A landmark decision from the Court of Venice has significantly raised the bar for professional diligence in the seed industry, clarifying the crucial distinction between “equitable remuneration” and full damages for the infringement of plant variety rights under Regulation (EC) No. 2100/94. The decision establishes that, for professionals operating in the sector, ‘lack of knowledge’ of the existence of IP rights is no excuse.
The dispute arose when Limagrain Europe S.A.S., the holder of a Community plant variety right for the “Audit” protein pea variety, took legal action against an Italian seed company for unauthorized multiplication and commercialization of the IP protected variety. The defendant company had purchased “first reproduction” seeds (R1), then unlawfully multiplied them into “second reproduction” seeds (R2), and sold them on the Italian market. While not contesting the material facts, the defendant argued it had acted in good faith, as the original seller had not informed him that the variety was protected by intellectual property rights. Consequently, it claimed liability should be limited to the “equitable remuneration” as set forth in Article 94(1) of Regulation (EC) No. 2100/94, rather than full damages for negligent infringement under Article 94(2).
The Court of Venice rejected the defendant’s claim of “good faith” and focussed the analysis on the objective standard of professional negligence required of industry operators. The ruling stresses that for operators in the seed and plant variety sector, diligence is not a passive expectation but an active duty.
The Court outlined the expected standard of care:
“The concept of negligence must be evaluated by taking into account the average level of diligence required of operators in the relevant sector and therefore, in this case, of entrepreneurs engaged in the trade of seeds and plant varieties. Such operators are certainly required not only to be aware of the regulatory framework prohibiting the reproduction of plant varieties without the holder’s authorisation, but also to proactively inform themselves and verify whether the products they intend to market or reproduce are protected by a plant variety right, in order to avoid incurring legal sanctions”.
In essence, the Court established a positive duty to conduct clearance checks in the plant variety sector. Operators intending to reproduce or market a plant variety cannot rely on information (or lack thereof) from third parties. Instead, businesses are expected to use publicly available resources, such as official databases, to confirm whether a plant variety is protected by an intellectual property right. Failure to conduct these checks constitutes negligence.
By finding the defendant negligent, the Court unlocked the more severe remedies under Article 94(2) of the Regulation (EC) No. 2100/94 which compensates the rightholder for losses caused by intentional or negligent exceeding the “equitable remuneration” applicable for non-negligent and non-intentional acts.
Furthermore, the Court confirmed that, in line with Article 97 of the Regulation (EC) No. 2100/94, the calculation of damages can be governed by national law. This allowed the application of Article 125 of the Italian Code of Industrial Property, enabling Limagrain Europe to claim full recovery of damages, including the infringer’s profit, a significantly more powerful remedy than mere equitable remuneration. An injunction was also issued to prevent future unlawful activity.
The decision of the Court of Venice is a pivotal development in the enforcement of plant variety rights. It effectively eliminates the “lack of knowledge” defence for professional operators and transforms professional diligence into a proactive duty of inquiry. Moreover, this decision significantly strengthens the position of IP rightholders, making it substantially easier to secure full compensation for infringement.