Last week, Phylos Bioscience filed a lawsuit in federal court against Silver Lion Farms in the District of Oregon. The complaint details that Phylos and Silver Lion entered into a letter of undertaking for Silver Lion to purchase hemp seeds of two different varieties for $2,954,250 – 14,625,000 AutoCBD seeds and 8,775,000 F1 hybrid seeds. Silver Lion paid its 25% deposit of over $700,000 in November 2020. However, the parties clashed on the delivery date of April 29, 2021.
Phylos alleges in its complaint that on the day of delivery, Silver Lion co-founder and president Gian Khalsa falsely represented to a representative of Phylos, Sage Haegen, that Phylos and Silver Lion had entered into a new agreement whereby Silver Lion only took about 4.3 million F1 hybrid seeds, but none of the AutoCBD seeds. In other words, Khalsa represented that Silver Lion now only took about half of the F1 hybrid seeds and none of the AutoCBD seeds. Phylos further alleges that Haegen had no cell reception at the time, so he was unable to confirm Khalsa’s depictions. Haegen left the property and unfortunately confirmed that was not the case. However, when Haegen returned to Silver Lion to repossess the F1 hybrid seeds, a property security guard refused to return them.
Claims under the Plant Variety Protection Act
The complaint lists the typical claims you would expect in such a case – breach of contract (or here, the engagement letter), promissory estoppel, and fraud. What is interesting in this case is that there are also claims under the Plant Variety Protection Act (or PVPA) relating to the Phylos PVP Certificate which covers and protects the seeds in question. Phylos asserts that Silver Lion:
“… violated the ‘403 PVP certificate at least by transferring possession of approximately 4.3 million protected seeds without authorization, using a scheme of deception and fraud” and that “[b]at least on the LOE, [Silver Lion] has expressed its intention to engage in propagation and production using seed protected by the ‘403 PVP certificate.
According to the USDA:
“The Plant Variety Protection Office provides intellectual property protection to breeders of new varieties of sexually propagated, tuber propagated and asexually propagated plant varieties. In application of the law on the protection of plant varieties (PVPA), we investigate new applications and grant certificates which protect varieties for 20 years (25 years for vines and trees). … Certificate holders have the right to exclude others from the marketing and sale of their varieties, to manage the use of their varieties by other breeders and to enjoy legal protection of their work.
In the United States, there are 3 types of intellectual property protection that breeders can obtain for new plant varieties:
- Plant Variety Protection – Seeds, Tubers and Asexually Propagated Plants (issued by PVPO).
- Plant patents – asexually propagated plants (issued by the Patent and Trademark Office (PTO).
- Utility patents – for genes, traits, methods, plant parts or varieties (issued by the PTO).
Much like traditional patent ownership, PVP certificate owners have a responsibility to enforce their PVP rights. And here, Phylos recognizes that it adds the possibility of new potential damage. It included injunctive claims against Silver Lion to further infringe Phylos’ intellectual property rights, reasonable attorneys’ fees, and increased damages (up to three times the amount found or assessed).
It’s not something we’ve seen much to date. But, we expect it to continue to become more and more common in space. We will continue to monitor this matter and report on any significant developments, particularly with respect to PVP infringement claims.
For more informative articles on the PVPA, see:
Editor’s note: Harris Bricken has represented Phylos on unrelated matters since 2016.
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