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Purchasing patented varieties

 
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MeyerLemon
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Posted: Wed 11 Jul, 2007 4:12 am

Hi,

I have a question on purchasing patented varieties.

Some varieties, like "Gold Nugget Mandarin" are held under a propagation agreement and nurseries asks for permits to sell budwoods or seedlings,etc...

But those trees are sold in containers as house plants on other online nurseries like "Will's Estate Maintenance Inc" or FourwindsGrowers, etc...

How does it happen, aren't they the same variety?

Thanks,
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JoeReal
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Posted: Wed 11 Jul, 2007 10:09 am

MeyerLemon wrote:
Hi,

I have a question on purchasing patented varieties.

Some varieties, like "Gold Nugget Mandarin" are held under a propagation agreement and nurseries asks for permits to sell budwoods or seedlings,etc...

But those trees are sold in containers as house plants on other online nurseries like "Will's Estate Maintenance Inc" or FourwindsGrowers, etc...

How does it happen, aren't they the same variety?

Thanks,



It depends upon how the patent holders and the assignee license their plant patents to other people. Patent holders are real people referred to as the inventors, as an organization cannot claim to have made the patent. If the patent holder is an employee for hire to make the invention, then as per employment agreement, the inventors assigns the patents to their employers, who in turn are assignee of the patents. This is to recognize the fact that patents are intellectual properties of individuals, but the assignee dictates how the patents are licensed and how they are to be enforced. Of course assignee and inventors can be one and the same person.

In the case of most patented plants that end up in the stores for retail, the patent arrangement is with the plant propagators and the assignee of the patent holders. Typically for each plant sold, the propagator pays a fee to the patent holder as per license to propagate agreement. This is easy to implement by auditing the sales receipts.
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JoeReal
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Posted: Wed 11 Jul, 2007 10:20 am

In the retail industry, most stores absorb the cost of the patent license, that is why you see them as the same price as their other plants, often for the sake of simplicity, ease of pricing and labeling of their plants sold.

In some cases, the base price is the same as their other same category item and then there is that very obvious Royalty Fee that is displayed alongside with the base price of the plant. For example they might state that the price of Gold Nugget is $19.95 for a 5 gal container plus Royalty fee of $1.50. In this case, it is very obvious that the retail seller is passing off the Royalty cost to the consumer.

In the case of Gold Nugget, UCR is the assignee of the patent while the researchers are its registered inventors. As a propagator, you will have to make arrangements with UC's main technological office liaison in San Francisco, primarily to make arrangement with you so that they get paid for each plant propagated and sold, and what auditing procedures to follow to minimize cheating on the sales and royalty fees due.

Selling patented grapes are also implemented in slightly different ways, because you can order the cuttings and you pay anywhere from $0.10 to $1.00 per cutting, directly to the planting material propagator.

It would be simpler if the patent holders are propagators but often they are not so there are other various arrangements in how to make sure the patent holders gets paid and the specifics of the patents are spelled out in various ways.

These plant patents should expire within 20 years.
Greed is evolving fast, so lawyers have devised ways around this one.let me add more on this later...
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MeyerLemon
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Posted: Wed 11 Jul, 2007 11:10 am

Thanks a lot, this is really detailed info.It is a little bit confusing but I guess I see it.
So, as a final buyer, do I have to right to propagate from a tree?
Say, I buy a container tree of a patented varietty and next season I get cuttings in my farm, graft them and grow new trees? How do they control it?
I mean is it illegal to propagte new trees from cuttings?

I guess that arrangements with UC's main technological office liaison is not asked for container tree purchases, right?
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JoeReal
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Posted: Wed 11 Jul, 2007 11:27 am

A patent holder can make exclusive arrangements with some plant propagators, like for the case of Zaiger Genetics and Dave Wilson Nursery. In the US, DWN is the exclusive propagator of cultivars developed by Zaiger Genetics, and popular among them are their pluots and apriums. No other US propagator are licensed, aside from DWN for the Zaiger patented plants. Zaiger Genetics have of course exclusive arrangements with various propagators in various countries like Australia, New Zealand and Europe.

In DWN's example, they are the wholesale propagators and they in turn sell their plants to various retail nurseries, and usually they have a say on how items are priced, as long as Zaiger Genetics gets paid their royalties. So you see various pluots and apriums sold by a lot of online and local nurseries, even the big box stores like Home Depot, OSH, and even CrapMart at times in other locations managed to sell some Zaiger cultivars (or i must have remembered it wrongly).

In most retail outlets of DWN trees, there are no price differences between heirloom, expired patent cultivars, and newly patented cultivars, but all of the DWN trees are priced higher than those from other wholesale nurseries.

Then there is that exclusitivity agreement again with Zaiger Genetics, DWN and commercial growers. Arrangements can be made so that only commercial growers have exclusive access to the newly patented cultivars. That is why to my frustration, more than half of the newly developed pluots, apriums, low chill cherry cultivars are not available to be sold as plants for home growers. Only commercial growers have access to these cultivars, primarily to protect their industry.

We can't blame why DWN and Zaiger Genetics resorted to such arrangements, because an agricultural spy from other countries can pose as tourists, go to a retail nursery, purchase the newly patented plant cultivars, take off some cuttings and ship the cuttings to the countries that hired them, then mass propagate those plants, and to put the final nail to the coffin, return the items to the store for full refund. Meanwhile, in a matter of months, these countries who don't respect the patent laws will be competing in supplying the world with the newly developed fruit cultivars at very cheap price, as basically their R&D costs nothing.
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JoeReal
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Posted: Wed 11 Jul, 2007 11:36 am

MeyerLemon wrote:
Thanks a lot, this is really detailed info.It is a little bit confusing but I guess I see it.
So, as a final buyer, do I have to right to propagate from a tree?
Say, I buy a container tree of a patented varietty and next season I get cuttings in my farm, graft them and grow new trees? How do they control it?
I mean is it illegal to propagte new trees from cuttings?

I guess that arrangements with UC's main technological office liaison is not asked for container tree purchases, right?


Basically you needed a license agreement with the patent holders as to how to make sure you can honestly pay the royalty fees and what auditing measures are acceptable, enforceable and doesn't cost that much to implement.

For example, it would be insane for them to check you up if you indeed propagated 10 plants in your farm and so you owe them $15 royalty fees, while the cost of having an agent inspect your farm would be $15,000! You know travel costs, salary, hotel, wasting your time and their time. So you see, there is no way to control and check effectively.

So basically, the most cost effective way for them is NOT to grant license to the non-commercial propagator such as home grower, farmer, or hobbyist to propagate the patented trees. It is illegal to propagate those patented trees without a license agreement and technically none of us non-commercial growers will ever have that privilege. So you are forced to buy from the licensed propagator where the royalty fees are much more cost effective to audit, it would just be a matter of faxing the sales receipt and calculating fees due. These are counterchecked with IRS too, so it is quite tight check and audit for commercial propagators.
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MeyerLemon
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Posted: Wed 11 Jul, 2007 11:49 am

Ok I see better, thanks.

So they just don't licence home growers to make it easy Smile

It still doesn't make sense how do they let nurseries to sell retail plants like that.They don't licence but they sell the trees at retailers.So the system works on trust Confused
As you say, any one can purchase a tree and get cuttings that way, strange.
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JoeReal
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Posted: Wed 11 Jul, 2007 11:59 am

Lately, this has been a big issue for me. The newly released Red Nules (pigmented version of Clemenules) from CCPP have exclusivity arrangement with Four wind growers and Future Fruit, LLC.

The way the patented Red Nules are executed is that only Four Winds Nursery can propagate the Red Nules, and only Contract Growers can plant those trees. The Contract growers cannot sell the fruits to anybody, but only to Future Fruit, LLC or to whomever Future Fruit decides to sell those fruits. This means that as a contract grower, you will never own the trees, even long after the plant patents have expired.

This means that Future Fruit is the sole monopolistic dictator of whatever price they want to sell the Red Nules to the market, having made exclusive arrangement with UCR CCPP.

It would have been perfectly alright for me if UCR CCPP is not publicly funded in part to enter such arrangements with Future Fruit, LLC as the exclusive arrangement has COMPLETELY SHUNNED the general public from ever having access to the patented Red Nules.

It is alright for UC to own patents, after all, they needed the funding to continue with their wonderful work when the government continues to cut research funding. I fully support the university, even give out donations and volunteer work to the university. But I condone anti-competitive behavior that is being facilitated by public institutions, which in effect have completely denied the general tax paying public access to patented cultivars, and to have it controlled by one company who will be the sole dictator on how the plant propagation are to be done and how fruits are to be sold. It would have been perfectly alright if UC is fully commercialized private institution. I don't like it that some of my tax dollars are being used to study and develop those cultivars and then deny me access to those cultivars for my own pleasure of growing them. There should be limits on how the scope of patents are owned by publicly funded institutions, and EXCLUSIVITY arrangements should never be one of them. After all, the university encourages free enterprises and competitive market for the benefit of the general public, and it would be hypocritical to encourage anti-competitive behavior.
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JoeReal
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Posted: Wed 11 Jul, 2007 12:11 pm

MeyerLemon wrote:
Ok I see better, thanks.

So they just don't licence home growers to make it easy Smile

It still doesn't make sense how do they let nurseries to sell retail plants like that.They don't licence but they sell the trees at retailers.So the system works on trust Confused
As you say, any one can purchase a tree and get cuttings that way, strange.


I have mentioned it before and make this clear that it is quite easy to do the audit checks, and hence easily calculate the royalty fees. You know that cash registers are auditable machines as required by law, simply because the IRS and State taxes are computed on a per sales basis, and so it is easy to check how many patented items are sold, as these have tags, and so the patent holders get their dues. Sales receipts are required for all tax purposes, and the store's SKU items are printed there, even each line item have their own tax rates, some are taxable and some are not, some have redemption values for recycling, some have royalty fees and some have not, nothing can be easily hidden from the IRS. So it is quite easy to audit for royalty dues to various patent holders, just the sales receipts or their summaries are needed. Trust is not needed at all, the system has been in place, and you can thank the IRS and the State Tax board for all of that.

Yes anyone can get cuttings that way by going to the store buy the tree, take the cuttings off, far from the video cameras of the stores, then come back and return the plants for a refund. The low paid store employees at the service desk wouldn't have any clue at all. This is not prosecutable as a violation of the law if the plants are not patented, as it is within the scope of customer satisfaction policies, as motives are not obviously known, and so the policy could be easily abused. This part calls for honesty, as without our money to support the industry, there would be no industry to have access to the fruits. It is not strange, I don't encourage it, as this will only drive up the prices of people who are honestly paying.

But if you take the plant cuttings from a patented cultivar with the purpose of propagating it, that would be easily prosecutable because you have the evidence in your yard. So like those illegal music downloads, one of these days, someone would get prosecuted as an "example" for propagating patented trees. And theoretically it can be done now. It is quite easier to raid the yard for evidence than to look for illegal music downloads from a hard drive. Very very very easy to collect the evidence of plant patent violation as the evidences can't be easily hidden with an encryption key or the trees couldn't be easily disposed of with a Norton complete untraceable erase utility.
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Millet
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Posted: Wed 11 Jul, 2007 12:40 pm

Joe and I have talked about the restrictive policies CCPP has put against Red Nules (Red Clementine). I agree it sets a bad policy for publicly funded (partially public funded) UCR CCPP. However, in the real world it normally isn't very long at all until such restricted varieties begin showing up in the black market, or in this case is it the orange market? A good example is the Australian Micro citrus cultivars. Absolutely every restricted cultivar grown in Australia is quite easy to obtain. - Millet
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MeyerLemon
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Posted: Wed 11 Jul, 2007 12:54 pm

JoeReal wrote:


Yes anyone can get cuttings that way by going to the store buy the tree, take the cuttings off, far from the video cameras of the stores, then come back and return the plants for a refund. The low paid store employees at the service desk wouldn't have any clue at all. This is not prosecutable as a violation of the law if the plants are not patented, as it is within the scope of customer satisfaction policies, as motives are not obviously known, and so the policy could be easily abused. This part calls for honesty, as without our money to support the industry, there would be no industry to have access to the fruits. It is not strange, I don't encourage it, as this will only drive up the prices of people who are honestly paying.



Yes, this is what I wanted to say when I wrote "system works on trust" Illegal music download is a very good example to summarize it.

I learned a lot about how patents work, thanks a lot that you wrote that much and explain Smile
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JoeReal
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Posted: Wed 11 Jul, 2007 3:43 pm

You're welcome MeyerLemon!
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JoeReal
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Posted: Wed 11 Jul, 2007 5:26 pm

And then there is that issue of Trademarked names!

Some companies would import non-patent cultivars through the USDA, and then sell them off as another Trademarked name! Some people are tricked to believed that Patented plants and Trademarked plants have the same rules. Often they would be the same because usually, the patent holders will also trademark the name for the cultivar.

But not all trademarked plants are patented, and you can of course, propagate any non-patented plants, trademarked or not. But the only thing with trademarks is that you cannot sell the same plant in the same category having the same name as the trademarked plant. You will have to call it another name if you sell a trademarked but non-patent plant. I've come many issues like these with apples and pears.

It is only the patented plants that you cannot asexually propagate (including nucellar propagation). You can of course asexually propagate them if you have license from patent holders. But bear in mind that you can use those plants when you bought them and derive new cultivars out of them either through hybridization or selection from their mutations and patent it too.
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MeyerLemon
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Posted: Thu 12 Jul, 2007 3:37 am

It is very interesting how our relation with nature gets complicated this much Very Happy Actually, I know it is not our relation with nature but Economics.
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