The case is Shenzhen Jingu Meixiang Industrial Co. v. Hefei Wanfeng Seed Co., Ltd. and Huoqiu Baofeng Seed Industry Co., Ltd., Case No. Zui Gao Fa Zhi Min Zhong No. 466, 2 Nov. 2021. An English-language translation by Connie Kongkui Hubbard is now available in 54 IIC 1121-31 (2023)--the August 2023 issue of the Max Planck Institute’s International Review of Intellectual Property and Competition Law—under the heading “China: ‘Huang Hua Zhan’ Rice Variety’.” To summarize, the plaintiff Jingu is the exclusive licensee of plant variety rights owned by the Rice Research Institute of the Guangdong Academy of Agricultural Sciences. Jingu filed suit against Wanfeng, a producer and seller of rice seeds, and Baofeng, a seller, alleging infringement of these rights. The court of first instance concluded that the defendants infringed and awarded damages of only CNY 300,000 against Wanfeng and CNY 40,000 against Baofeng. Both parties appeal from certain aspects of the lower court’s ruling. The SPC affirms the judgment of liability, but awards greater damages against Wanfeng, in the amount of CNY 1,000,000, plus CNY 50,000 costs.
Focusing exclusively on the damages issues, the Seed Law of the People’s Republic of China contains a provision similar to what is found in China’s Patent, Copyright, and Trademark Acts, in that it lists the various types of monetary compensation awardable in order of preference. Thus, under article 73 of the law in force at the time of the above decision, the court could award damages based on actual losses to the rightsholder; if this was difficult to calculate, then it could award damages based on the infringer’s financial gain from the infringement; if this was difficult to calculate, the court could award a license fee, which could be multiplied up to three times in the presence of aggravating factors; and if all else failed, it could award statutory damages of up to 3,000,000 CNY (equal to about $409,000 as of today). (An amended version of the Seed Law became effective in 2022. The damages provision is now found in article 72, under which courts can increase the amount of the license fee up to five times, and statutory damages of up to CNY 5,000,000.)
Anyway, in the
present case the SPC rejects the defendants’ argument that Jingu is not
entitled to damages because it has not suffered a financial loss, reasoning
that the rightsholder suffers a loss even if it does not produce seeds itself,
and that the defendants profited from their infringement. In addition, the court notes that Wanfeng and
Jingu entered into a mediation settlement agreement in 2019, under which
Wanfeng agreed to pay “damages of no less than CNY 1 million if it violated the
agreement,” which according to the court it did. More generally, the court appears to endorse the use of such
stipulated damages agreements, stating that although such a provision may be “simplistic,”
the “law does not proscribe a rights owner and an infringer from reaching an
agreement in advance regarding liability and the amount of damages.” In addition, the court noted that the infringement was a re-offense, occurring after the signing of the agreement; that the scale was "rather large"; and that Wanfeng sold and produced seeds that were found to infringing in two other cases in which it was not named as a party. The court therefore ordered Wanfeng to pay
CNY 1 million, plus costs (“reasonable expenses" Jingu incurred "defending its rights”) in the amount of CNY 50,000. The court also concludes that, although a seller is
not liable in damages if it proves that it did not know the seeds it
sold infringed, and that it obtained the seeds from a legal source, Baofeng did
not prove these facts here (“it is difficult to determine if Baofeng Company
either did not know or need not know that the seeds it sold infringed”). Therefore, Baofeng is liable for Jingu’s
losses from the sale of the infringing seeds, plus costs. The court
awards "CNY 40,000.00 damages.”
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