Comments

The Draft Regulations are the second draft revision to the Regulations, the first draft revision was released for comment in 2019 ("2019 Draft Regulations"). The Draft Regulations incorporate a number of suggestions contained in the 2019 Draft Regulations, including expanding the protected acts, providing protection of harvested material, expanding the term of protection, increasing the penalties for infringement and counterfeit, and clarifying authority and duty of lower-level governments to handle infringement cases. The Draft Regulations also include the lack of knowledge and legitimate source defenses. From an overall perspective, the Draft Regulations are not as detailed as the revisions proposed under the 2019 Draft Regulation and are not as progressive in some respects. However, further progress has been made since the last draft in some respects including in the protection of varieties which are not clearly distinct and clarification that arbitration can be used to resolve PVR infringement disputes.

The Draft Regulations provide PVR holders with much wider protection and more comprehensive tools to safeguard and commercialize their new plant varieties, complementing the recent amendments to the PRC Seed Law. For any assistance in drafting and submitting comments, please reach out to us at our details below. We are closely following the developments and will keep you updated on any developments.

In more detail

1. Expansion of the scope of protection

The protection of propagating material of protected varieties has been extended from production, propagation and sale to a total of eight acts including handling of propagating material for propagation purposes, offer for sale, import, export and storage of propagating material.

PVR protection has also been extended to include harvested material, subject to meeting certain preconditions, in line with the revised PRC Seed Law. The Draft Regulations define "harvested material," being the whole or part of a plant obtained from growing propagating material. However, the Draft Regulations do not clarify how the extension to harvested material will operate in practice.

The Draft Regulations also extend a variety's protection to certain other varieties, including:

• Varieties which are essentially derived from the protected variety
• Varieties which are not clearly distinguishable from the protected variety
• Varieties produced or propagated from the repeated use of a protected variety for commercial purpose

Unfortunately, unlike the 2019 Draft Regulations, protection has not been extended to all genera and species. The Draft Regulations maintain that only genera and species listed in the published catalogues may be protected.

2. Implementation of regulations on Essentially Derived Varieties (EDV)

The revised PRC Seed Law extends PVR protection to essentially derived varieties (EDV) for the first time in China. The PRC Seed Law defines an EDV as a variety which is (i) substantively derived from an initial variety, or substantively derived from a variety which itself is substantively derived from an initial variety; (ii) is clearly distinct from the initial variety; and (iii) except for the differing characteristics arising from the act of derivation, the variety is the same as the initial variety in terms of the expression of the basic characteristics produced from the genotype or combination of genotypes of the initial variety. The Draft Regulations provide that the scope of the implementation of EDV will be determined by a catalogue to be published by the competent agriculture and forestry departments under the State Council. Pursuant to the Draft Regulations, the departments are to issue determination guidelines to clarify the requirements and capabilities of appraisal agencies in respect of EDV and to establish an expert committee to provide professional consultation regarding EDV. We anticipate that EDV may be rolled out on a crop by crop basis. It is unclear who will have authority to make determinations on EDVs, whether this will be left to courts or whether this will fall under the jurisdiction of the administrative departments.  

3. Extension of protection period

The protection periods for woody plants and vines have been extended from 20 years to 25 years, while the protection period of other plant varieties has been extended from 15 years to 20 years. This extension fosters China's integration with international standards.

4. Introduction of punishment for dishonest behavior

If there is involvement of any dishonest behaviour, including deception, concealment and counterfeit during the PVR application process, this will be recorded in the social credit system and will be publicized. Such applicant (and its responsible person) will not be allowed to file any application for PVR in the following three years and will have to compensate for any loss it has caused.

This aims to enhance the honesty and integrity of the PVR application process and registration system.

5. Comprehensive enforcement measures for administrative authorities at or above the county level

The Draft Regulations clarify that the administrative departments of agriculture and forestry at or above the county level are competent to handle PVR infringement and counterfeit cases upon the request of PVR holders or interested parties. The current Regulations only refer to the administrative departments at or above the provincial level. In practice, this will remove the ability of the administrative departments at or above the county level to reject cases based on not having clear authority to handle.

The administrative departments at or above the county level are expressly authorized to take the following actions when dealing with PVR infringement and counterfeit cases:

• Enter production and operation sites for inspection
• Conduct sample tests, trials and inspection of propagating material and harvested materials in issue
• Inspect and make copies of relevant agreements, bills, account books, production and operation files as well as any other relevant information
• Seal up and detain evidence supporting any infringement and counterfeiting acts, including tools, facilities and transportation facilities involved
• Seal up premises related to any infringement and counterfeiting acts

The revised PRC Seed Law also provides for similar measures to facilitate enforcement abilities of the administrative authorities.

In addition to filing administrative complaints or initiating civil litigation through the People's Courts, the Draft Regulations clarify that PVR holders or interested parties are also entitled to settle disputes through arbitration. This is the first time that arbitration is clearly listed as one of the options to safeguard PVR in China.

6. Increase in penalties

For PVR infringement and counterfeit cases involving material worth more than RMB 50,000 (approx. USD 7,184), the penalties have increased from 1 to 5 times of the value of goods to 5 to 10 times the value of goods in question. On the other hand, for cases with materials worth less than RMB 50,000, the Draft Regulations set a minimum of RMB 10,000 (approx. USD 1,437) for penalties, while the maximum remains unchanged at RMB 250,000 (approx. USD 35,922). Such amendments are aligned with Article 72 of the revised PRC Seed Law.

7. Farmers' Exemption

The 2019 Draft Regulations provided clarity around the breadth of the Farmers' Exemption, providing a narrow definition of what constitutes a "nongmin," the subject of the farmers' exemption, and a narrow application of the exemption. A "nongmin" is defined under the 2019 Draft Regulations as a member of a rural collective economic organization who has signed a rural land contract under the household contract responsibility system, and the farmers' exemption from infringement only applies to self-use or self-propagated propagating material by the "nongmin" of an amount which does not exceed the reasonable amount needed for the household contracted land.

While the Draft Regulations provide for the same narrow definition of "nongmin," the Draft Regulations do not limit the amount of self-propagation that is permitted under the exemption, or the crops to which the Farmers' Exemption applies, leaving it open to be applied to vegetatively propagated crops, where there is no practice of saving seed.

8. Lack of knowledge and legitimate source defence

The infringer could rely on this defense to infringement if the following two conditions are both satisfied: (i) the infringer did not know or ought not to have known that the propagating material or harvested material was infringing; and (ii) the infringer can provide evidence to prove that the material came from a lawful source. The infringer could be exempted from the whole or part of the punishment based on this ground, but they will still be required to stop infringement immediately.

This aligns with Article 13 of the Several Rules on the Application of the Law to the Trial of New Plant Variety Infringement Cases (II) issued by the PRC Supreme People's Court.

9. Restoration of right

The Draft Regulations include a new article to clarify that applicants can apply for restoration of rights if such rights were lost under certain conditions.

First, if there is any delay in the applicant's compliance with deadlines set by Draft Regulations or approval authorities due to a force majeure which leads to the loss of the applicant's right, the applicant can- within two months after the cessation of such force majeure- write to explain to the approval authorities with supporting documents and request for a restoration of rights.

Similarly, in the event that the applicant's compliance with deadlines set by Draft Regulations or approval authorities is delayed because of legitimate reasons that leads to a loss of rights, the applicant can- within two months- write to the approval authorities explaining such legitimate reasons and request for a restoration of rights.

10. Establishment of professional teams for PVRs

The Draft Regulations encourage the establishment of professional teams for PVRs in all sectors, including PVR agency, legal, information, commercialization, consulting and training services. The professional teams will then facilitate the creation, protection, management and utilizations of PVRs.

This addition seeks to implement the measures mentioned in the Opinions on Strengthening Intellectual Property Protection and the Outline for the Building of a Country Strong in Intellectual Property (2021-2035) issued in 2019 and 2021 respectively, which aim to strengthen professional services in intellectual property protection in practice.

11. Use of DNA in examination of applications

The Draft Regulations provide that if a variety's characteristics have a clear association with a gene, this can be used as the basis for carrying out the examination of distinctness. This is a departure from the examination of distinctness being based on phenotypic differences.

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For further information and to discuss what this Draft Provision, please get in touch with your usual Baker McKenzie contact.

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This client alert has been prepared for clients and professional associates of Baker & McKenzie FenXun (FTZ) Joint Operation Office. Whilst every effort has been made to ensure accuracy, this client alert is not an exhaustive treatment of the area of law discussed and no responsibility for any loss occasioned to any person acting or refraining from action as a result of material in this presentation is accepted by Baker & McKenzie FenXun (FTZ) Joint Operation Office.