Jane Glover Barrister – Mediator – Adjudicator

RARE SIGHTING OF A PVR INFRINGEMENT CASE – AND MUCH, MUCH MORE

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Perhaps I am just over-excited, but I’m going out on a limb here and declaring Zespri Group Ltd v Gao [2020] NZHC 109 the must-read IP decision of 2020. Yes, already.

Even if it’s appealed, it is unlikely that the appeal decision will have the same immediacy or impact. By New Zealand case law standards (at least outside of the criminal law), this one is essentially a John LeCarré novel. It has border searches, police investigations, private investigators who won’t give evidence because they are scared to reveal their identities, and outrageously scurrilous characters.

THE CHIEF BADDIE

The first defendant, Mr Gao, is described by Katz J as a person who lacks a moral compass and does not place a high value on honesty. Ouch.

THE ACTION

Mr Gao and his ominously-named company, Smiling Face Limited, surreptitiously supplied two varieties of Zespri’s gold kiwifruit to a number of orchards in China.

LAW-GEEK EXCITEMENT POINT 1: PVR

It’s a plant variety rights case! And only the second ever PVR infringement case.

LAW-GEEK EXCITEMENT POINT 2: JURISDICTION

Katz J gives practical, pragmatic and – it has to be said – quite generous findings on the jurisdictional issues.

Most of the action took place in China, not New Zealand. The exclusive rights afforded by the PVR Act include the exclusive right to produce for sale, to offer to sell, and to sell the relevant reproductive material. The exclusive rights do not, however, include the express right to control the export of protected plant varieties. The 1991 version of the relevant international convention (UPOV) does so, but the New Zealand legislation has not yet been amended to reflect this. The fact that the PVR Act does not give plant breeders control over the export of reproductive material has been recognised as a potential vulnerability in the current legislation.

Her Honour accepted, however, that conduct within New Zealand that facilitates the export of protected varieties can potentially diminish a rights holders’ enjoyment of its exclusive rights. An “offer to sell” may be made within New Zealand even if the actual sale is concluded offshore.

LAW-GEEK EXCITEMENT POINT 3: NO HIDING BEHIND THE CORPORATE VEIL

It was argued that Mr Gao should not face personal liability for conduct in respect of which he was acting in his capacity as director of Smiling Face Limited. This argument failed. Mr Gao and his company were held to be joint tortfeasors and were concurrently liable.

LAW-GEEK EXCITEMENT POINT 4: HEARSAY

Her Honour noted that Zespri’s witness briefs contained extensive and obvious hearsay. They included, for example, evidence from Zespri’s employees as to reports given to them by private investigators. Some of it was double or triple hearsay (such as where the investigators were reporting on matters told to them by third parties).

Much of the hearsay evidence was ruled inadmissible, or was admitted only as background or contextual evidence that was not relied on for the truth of its contents.

The defendants didn’t escape criticism, either. They failed to raise any objections to the hearsay evidence prior to trial, as required by HCR 9.11. The Judge observed that this was likely a tactical decision and could be relevant to costs.

LAW-GEEK EXCITEMENT POINT 5: DAMAGES

The damages were high – nearly $15 million. Even better (from a plaintiff’s point of view), the Judge felt comfortable calculating damages on the basis of a finger-in-the-wind, user principle – for both the PVR infringement claim and a related breach of contract claim.

LAW-GEEK EXCITEMENT POINT 6: THE WRITING

For starters, I learnt a new word: “monopsony” (a market situation in which there is only one buyer).

But more than that, this must have been a hellish decision to write – so many legal, factual and evidential issues, plus language barriers and interpreters – yet it is organised and readable. If I may say so – respectfully – the clarity and logical construction of this decision is a bloody marvel.

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Jane Glover

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  • Great article thanks Jane! $15M seems light given NZ court’s jurisdiction doesn’t extend to destruction of the vines overseas, so they are presumably still growing the variety in China and in direct competition with NZ growers on the global market. This shouldn’t have just been a court case, it should have been a political issue managed by our govt.

By Jane Glover
Jane Glover Barrister – Mediator – Adjudicator

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