- 1. Introduction to European Union Plant Variety Rights (EU PVR)
The European Union is a member of UPOV (International Union for the Protection of New Varieties of Plants) and, as such, has a system for the protection of a breeder’s intellectual property in new plant varieties.
A holder of an EU PVR is entitled to control (in effect, demand payment for):
- production or reproduction (multiplication)
- conditioning for the purpose of propagation
- offering for sale
- selling or other marketing
- exporting from the EU to other parts of the world
- importing into the EU
- stocking for any of the purposes mentioned under points (1) to (5).
In practice, most royalties are paid on the quantity sold by the licensee. Sometimes they are also paid on harvested material such as fruit or cut flowers. PVRs are valid for 25 years from the date they are granted (30 years for vines, trees and potatoes).
EU PVR supercedes and replaces any national PVR that might have been applied for within the EU and is enforceable throughout all 28 member nations of the EU. Any pre-existing national rights in any member nation become dormant upon the granting of EU PVR and only become enforceable if the EU PVR is terminated.
Within the EU, applications for Plant Variety Rights are administered by the Community Plant Variety Office (CPVO) which is based in Angers, France.
To be granted EU PVR, a plant variety must satisfy five criteria. The first of these is that the new variety must be given a unique name. There are various rules regarding naming that we can advise on. In general, we recommend that the “proposed denomination” takes the form of a code or nonsense name, not more than ten characters in length. For example, Ajuga Black Scallop is filed under the denomination BINBLASCA.
The next criterion is “novelty”, which is determined based upon the information provided in the application paperwork and the breeder’s declarations contained therein. In general, this means that the application for PVR must be made not more than one year after the first commercial exploitation of the plant (or harvested material) within the EU and not more than four years after the first sale anywhere else in the world. In practice, due to the speed at which the administration works, it is advisable to make applications not less than two months before the deadline (although we have successfully made applications with only days to spare!).
The remaining criteria are “distinctiveness”, “uniformity” and “stability” which are determined by plant trials carried out by the CPVO’s testing stations (known as “DUS examination”). These tests ensure that the variety is different from other previously existing varieties, that its essential characteristics are constant and that the plant does not produce spontaneous mutations or reversions. Failure to pass any of these tests or failure to submit the plant variety to testing at the required time will result in the application for PVR being rejected by the CPVO, with all fees paid to the CPVO forfeited.
The CPVO conducts DUS testing for different genera at different locations with the intention that the climate and facilities at each station are appropriate to the genus concerned. The location of the testing is determined by the CPVO but is always within the EU. It is the responsibility of the applicant to provide test plants to the CPVO in accordance with a specification issued by the CPVO (which varies from genus to genus), and to ensure punctual delivery and compliance with plant health regulations.
Individuals or companies that are not resident within the EU may not submit applications to the CPVO but must appoint an EU-based “procedural representative” to act on their behalf. PFE acts as procedural representative for many breeders and so is able, qualified and experienced to assist in this regard.
Potential impact of Brexit
EU Plant Variety Rights will not be enforceable in the UK after Brexit has been completed. Until then, it is not possible to simultaneously hold UK and EU Plant Variety Rights. Therefore, we are recommending to our clients that they should continue with applications for EU rights as normal until the new situation (and any transitional arrangements) become clear. In future, both EU and UK PVRs are required to have effective protection on both sides of the English Channel, and we expect that anyone making an application for EU rights between now and the end of the transition period will need to make an additional application for UK rights after Brexit.
We do expect that applicants based in the UK will no longer be able to make applications for EU Plant Variety Rights without a procedural representative within the EU27. Therefore, we are setting up an office in the Netherlands to be able to offer a continued service to our breeder clients.
- 2. PFE’s services as procedural representative for EU PVR applications
Plants For Europe Limited can act as a procedural representative for the filing of applications to the CPVO for EU PVR. In such circumstances, PFE would limit its activities to the following functions:
- completion and submission of CPVO application forms on the breeder’s behalf and in the breeder’s name
- all correspondence with the CPVO
- ensuring timely payment of fees due to the CPVO, including application fees, DUS testing fees and annual renewal fees (PFE would pay these fees and recharge to the breeder, plus bank fees)
- assisting in ensuring correct and timely delivery of plants for DUS testing
- advising on any appeal in the event of a declined application (although administration of such an appeal would attract additional charges).
PFE would undertake no licensing activities, nor any collection or policing of royalties. This would be the responsibility of the breeder unless PFE were to be engaged to carry out these services, for which separate charges apply (see section 4 of this document).
For the procedural representative service, PFE makes a standard, once-only, flat-rate charge of GBP 600 per variety (plus VAT where required by law). This fee must be paid to PFE prior to commencing the application process.
In addition, the breeder would be liable for the CPVO fees, all bank charges (the applicant must pay the CPVO’s bank fees) and for the cost of providing and delivering plants for DUS testing.
The CPVO’s charges are currently as follows (the CPVO’s charges prevailing at the time would apply – these are the correct rates at the time of writing [July 2018]. All prices in euro):
- application fee: EUR 450 (assuming the application is filed online, which is our normal practice)
- DUS testing fee: EUR 1730 to 3000 per cycle, depending on genus
- annual renewal fee: EUR 330
We estimate the bank charges at around EUR 10 per transaction.
The fee for DUS testing varies from genus to genus. In addition, some genera are tested over a single growing cycle, but others over several cycles, usually up to a maximum of four cycles. As examples:
- Abelia: EUR 1730, two cycles
- Agapanthus: EUR 1730, one cycle
- Lavandula: EUR 1960, two cycles
- Lilium: EUR 1940, one cycle
- Nemesia: EUR 1730, one cycle
- Osteospermum: EUR 1730, one cycle
- Salvia: EUR 1730, one cycle
- Thuja: EUR 1730, two cycles from plants 3-4 years old
- Veronica: EUR 1960, one cycle
In general, ornamental plants are tested over one or two cycles (with a few notable exceptions), whereas food crops are tested over two to four cycles. In order to provide a more accurate estimate of the fees, PFE would need to know the genera and species concerned in order to obtain a quotation from the CPVO.
If, for any reason, the variety does not express all the “relevant characteristics” (i.e. flower, fruit, habit, etc.) in the expected number of DUS examination cycles, the CPVO can request additional cycles of examination, each of which attracts a new examination charge. If the breeder does not wish to pay the charge, the application can be withdrawn, but fees already paid are forfeited.
The breeder would be responsible for the actual delivery of the plant material for DUS testing, although PFE would assist in whatever way possible, including arranging forwarding of plant material located within the EU and assisting with plant health requirements. The costs of this additional assistance (e.g. transport costs) would be recharged to the breeder.
The annual renewal fee does not become due until the PVR has been granted (see timetable below). Remember that all fees are subject to change.
- 3. Timetable for EU PVR applications
The timetable for applications for PVR depends on when the first sales are made. However, as an example and assuming first commercial exploitation takes place in January 2018, then the following timetable might apply:
- January 2018: first commercial exploitation in EU
- No later than December 2018: application for EU PVR. CPVO application fee must be paid at this time. PFE’s fee must be paid in advance of this
- Three to twelve months after application (depending on genus): DUS testing fee due. (Note: if multiple cycles are required for DUS testing, the fee must be paid at the beginning of each cycle)
- At the same time: plants for DUS testing must be submitted
- One to four years later: subject to successful DUS testing, PVR will be granted and the first annual fee becomes due
As you can see, the costs of the application are spread over a period of two to six years. If the variety is not a commercial success, the application can be withdrawn at any time, with the result that further payments to the CPVO do not need to be made (although payments already made are forfeited).
In European law, the PVR is considered to be enforceable as soon as the application is received by the CPVO and published by them – one does not have to wait for the entire application process to be completed. Some breeders prefer to make the application before first sale and we would recommend this in the case of plants grown for harvested material or with a short production cycle.
- 4. PFE’s services as breeder’s agent for licensing and royalty collection in the EU
In addition to acting as procedural representative for the filing of breeder’s rights applications, PFE can also act as licensing agent – in fact, this forms the bulk of our work. In these circumstances, PFE would normally require acting as sole exclusive agent for the entire European Union. If you undertake plant sales yourself, PFE would work with you to ensure that any licensing activities did not conflict with your own sales and marketing strategies – we already have considerable experience in this field working with companies such as the Farplants group. Thus, we can avoid inadvertently issuing licences to your own competitors. We would wish to discuss this before commencing any work for you.
Licensing and royalty collection forms the biggest part of PFE’s work, and we already represent an impressive portfolio of plant varieties from many breeders. As part of this service, PFE undertakes the following:
- using its best endeavours to secure a profitable income for the breeder by collecting royalties on licensed sales
- managing distribution, trials and licensing
- regular reporting to the breeder
- marketing of the varieties, joining with the breeder and licensees when necessary to achieve this
- issuing licenses to growers using our standard licence contract
- collection of royalties from licensees, paying them to the breeder twice each year after deducting commission
- management of applications, on the breeder’s behalf and in their name, for European Union Plant Variety Rights in the manner described above
- monitoring and reporting any suspected cases of infringement of the breeder’s proprietary rights, including under-reporting by licensees (policed by record inspection and site visits) and production by unlicensed propagators – and working with the breeder to bring such infringements under control
PFE is active throughout the European Union and concentrates on the major markets for garden plants, in particular the UK, Netherlands, Germany, France, Belgium, Ireland, Poland, Denmark, Italy, Hungary and Spain. In addition, we work closely with several propagators based in Israel, Africa and Central America. Our licensees are active throughout the EU.
PFE charges for this full-service breeder’s agency work by deducting a commission from royalties earned on the breeder’s behalf. The rate for this commission is 33% of gross royalties. However, if PFE is engaged as the breeder’s agent, the separate charge for filing PVR applications described in section 2 of this document would be waived.
By charging in this manner, the breeder does not normally have to pay anything to PFE until the variety starts to generate royalty income (although CPVO fees may fall due). Consequently, PFE may not agree to represent all plants that are offered to it and will only undertake to represent those plants which are likely to be profitable to the breeder and PFE. In such circumstances, we may still be able to help you by acting as procedural representative for applications (see section 2) or by offering a licence administration only service – please ask for details.
- 5. PFE’s services for worldwide breeder’s rights management including sub-agency arrangements
In addition to the services described above, PFE can also act as “head agent” for worldwide breeder’s rights management. PFE works with a number of other independent breeders’ agents in various territories who are experts in their field. Coverage includes South Africa, Australia, New Zealand, Japan, United States and Canada. We are currently developing relationships in Korea and other markets.
PFE’s service as a “head-agent” includes:
- selecting and appointing, with the breeder’s approval, agents in territories outside the European Union (“local territory agents” or LTAs), including agreeing terms
- providing information to LTAs on the new variety or varieties, including descriptions, photographs and information that may be required for local PVR applications, as well as cultural information useful to licensees
- ensuring that LTAs complete PVR (or Plant Patent) applications, where appropriate, in the breeder’s name and in a timely manner
- coordinating first dates of sale worldwide to ensure that PVR applications may be made on time
- arranging export of plant material to LTAs, including all necessary permits, phytosanitary certification, customs clearance and freight brokerage
- collecting royalties from LTAs twice each year, converting them to euro/Sterling and paying them to the breeder after deducting commission
- working with local agents to monitor and control infringements of the breeder’s proprietary rights, including those that might arise from international trade
- controlling international trade in the new variety to protect any exclusivity arrangements that might be made, including those of the breeder if the breeder also sells the plant when that is possible and not prohibited by competition law
In addition, the local territory agents will undertake all the other tasks in their territory that are equivalent to those undertaken by PFE in the EU, such as trials, licensing, royalty collection, marketing, etc. The local territory agents will generally charge commission on royalties and this varies from agent to agent, but is usually in the order of 25% to 33% of gross royalties. This commission is deducted by them before they remit their payments to PFE. PFE then deducts commission to cover the costs of headagent services – this commission is calculated at 20% of net royalties remitted by the local agent.
PVR and Patent costs vary from territory to territory. We would be happy to provide an estimate for each territory that you wish to explore as a market. However, as a guide you can expect protection costs to be around AUD 3000 in Australia, NZD 1500 in New Zealand and USD 3000 in the United States.
In general, the same rules apply around the world for “novelty” as apply in the EU, i.e. the application must be submitted not later than one year after the first sale in that country and no more than four years after the first sale anywhere in the world. The most significant exception is the United States. The United States requires that the application is made not less than one year after the first “enabling act” (which often includes publicity prior to sale) – and that “enabling act” can occur anywhere in the world.
- 6. What happens next?
We hope that you have found this document to be useful and wish to engage PFE’s services. Of course, if you have any questions at all, please do not hesitate to contact us.
The next step is for you to decide what level of service you require from PFE (procedural representative, breeder’s agent for EU only or worldwide management of breeder’s rights).
If you wish us only to act as procedural representative, we will send you an engagement agreement, which you will need to review and sign, as well as a CPVO form to certify the appointment of PFE as procedural representative. Specimen copies of both documents are available upon request.
If you wish PFE to act as breeder’s agent, either for the EU or as worldwide head agent, please send us details of your new plant variety (or varieties). This can be as little as a description and photograph in the first instance – if we need to know more, we will ask you. We will then, without any obligation on either party, give you a preliminary market appraisal on your new plant(s) – if you wish us to explore the worldwide market, we will also need to consult potential LTAs and licensees outside the EU.
Based on this initial appraisal, PFE will make a recommendation on the best way to proceed. At this point, we will send you an engagement agreement which you will need to review and sign. A specimen copy of this document is available upon request.
Please be assured that PFE makes engagement agreements on a variety-by-variety basis – there is no obligation upon a breeder to place all varieties with PFE. Our engagement agreement also clearly defines the terms under which you may terminate the agreement if you are dissatisfied – although we are confident that this situation would never arise!
Finally, you can be confident that PFE treats information about your new varieties in confidence and only reveals information to those parties for whom the knowledge is essential in order to make a useful market appraisal.