Winchester International (NZ) Limited & Winchester v Cropmark Seeds Limited
Court of Appeal
5 December 2005
Anderson P, Glazebrook and Baragwanath JJ
This is a belated report on a Court of Appeal decision on plant variety legislation. Since any case on this legislation is rare, the decision is worth noting.
The enactment of the Plant Variety Rights Act 1987 followed New Zealand’s accession in 1981 to the International Convention for the Protection of New Varieties of Plants. Pursuant to s17 of the Act, plant variety rights give the owner the exclusive right to “produce for sale, and to sell, reproductive material of the variety concerned”.
The respondent, Cropmark, was the exclusive New Zealand licensee of a barley seed variety called “Optic”. Cropmark sued Winchester and its directors for infringement of its plant variety rights in arranging sale of infringing seed to third party growers. (Winchester did not sell the infringing seed itself.)
The second defendant director, Mr Winchester, arranged the sales of the infringing seed asking grower purchasers not to tell anyone about the transaction and telling them that the seed would be billed as “straight barley” (as opposed to barley to be used for planting). The High Court held that Winchester had infringed (making credibility findings against Mr Winchester) and awarded exemplary damages and costs. Both the company and Mr Winchester appealed to the Court of Appeal.
The issue on appeal was whether the defendant’s conduct in arranging sales was sufficient to amount to infringement under the Act in circumstances where the conduct of the vendors of the seed to growers undoubtedly was so.
Noting that s17 leaves it to implication as to what conduct may constitute a breach of the exclusive right contained in s17, the Court of Appeal held that the defendant’s conduct diminished Cropmark’s enjoyment of its exclusive right by depriving it of potential royalties. After canvassing the authorities as to personal liability of directors, the Court additionally held that Mr Winchester had offended in his own right by causing the infringing activity of the vendors as well as causing the company to infringe.
The Court upheld the High Court’s exemplary damages award of $5,000 against both company and director.