Case C-242/14, Saatgut-Treuhandverwaltung – Community plant rights after the barley mow [judgment 2015, ECLI:EU:C:2015:422]

Strains of plants can be protected by a type of EU IP law known as the Community plant right. Consequently, if a farmer wants to use a plant that is protected by a Community plant right he will need to pay money to the right holder. Here, the question is whether a right holder is entitled to a farmer’s money when the right holder has not complied with the formalities of German law, and it may not have complied with the wording of the EU’s Regulation 2100/94 on Community plant variety rights.

Facts
German farmers engage in ‘Nachbau’, and keep a proportion of their harvest as propagating material for a subsequent, ‘planting the product of the harvest’.

However, some strains of plants are protected by a type of EU IP law known as the Community plant right.

So how should EU IP law apply in a situation where ‘the product of the harvest’ is obtained from material that comes from a protected variety?

The claimant in this case is the ‘STV’ [the ‘Saatgut-Treuhandverwaltung’], and that German company has but one purpose: it is to protect the economic interests of those in society who produce or market seeds.

The STV achieves its aim in a number of ways. For example, it monitors ‘plant variety’ rights on a national and international scale. It keeps a check on its members (or third parties) who are at propagating firms, or who are part of distribution associations. And it also adopts and implements ‘general measures’ that are designed to ensure that consumers get ‘top-quality’ seeds. The STV’s most important work is however to extract money from farmers and the like in respect of licences to use ‘plant variety rights’.

In this particular piece of litigation, the STV has tried to collect money from a family of German farmers. The STV’s attempt to get its money went like this. Every year, the STV would write to the defendant family enclosing a form. The form requested just general information about the extent to which in the relevant economic year the farmers were going to plant harvested material. (The request form did not however ask the farmers to identify which particular plant varieties they were going to plant.) The STV’s form also indicated which plant varieties were protected and who held not only the relevant plant breeders rights but also the respective licencees of those rights. However, the STV’s attempts to get this particular farming family to stump up failed because the farmers just did not return the form.

In 2011, the STV were informed by one of the farmer’s workers that in the economic year of 2010-2011, the farming family had used an amount of winter barley that was protected by a Community plant right. Consequently, the STV wrote to the farmers asking them about this, and set a time limit for them to reply. The farmers did not reply to the letter. The STV sent them a bill.

The matter ended up in court at the Landgericht in Mannheim. The farmers explained their belief that they were under no duty to pay any money to the STV. To start with, the STV’s bill was not legal. It did not comply with German law since the bill had failed to mention the VAT.

In any event, no legal debt had arisen. This was because the farmers were under no legal obligation in EU law to respond to the STV and provide them with the information being sought.

The law governing when a farmer must provide information is set down in Commission Regulation (EC) No 1768/95 of 24 July 1995 implementing rules on the agricultural exemption provided for in Article 14 (3) of Council Regulation (EC) No 2100/94 on Community plant variety rights.

Article 8(3) of that Regulation says:

The information […] shall refer to the current marketing year, and to one or more of the three preceding marketing years for which the farmer had not previously provided relevant information on request made by the holder in accordance with the provisions of paragraphs 4 or 5.
However, the first marketing year to which the information refers, shall be not earlier than the one in which the first of such requests for information was made in respect of the variety or varieties and the farmer concerned, or, alternatively, in which the farmer acquired propagating material of the variety or varieties concerned, if this was accompanied by information at least on the filing of the application for the grant of a Community plant variety right or on the grant of such right as well as on possible conditions relating to the use of that propagating material.
In the case of varieties coming under the provisions of Article 116 of the Basic Regulation and in respect of farmers entitled to invoke the provisions of Article 116 (4), second indent of the basic Regulation, the first marketing year shall be 2001/02.

Applying that provision here meant that the STV could only enquire about ‘the current marketing year’. Since the STV’s actual request related to a completely different marketing year, there was no legal basis for the STV’s request to provide information. Without such a legal basis, there was no obligation on the farmers to provide the information. Consequently, the STV could bring no legal claim for equitable remuneration on the basis of the farmers’ alleged failure to provide the information – for the farmers had not failed in their duty to provide information.

At the Landgericht Mannheim
The Landgericht Mannheim identified two major issues. First there was the Community plant variety regulation, and the scope of the so-called Article 14 derogation – could a farmer really be required to pay prior to planting harvested material? And second, if a farmer should pay not before but only after planting, then could some sort of timelimit for payment be imposed on the farmer?

A) the Article 14 derogation
The Landgericht Mannheim recalled the principle planks of EU legislation. Namely, the Article 14 derogation to the Community plant variety specifies:

1. Notwithstanding Article 13 (2), and for the purposes of safeguarding agricultural production, farmers are authorized to use for propagating purposes in the field, on their own holding the product of the harvest which they have obtained by planting, on their own holding, propagating material of a variety other than a hybrid or synthetic variety, which is covered by a Community plant variety right.

The wording of Article 14 then goes on to say:

3. Conditions to give effect to the derogation provided for in paragraph 1 and to safeguard the legitimate interests of the breeder and of the farmer, shall be established, before the entry into force of this Regulation, in implementing rules pursuant to Article 114, on the basis of the following criteria:
…
– in the case of those of the plant species referred to in paragraph 2 of this Article to which Council Regulation (EEC) No 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops (4) applies, farmers who do not grow plants on an area bigger than the area which would be needed to produce 92 tonnes of cereals; for the calculation of the area, Article 8 (2) of the aforesaid Regulation shall apply

Although unhelpful to providing a clear answer in the present case, there were also a couple of pieces reasoning in the CJEU’s case law.

First, there was Case C-305/00, Schulin v STV, in which it was said:

71. In any event, a farmer who does not pay equitable remuneration to the holder when he uses the product of the harvest obtained by planting propagating material from a protected variety, cannot rely on Article 14(1) of Regulation No 2100/94 and, therefore, must be considered to have undertaken, without being authorised, one of the acts referred to in Article 13(2) of that regulation. Accordingly, it is clear from Article 94 of that regulation that such a farmer can have an action brought against him by the holder for an injunction in respect of the infringement or for payment of equitable remuneration or both. If the infringement is intentional or negligent, the farmer is also obliged to pay damages to make good the loss suffered by the holder.

Second, there was the later judgment in Case C-509/10, Geistbeck v STV – a case in which a farmer had planted more of his harvest than he had declared. In Geistbeck, the CJEU had explained:

23 In that regard, the Court has found that a farmer who does not pay equitable remuneration to the holder when he uses the product of the harvest obtained by planting propagating material from a protected variety cannot rely on Article 4(1) of Regulation No 2100/94 and must therefore be considered to have carried out, without being authorised, one of the acts referred to in Article 13(2) of that regulation (Schulin, paragraph 71).
24 As it is, the situation of the Geistbecks is similar to that of farmers who have not paid the ‘equitable remuneration’ provided for under the fourth indent of Article 14(3) of Regulation No 2100/94, in so far as, by not declaring a part of the product of the harvest that they had planted, they did not pay such remuneration.

But this body of EU law did not really provide a clear answer to the present case, namely, whether, and up to what point in time, a farmer was required to pay the equitable remuneration provided for under the fourth indent of Article 14(3) of Regulation (cited above), if he was to qualify for the Article 14(1) derogation.

STV’s standpoint was clear. It believed that a farmer must have satisfied all of the requirements to qualify for the Article 14 derogation and to have done so at the moment of planting – otherwise, the farmer would commit an unauthorised act pursuant to Article 13(2) of Regulation 1768/95.

But the Landgericht in Mannheim was suspicious about the validity of that submission. Yes, Article 6(1) of Regulation 1768/95 did indeed create an obligation on an individual to pay an equitable remuneration at the moment when he actually used the harvested product in the field for propagation purposes. Equally, the second sentence of that provision permitted the right holder to decide and set the day on which payment must be made, and even the method of payment. However, there appeared to be nothing in the wording of the second sentence which would allow for the payment date to be fixed prior to the date on which the obligation actually arose. Consequently, the Landgericht understood the EU legislation to mean that the farmer could not be obliged to pay the compensation prior to the actual start of the planting of the product of the harvest.

Furthermore, the Landgericht Mannheim had understood that it was general commercial practice for payment to take place only after the farmer had planted, and only then after the right holder had asked for the relevant information, and indeed only after he had provided the right holder with that information. It seemed to be understood commercially that a farmer would be taken to have to discharged his obligation once he had filled out a form which specified which particular plant varieties had been planted in the relevant period of ‘the request for information’ form – for on the basis of that information, he would then pay the correct amount at a later date. In other words, payment would only come after planting. Still, the referring court decided to ask a question of the CJEU on this point.

B) the payment framework
Now in the event of a farmer not being obliged to pay prior to planting, this would mean that a farmer’s planting was indeed ‘authorised’ for the purposes of aforementioned Article 14(1) of Regulation 2100/94, when read together with Article 94(1) of that Regulation. So how should he pay the equitable remuneration?

In so far as Article 94 is mentioned in the subsequent question asked by the Landgericht, it might be helpful to note at this point that Article 94 governs ‘Infringement’, and states boldly:

1. Whosoever: (a) effects one of the acts set out in Article 13 (2) without being entitled to do so, in respect of a variety for which a Community plant variety right has been granted; or (b) omits the correct usage of a variety denomination as referred to in Article 17 (1) or omits the relevant information as referred to in Article 17 (2); or (c) contrary to Article 18 (3) uses the variety denomination of a variety for which a Community plant variety right has been granted or a designation that may be confused with it; may be sued by the holder to enjoin such infringement or to pay reasonable compensation or both.
2. Whosoever acts intentionally or negligently shall moreover be liable to compensate the holder for any further damage resulting from the act in question. In cases of slight negligence, such claims may be reduced according to the degree of such slight negligence, but not however to the extent that they are less than the advantage derived therefrom by the person who committed the infringement.

But the Landgericht felt that this did not really answer the issue here since the parties had no contractual relations whatsoever. What should be done? There were no contractual arrangements in place concerning the timelimit for payment in respect of monies owing from the planting of the product of the harvest. Equally, the STV had made no use of the possibilities afforded to it by Article 6(1) of Regulation 1768/95 for putting in place a payment programme. Furthermore, the STV’s letter requesting information had also failed to set out a timeframe for payment. That said, neither of the EU’s Regulation had expressly set down a payment time frame in respect of a farmer who was considered to be ‘authorised’ to start planting. Indeed, the wording of the EU Regulations did not seem to support any of the proposed interpretations of the law which had been advanced by the STV. So what should be done? The Landgericht Mannheim felt it appropriate to ask a question on this point too.

Questions Referred
My unofficial translation of the questions asked by the Landgericht Mannheim reads:

1. Is a farmer – who, without contractual agreements with the plant variety right holder, uses the product of the harvest obtained by planting propagating material from a protected variety – required to pay an equitable remuneration to the right holder in accordance with Article 94(1) of Regulation (EC) No 2100/94 of the Council of 27 July 1994 on Community plant variety rights; and required to pay compensation for all further harm which is caused, whether intentionally or negligently, through infringing the plant variety right within the meaning of Article 94(2) of the Regulation, when the obligation to pay an equitable remuneration by dint of Article 14(3) fourth indent – read together with Articles 5 et seq of Commission Regulation (EC) No 1768/95 of 24 July 1995 implementing rules on the agricultural exemption for farmers provided for in Article 14(3) of Council Regulation (EC) No 2100/94 – had not yet been fulfilled at the time of the actual use of the product of the harvest for propagating purposes in the field?

2. In the event of the answer to the first question being that the farmer can still be obliged to pay an equitable remuneration even after an actual use of the product of the harvest for propagating purposes in the field, must the aforementioned provisions be interpreted in such a way that they set a time limit to pay equitable remuneration for the farmer who has planted using propagating material obtained from a protected variety for that farmer to be considered ‘authorised’ for the purposes of Article 94(1) of Regulation (EC) No 2100/94 when read together with Article 14?