Hemp Litigation and the Plant Variety Protection Act

Last week, Phylos Bioscience filed a federal court complaint against Silver Lion Farms in the District of Oregon. The complaint details that Phylos and Silver Lion had entered into a Letter of Engagement for Silver Lion to  purchase $2,954,250 worth of hemp seeds of two different varieties – 14,625,000 of AutoCBD seeds and 8,775,000 of F1 hybrid seeds. Silver Lion paid its 25% deposit of over $700,000 in November 2020. However, the parties came to a head on the April 29, 2021 delivery date.

The allegations

Phylos alleges in its Complaint that on delivery day, Silver Lion’s Co-Founder and President, Gian Khalsa, falsely represented to a Phylos representative, Sage Haegen, that Phylos and Silver Lion had made a new agreement that Silver Lion was only taking “approximately 4.3 million F1 hybrid seeds, but not any of the AutoCBD seeds.” In other words, Khalsa represented Silver Lion was now only taking approximately half of the F1 hybrid seeds and none of the AutoCBD seeds. Phylos further alleges that Haegen didn’t have cell reception at the time, so was unable to confirm Khalsa’s representations. Haegen left the property and unfortunately confirmed that this was not the case. However, when Haegen returned to Silver Lion to take back possession of the F1 hybrid seeds, a security officer at the property refused to return them.

The claims under the Plant Variety Protection Act

The Complaint lists the typical claims you’d expect in such a case – breach of contract (or here, the Letter of Engagement), promissory estoppel, and fraud. What’s interesting about this case though is that there are also claims under the Plant Variety Protection Act (or PVPA) relating to Phylos’ PVP Certificate that covers and protects the seeds in question. Phylos claims that Silver Lion:

“… infringed the ’403 PVP certificate at least by transferring possession of approximately 4.3 million protected seeds without authority, using a scheme of deceit and fraud” and that “[b]ased at least on the LOE, [Silver Lion] has expressed an intent to engage in propagation and production using seeds protected by the ’403 PVP certificate.”

Per the USDA:

“The Plant Variety Protection Office provides intellectual property protection to breeders of new varieties of sexually reproduced, tuber propagated, and asexually reproduced plant varieties.  Implementing the Plant Variety Protection Act (PVPA), we examine new applications and grant certificates that protect varieties for 20 years (25 years for vines and trees). … Certificate owners have rights to exclude others from marketing and selling their varieties, manage the use of their varieties by other breeders, and enjoy legal protection of their work.”

In the U.S. there are 3 types of intellectual property protection that breeders can obtain for new plant varieties:

  • Plant Variety Protection – seeds, tubers, and asexually reproduced plants (issued by PVPO).
  • Plant Patents – asexually reproduced 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 the responsibility of enforcing their PVP rights. And here, Phylos recognizes that it adds the possibility of potential new damages. It included requests for an injunction against Silver Lion from further infringing Phylos’ IP rights, reasonable attorneys’ fees, and increased damages (of up to three times the amount found or assessed).

This isn’t something we’ve seen a whole lot to date. But, we expect that it will continue to be come increasingly more common in the space. We’ll continue to monitor this case and report back on any significant developments, especially with respect to the PVP infringement claims.

For more informative articles about the PVPA, check out:

Editor’s Note: Harris Sliwoski has represented Phylos on unrelated matters going back to 2016.