Ralf Schräder v Community Plant Variety Office (CPVO) - Case C‑546/12 P
By ruling on the complex appeal against four decisions regarding the validity of the LEMON SYMPHONY plant variety, the Court of Justice of the European Union (CJEU) has provided important guidance on the conditions to challenge third parties' rights before the CPVO.
The CJEU made it clear that the obligation of the Office to investigate facts of its own motion does not exempt an applicant seeking a declaration of nullity of a third party's right to duly substantiate its claim and take a position on all facts, including those that relate to common knowledge. It also specified that a minor reclassification or modification of the terms of the registration in light of the evolving scientific knowledge shall not be automatically construed as a failure to comply with the requirement of stability envisaged by Article 6 of Regulation (EC) No 2100/94 (CPVR Regulation).
Overall, what can be inferred from this case regarding the validity of this South African daisy is that on the one hand (i) the CPVO enjoys a wide discretion in carrying out its assessment and (ii) actions before the Office shall be duly substantiated, given the reluctance of the Court of Luxemburg to dig into technicalities of the CPVO botanical examinations and the limits of its power to review the merit of the Office's decision.
Article 6 of CPVR Regulation establishes that plant variety registrations (CPVRs) can only be granted for varieties that are, inter alia:
i. "distinct", meaning that they can clearly be distinguished, by reference to the expression of the characteristics, from any other variety (distinctiveness is defined under Article 7); and
ii. "stable", namely that their characteristics remain unchanged after repeated propagation (stability is defined under Article 9). Applications for registration must undergo, among others, a technical examination (Article 55 of CPVR Regulation) in order to assess whether they comply with the requirement of stability.
Further, pursuant to Article 76 of the CPVR Regulation, before making a decision the Office shall make investigations on the facts of its own motion, to the extent that they come under the examination in accordance with Article 55.
Pursuant to Article 21(1) of the CPVR Regulation, at the request of third parties, the CPVO shall cancel with effect in futurum CPVRs that no longer comply with, inter alia, the requirement of stability (cancellation). Furthermore, pursuant to Article 20(1)(a) and 20(2) of CPVR Regulation, at the request of third parties, the CPVO shall annul, with effect from the outset, CPVRs that did not comply with the requirements envisaged by, inter alia, Article 7 (nullity), at the time when they were granted.
Any decision of the CPVO (i) granting a registration of a CPVR, (ii) cancelling or (iii) annulling such rights can be appealed before the Board of Appeal of the CPVO (BoA) (Part IV, Chapter V of the CPVR Regulation). While the BoA is entitled to carry out a full review of the decision taken by the CPVO (Article 72(2) of CPVR Regulation), the BoA’s decisions can only be appealed before the General Court of the European Union ("General Court") for: (i) lack of competence: (ii) infringement of an essential procedural requirement; (iii) infringement of the Treaty, the CPVR Regulation or related legislation; or (iv) misuse of power (Article 73(2) of CPVR Regulation).
The action before the CPVO
In April 1999, the CPVO granted Mr Hansson (the intervener) with the CPVR denominated LEMON SYMPHONY for a variety of the species Osteospermum Ecklonis (South African daisy). The German Bundessortenamt (Examination Office), tasked by the CPVO with the technical examination, concluded that the variety applied for complied with the distinctiveness and stability criteria. Worthy of note was that the Bundessortenamt managed to complete its assessment, despite it initially informing the applicant that the treatment with growth regulators and trimming that the propagating material had undergone could have hampered the progress of the examination. Furthermore, the Examination Office considered that, according to the test guidelines applicable at that time (Bundessortenamt's "Table of Characteristics VI"), the "attitude of shoots" should be classified as "erect". Such indication was then duly reproduced in the Register of CPVRs.
On the basis of such right, Mr Hansson lodged an infringement action before the Düsseldorf Regional Court against Jungpflanzen Grünewald GmbH ("Grünewald"), a company partially owned by Mr Schräder (the applicant) for having marketed a variety of Osteospermum Ecklonis which was not clearly distinguishable from LEMON SYMPHONY. At the time the infringement action was lodged, Grünewald had only applied to register its variety as a CPVR under the name SUMOST 01. The CPVO still had to conduct the technical examination. Both the Düsseldorf Regional and Higher Regional Courts upheld the requests of Mr Hansson ordering Grünewald, inter alia, to cease marketing SUMOST 01. The German Courts based their decisions on the report of the Bundessortenamt expert, who found that the varieties in issue were not clearly distinguishable. However, the expert also noted that the plant material for the LEMON SYMPHONY submitted for comparison with SUMOST 01 did not match the material used for the technical examination for registration before the CPVO, insinuating that, despite what was indicated in the registration of 1999, the variety was (from the very beginning) semi-erect, just as other comparable species.
With that in mind, Mr Schräder first challenged the validity of the LEMON SYMPHONY by lodging a cancellation action, alleging that LEMON SYMPHONY lacked stability after repeated propagation - at least as at the time of the German proceedings. Further to technical verification, the CPVO concluded that the variety had not substantially changed and therefore, the stability requirement was still fulfilled. Overall, the Office, taking into account the suggestions of Bundessortenamt's expert, observed that the change in the classification proposed by the German Office from erect to semi-erect was due to (i) possible variations linked to environmental factors and, most of all, (ii) to a difference of scores calculated on the basis of new test guidelines just entered into force (i.e. TG/176/3 guidelines for the performance of the distinctiveness, uniformity and stability test, laid down on 5 April 2000 by the International Union for the Protection of New Varieties of Plants). Alternatively, on the basis of pictures of the variety dated 1997, 2003 and 2004, the CPVO concluded that the variety did not substantially change – what did change was the classification due to different and more accurate evaluation criteria and a comparison with new species.
In light of such assessment, the CPVO: (i) first rejected the application for SUMOST 01 as not clearly distinguishable from Mr Hansson's variety; then (ii) amended the registration of LEMON SYMPHONY to report the new classification as "semi-erect"; (iii) finally rejected Mr Schräder's cancellation action; and (iv) rejected the annulment action subsequently lodged by Mr Schräder alleging that LEMON SYMPHONY never existed as described in the registration (i.e. never existed in the erect form but only in the semi-erected form) as the outcome of the examination was distorted by the use of defective material. Since the CPVO already clarified that the modification in the classification merely referred to formal aspects and did not reflect a substantial change of the variety, it considered that the action filed by Mr Schräder could not succeed.
The four aforementioned decisions were also confirmed by the BoA before which they were challenged by Mr Schräder. It is important to mention that the BoA investigated the effect of growth regulators and the practice of taking cuttings of the material examined, and – with the testimony of experts from the Bundessortenamt and the CPVO itself as well as on the basis of its common knowledge – it concluded that such treatment had no impact whatsoever on the technical examination of LEMON SYMPHONY. After rejection of all his requests, Mr Schräder decided to appeal the BoA's decisions to the General Court.
The proceedings before the General Court
The appeals against the four decisions, T-134/08, T-133/08 and T-177/08, were joined under the main action T-242/09 i.e. rejection of the application for annulment, which the General Court considered as a priority, to which the other cases were linked. As a main argument, Mr Schräder contended that the BoA violated the rules on the burden of proof and taking of evidence. In his view, the BoA should have investigated, of its own motion, the arguments put forward regarding the possible distortions of the technical examination caused by the use of treated material. In turn, the BoA did not order the requested measures of inquiry to investigate the objections of the applicant and it rebutted the application on the assumption that, since it is common practice to take cuttings from propagating material submitted for examination purposes, it can be safely assumed that such practice had no impact on the evaluation carried out by the Bundessortenamt.
Further to extensive analysis of Mr Schräder's arguments, the Court of first instance dismissed the appeal. The main practical conclusions that can be inferred from the Court's reasoning are the following:
- The BoA is not obliged to investigate, of its own motion, all the facts that may be relevant in the frame of a technical examination. Indeed, while the CPVO is vested with an obligation to investigate all aspects of the factual matrix that may be relevant to the examination, the task of the BoA is limited to verifying the lawfulness of a decision taken by the Office, meaning that the conditions for registration (as per Article 7) have been fulfilled. Thus, strictly speaking, Article 76 of CPVR Regulation does not apply to technical examination;
- The applicant is required to put forward arguments and facts to support its claims under the condition of having its application rejected. Since under CPVR Regulation, annulment proceedings are initiated by the party, the Office shall limit its decisions to the arguments and facts brought forward by the applicant. To reach such conclusion, the General Court (i) applied by analogy the conditions of invalidity applications under Article 63(1) of Regulation (EC) No. 6/2002 (Community Designs Regulation) which, similarly to the EU CPVR legislation, does distinguish between absolute and relative grounds for refusal, and (ii) it transposed to the CPVR legislation pursuant to Article 81 of CPVR Regulation the general principle of procedural law whereby the burden of proof falls on the claimant.
- The review of the General Court shall be limited to manifest errors of assessment of the BoA (i.e. prohibition of carrying out a fresh assessment of the facts and findings). The General Court noted that that in light of well-established case-law, it is not within its remit to carry out reviews of the complex and technical analysis the Administration relied upon to adopt its decisions. In the case at hand, the CJEU concluded that since no evident flaw could be detected in the decisions appealed, the BoA had carried out its review with the required level of scrutiny. Notably, the Court set out the following:
- Mr Schräder's submission does not contain any evidence substantiating that the alleged distortion of the technical examination in consequence of the treatment with growth regulators and trimming. Therefore, the BoA correctly relied on its knowledge that such practice is common among breeders and has no impact on technical assessment;
- The amendment of the description from erect to semi-erect was purely a terminology modification - it did not reflect a substantial modification of the plant, meaning that the variety would have been granted in 1999 even if the later Guidelines TG/176/3 has been applied.
- The BoA is not required to adduce evidence supporting well-known facts. Again, the General Court relied on Community trade mark case law stating that, unless the facts or the evidence had been distorted, the BoA can base its conclusion on common knowledge. More importantly, in doing so, the BoA is not required to prove the accuracy of such facts.
As a preliminary remark, the CJEU corrected the interpretation that the General Court gave of Article 76 of CPRV Regulation insofar as it considered such provision not to be applicable to proceedings before the BoA. The CJEU noted that Article 51 of Implementing Regulation does not provide for any exemption whereby certain provisions applicable before the CPVO shall not apply before the BoA. Hence, the obligation to investigate ex officio all facts pursuant to Article 76 shall also apply to the BoA’s review of the technical examination.
Yet, the CJEU mitigated the potential disruptive effect of such specification by clarifying that Article 76 cannot be construed in a way to oblige the CPVO to investigate sua sponte any possible fact relating to an application for annulment, regardless of whether such application is supported by any evidence or not. To this end, CJEU brought into play Article 59 of CPVR Regulation, which confers the right to any interested party to lodge comments on the technical examination. It is crucial to note that while such comments shall be filed by the deadline established by Article 59(4), an application for annulment pursuant to Article 20 of CPVR Regulation can be lodged at any time. The CJEU observed that in order to avoid interpreting the application for annulment pursuant to Article 20 as a duplication of the right to file comments pursuant to Article 59 of CPVR Regulation without complying with the specific deadline established therein, it shall be concluded that the conditions that trigger the review of the examination carried out by the CPVO are different in each action. Bearing in mind that applications for a CPVR must undergo a thorough and exhaustive assessment before being registered, the CJEU concluded that the CPVO (and subsequently the BoA) shall investigate facts relating to nullity applications only in the presence of evidence that can cast serious doubts about the correctness of the initial technical assessment.
As this was not the case in relation to Mr Schräder’s application, which lacked any prima facie evidence that the outcome of the examination of LEMON SYMPHONY was somehow distorted, the CPVO and the BoA correctly rejected the annulment application for LEMON SYMPHONY. In addition to confirming that the General Court is not supposed to provide a fresh assessment of the facts whenever it is proved that such facts have not been distorted, the CJEU also confirmed that adaptions of the classification throughout time should be necessary (i) in light of the update of guidance documents and evolution of assessment techniques as well as (ii) in comparison with emerging varieties.
In summary, although via different logic, the CJEU came to the same conclusion as the General Court by stressing once more that the CPVO enjoys a wide discretion in assessing whether a plant variety should be declared void.
The case provides useful guidance on how to successfully challenge registrations before the CPVO. Moreover, it sheds light on what users can expect from the review by the Community adjudicator of technical decisions taken by the Office.
First, each court noted the wide discretion of the Office in carrying out the technical examination. By limiting their review to evident errors in the appraisal of the BoA, the General Court and the CJEU showed their reluctance to dig into technicalities of the Office's examination. This is also because, while pursuant to Article 73(1) of CPRV Regulation the General Court is to review decisions of the BoA based on the grounds of lack of competence, infringement of an essential procedural requirement, infringement of the Treaty, of the CPVR Regulation or any implementing rule, pursuant to Article 256 TFEU, the CJEU can only verify the legality of the decisions taken by General Court with no competence over the decisions of the BoA. Users should therefore pay utmost attention in their submissions from the initial stage before the CPVO, without relying on the review of the higher courts.
Second, the CJEU implied that nullity applications must be supported by solid evidence and clear logic. Such evidence must be capable of casting serious doubts about the compliance of the challenged variety with the requirements laid down in Article 7 of the Regulation. It could be assumed that third parties' observations could merely draw the attention to facts that the CPVO should investigate ex officio. While the General Court made reference to the rules on invalidity proceedings of Community Designs, further to the specification of the CJEU, Community trade mark experts probably see more similarities with the requirements for filing third parties observations on absolute grounds for refusal of Community trade marks and with the substantiation requirements for Community trade mark invalidity actions against trade marks registered contrary to Article 7 of regulation (EC) No 207/2009. In the latter case, the General Court already specified that, given the presumption of validity of a registered mark, the OHIM shall limit its examination to the factual submissions made by the applicant (see judgment of 13/09/2013, T-320/10, "Castel", paragraphs 27-29).
Third, the CJEU relied on previous case-law concerning well-known facts. Once again, IP-related legislation has been used to provide guidance on CPVRs. Users should therefore be aware that practices and well-established case-law on Community trade marks and designs can be applied by analogy in areas of breeders' rights where guidance is lacking. More specifically, applicants in annulment proceedings should challenge well-known practices on the basis of scientific arguments since the onus of proof is on them.
Lastly, operators active both in plant breeding and in the manufacturing of plant protection products – e.g. manufacturers of pest resistant varieties – will notice that, while it is allowed to use updated guidelines on the later technical assessments of varieties, assessment of substances for use in phytosanitary products included in the review program can only be carried out using the guidance document applicable at the time the dossier was filed.
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