The CJEU interprets the concept of “reasonable compensation” in the Community Plant Variety Regulation
Recently, we have become aware of the judgment delivered by the Fist Chamber of the Court of Justice of the European Union (CJEU) on 5th July 2012, in case C- 509/10. This judgment is interesting due to the interpretation made by the CJEU regarding several provisions contained in Regulation 2100/94 on the Community Plant Variety and Regulation 1768/95 related to the concept of the “reasonable compensation” that licensees must pay to the holder of rights for planting plant varieties in a way detrimental to his rights, or in a manner that constitutes an act of infringement.
That’s exactly what happened between STV and the Geistbecks in case C-509/10. The Geistbecks (two farmers) planted significantly higher quantities of protected varieties than the quantities actually declared. Under these circumstances, STV claimed a payment corresponding to the remuneration which would have been payable.
However, the German Court stayed the proceeding and referred certain questions to the CJUE in relation to the basis for calculating the “reasonable compensation” in a case of infringement as that with which the referring court was faced. Should that reasonable compensation be: (i) the fee payable for the licensed production of the protected varieties planted in the same area (what is known as the C- License fee) or, (ii) the fee for authorized planting, that is, 50% of the amount payable for the licensed production (according with article 14 (3), fourth indent of Regulation 2100/94).
In his opinion, the Advocate General highlights the fact that the objective behind the concept of “equitable remuneration” is to establish a “balance between the reciprocal legitimate interests for farmers and holders of plant variety rights”, concluding that the remuneration for authorized planting cannot be the basis for calculating the “reasonable compensation” payable to the right holder. As a consequence and in so far as article 94 of the Regulation intends to make good the loss suffered by the right holder as result of an infringement, it must be taken as basis to calculate the “reasonable compensation” at least the fee that a third party would have had to pay for a C- Licence. Taking a lower figure corresponding to the remuneration for authorized planting would favor farmers who do not fulfill their legal obligations under article 14(3) of Regulation 2100/94 in conjunction with article 8 of Regulation 1768/95, and therefore the Regulation would not achieve its goal of striking the balance between the reciprocal legitimate interests for farmers and plant variety rights´ holders. This rationale was followed by the CJEU in its final judgment.
The CJEU also assessed whether or not the payment of compensation of costs incurred into by the right holder for monitoring compliance with the rights granted by a protected plant variety, enter into the calculation of the concept of “reasonable compensation”. The Court answered on the negative, as article 94(1) of Regulation 2100/94 provides for reasonable compensation in the case an infringement has taken place in regards with a protected plant variety.
In Salvador Ferrandis & Partners we believe that the CJUE got it right when taking as basis for the calculation of “reasonable compensation” the amount of the fee payable for the licensed production of the material of protected plant varieties. Taking a lower amount, such as the remuneration for authorized planting, would favor farmers who do not fulfill their legal duties imposed by article 14(3) of Regulation 2100/94 over those who do declare the quantities actually planted of the protected plant variety in question. Using a different measure for calculating the “reasonable compensation” would tilt the balance in favor of those who infringe, something that to our understanding would be unfair and would make meaningless part of Regulation 2100/94.
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