 36 of the Plant Breeders’ Law, and sec. 65 of the Law regulates the relief that may be granted in actions for infringement on breeders’ rights.
Following the amendment in 1991 to the International Convention for the Protection of New Varieties of Plants, 1961, and Israel’s signature of the Convention in October of that year, the Plant Breeder’s Law was amended (Amendment no. 2 5756-1996), and inter alia, sec. 36A was added to the Law. In this section, the legislator anchored the doctrine of exhaustion of rights, or the “first sale doctrine”; the meaning of this is that subsequent to the first sale of the seedling of the registered variety by the holder of the breeders’ right or with his consent, within the territory of the State of Israel, the breeders’ right in that seedling is exhausted. At the same time, two reservations were established; when either of these eventuates, the cluster of rights granted to the breeder under the Law, which is defined in the term “utilization” in sec. 1 of the Law, is “restored” to him. The first reservation (which is relevant to the matter at hand) deals with utilization involving repeated propagation of the variety (sec. 36A(1) of the Law); the second reservation deals with the export of propagating material, or harvested material of the variety, which enables its propagation in a state that does not protect varieties of the genus or species to which the protected variety belongs, except for purposes of “private” consumption (sec. 36A(2) of the Law). The purpose of the said amendment was to achieve a balance between the property right of the breeders, who are entitled to an injunction under sec. 36, in certain circumstances, and the public interest in not permitting expansion beyond the exhaustion of the breeders’ right that he sold, except in a case of repeated propagation or export of propagating material for the purpose of propagation.
From a combined reading of the relevant provisions of the law, the legal situation that arises is this: every “utilization” – in the broad sense of the term in sec. 1 of the Law – of a registered variety, without the permission of the holder of the breeders’ right, or without a permit having been granted for this by law (e.g., within the bounds of the permitted uses under sec. 37 of the Law, such as utilization “for any act performed privately and not for commercial purposes” (sec. 37(2) (end)), falls within the definition of infringement on a breeders’ right, which grants the breeder the right to prevent the infringer from continued utilization of the protected variety, by means of an injunction (alongside additional remedies). The sale or the marketing by any other means of an item of the protected variety by the holder of the breeders’ right, or with his consent, within the territory of the State of Israel, exhausts the right of the breeder with respect to that item, and he may not invoke the steps afforded in the Law against a person who utilizes the registered variety in those ways, without his permission, or unlawfully, unless the utilization involves repeated propagation of the registered variety (or unlawful export, as stated in sec. 36A(2) of the Law). If such repeated propagation (or unlawful export) are involved, the powers and rights of the holder of the breeders’ right are restored to him, and he is entitled to take the steps afforded to him by the Law against any person who utilizes the registered variety in such manner without his permission, or unlawfully, thus infringing on his property right, and he is entitled to the full relief granted by the Law to the holder of the right in the case of infringement, including an injunction.
The practical significance of these provisions is that from the moment that the seedling of the protected variety is sold or otherwise marketed in Israel by the holder of the breeders’ right or with his consent, the holder of the breeders’ right has no claim against a person who utilizes the protected variety by way of cultivation, sale, import, export or marketing in any other manner of the seedling, or by way of maintenance for the purpose of one of these actions, as long as these actions do not involve repeated propagation of the variety, or the export of propagating material or harvested material of the variety, which allows for its propagation in a state that does not protect the varieties of the genus or species to which the protected variety belongs, except for the purposes of consumption, as prescribed in sec 36A(2) of the Law.
As opposed to this, the repeated propagation of a protected variety for commercial purposes, as well as the cultivation, offer for sale, or sale, export, import or marketing by other means, or maintenance for the purpose of performance of any of these actions, of the seedlings of a protected variety, which were produced by way of repeated propagation (or of the products of a protected variety, the crops derived from them or what they produced such as their flowers, their fruits etc., as determined and elucidated later in the judgment) amount to an infringement on the breeders’ right (unless they were expressly permitted and the conditions of the permit were met) that gives rise to an entitlement to relief that will prevent the continuation of the infringement in these ways, even if the product of the protected variety is initially sold or otherwise marketed within the territory of the State of Israel by the holder of the breeders’ right or with his consent.
In other words, it is forbidden for the grower who purchased seedlings of the protected variety to “produce” new seedlings of that variety by way of “repeated propagation,” for commercial purposes, without receiving permission from the holder of the breeders’ right. As stated, according to the Court’s position, within the definition of the expression “utilization that involves repeated propagation of the [protected] variety” are included not only the propagation itself (as the respondents argue), but also all utilization (within the definition of this term in sec. 1 of the Law) of the protected variety and of its “harvested material” (such as its flowers, fruits and the like) that were obtained as a result of the utilization of the protected variety by way of repeated propagation, without the breeder’s permission. “Preparation for the purpose of propagation” as well as maintenance of the variety for the purpose of repeated propagation (for commercial purposes) also fall within the definition of the expression “utilization that involves repeated propagation of the variety” that constitutes infringement on the breeders’ right. This expansive interpretation is mandated in light of the explicit language of sec. 36A of the Law, and it is consistent with the purpose of the 1996 Amendment, which was intended to broaden the protection of the breeders’ right; it is also consistent with the international obligations of the State of Israel, by virtue of the provisions of art. 16 of the Convention.
The injunctive relief to which the holder of the breeders’ right is entitled and its scope in the circumstances of sec. 36A(1) of the Law: The holder of a breeders’ right, whose right was infringed on by way of utilization involving repeated propagation of the variety for commercial purposes, without his permission, is entitled, as a rule, to relief by way of an order that will prevent the infringer from continuing to utilize the protected variety (within the meaning of secs. 36(b) and 1 of the Law), even if the item of the protected variety was initially sold or otherwise marketed in Israel, by him or with his consent. At the same time, the extent of the relief is equivalent to that of the right, and no more than that. This means that it is within the power of the order that is issued under the circumstances of sec. 36A(1) of the Law to prevent only utilization for commercial purposes that “involves repeated propagation of the variety.”
Utilization of a registered variety, similar to “utilization” of other things that are the bearers of abstract intellectual property rights, requires, in accordance with the provisions of the Law, permission from the holder of the breeders’ right (other than in situations that constitute “permitted use” within the meaning of sec. 37 of the Law – which are not our concern here). However, the Plant Breeders’ Law does not relate to the manner in which the permission must be given. Consequently, several different modes for granting the said permission have developed. The most common way is by granting a license to use by the holder of the breeders’ right, or his representative. As a rule, the preferred way is to grant a written license. However, according to the Court, in the absence of any contrary provision in the Law, there is nothing to prevent that permission to utilize a registered variety from being given orally (even though this may give rise to disputes and evidentiary difficulties, and is therefore not recommended). Without making an ironclad determination, in suitable circumstances the permission may also be deduced from the conduct of the parties. Similarly, the Court does not rule out the possibility that in certain circumstances, permission will also be given retroactively and in a less formal manner.
In the absence of any reference to the matter in the Plant Breeders’ Law, the validity of the said licenses (in all their possible forms) will be determined in keeping with the general laws that apply to transactions of this type (such as the laws of general contracts, laws of standard contracts, consumer protection laws and antitrust laws) and within the bounds of which the breeder is entitled, in principle (and subject to the general constraints of the laws), to attach conditions to utilization of a variety that he bred (even if it is not registered) that may not necessarily fall within the parameters of the property right granted to him by virtue of the Law. Without ruling definitively, conditions of this type are likely to include, inter alia, the imposition of a (compulsory) duty to report utilization of the bred varieties (both registered and non-registered); a compulsory undertaking to pay royalties (including for the utilization of varieties that are not protected by the Law); and an undertaking (obligatory) to allow the breeder, or his representative, to establish for himself the scope of utilization by the grower – and all subject to these obligations being valid under the general law and taking into account that in attaching conditions of this type, the breeder may expose himself to claims under the Restrictive Trade Practices Law.
The very act of reporting to the breeder on utilization by way of repeated propagation of the items of the registered varieties that were purchased lawfully by the grower, and the payment of royalties for their utilization, per se, cannot “repair” the breach and grant the “utilizer” protection or immunity from a claim for infringement on the breeder’s right where the law, or the holder of the right, explicitly forbade the grower to utilize the varieties in the said circumstances. This is especially so when there is a dispute between the two parties as to the amount of royalties that are to be paid for utilization of the variety.
At the same time, the power of the holder of a breeders’ right to revoke the license in a protected variety that he bred, as well as the power to sue that is granted to him under the Law, must be exercised in an accepted manner and in good faith. The scope of good faith is determined according to the nature of the relations between the property owner and the “other.”
In the present case, the Court was convinced that in the period relevant to the action, the respondent utilized (within the meaning of the term in the Plant Breeders’ Law) for commercial purposes, without the permission of the appellants and unlawfully, products of the seedlings from the protected varieties that were bred by the appellants, in a manner that involved their repeated propagation. The utilization by the respondent did not come under the aegis of the “protection of exhaustion” prescribed in sec. 36A of the Law, and it constitutes an infringement on the monopolistic right to utilize the protected varieties that is granted to the appellants in accordance with the provisions of the Plant Breeders’ Law.
From a combination of the provisions of sec. 35(b) and 65(a) of the Law it emerges that by virtue of the prerogative accorded to the holder of the property right in the protected varieties, the appellants are entitled to prevent the respondent, by means of an order, from utilizing, for commercial purposes, the protected varieties in a way that involves the repeated propagation of the variety. (Issuing a sweeping injunction, as requested, for all utilization and not only for utilization involving repeated propagation of the variety is not warranted, in that it deviates from the bounds of the “monopoly” that is granted to the breeder in the Law, and it is also not warranted in the circumstances of this case, inter alia, for reasons connected to anti-trust laws). There is no justification for limiting the injunctive relief, or to negate it, for reasons of “equity.”
It was made clear that respondent no. 1 bears direct liability for infringing on the appellants’ rights (in that he himself utilized the protected varieties, for commercial purposes, in a manner involving their repeated utilization, without the appellants’ permission), whereas respondent no. 2 – the owner of the agricultural lands on which the infringement was perpetrated – is liable for the infringement of the rights of the breeders, inter alia, by virtue of the doctrine of contributory infringement, which in Israeli law applies to the laws of patents (and the application of which was recently recognized in copyright law as well), and is recognized in this judgment in relation to the laws of breeders’ rights too.
Therefore an injunction was issued ordering the respondents to refrain from all utilization that involves repeated propagation of the protected varieties for which the appellants hold the registered breeders’ right, for commercial purposes, without the permission of the appellants.
Keywords
Copyright
Recommended Citation
Melcer, Hanan; Joubran, Salim; and Rubinstein, Elyakim, "de Kwakel B.V. v. Hajaj" (2013). Translated Opinions. 121.
https://larc.cardozo.yu.edu/iscp-opinions/121
