‘Penal­ties not tough enough’

Penal­ties im­posed against the grower who al­legedly pro­vided bud wood from two new Ze­spri ki­wifruit va­ri­eties to Chi­nese or­chards may not be tough enough, said Doug Brown, chair­man of New Zealand Ki­wifruit Grow­ers Inc.

The Orchardist - - News - By Elaine Fisher

Ze­spri has ter­mi­nated the grower’s li­cence and will re­move all SunGold plant ma­te­rial from their or­chard; moves which will re­sult in losses of hun­dreds of thou­sands of dol­lars now and into the fu­ture.

“The penal­ties are tough and fi­nan­cially sig­nif­i­cant. They will be very costly for the grower, given that Ze­spri is pre­dict­ing an av­er­age or­chard gate re­turn of $100,000 a hectare.”

If the grower re­mains in the in­dus­try the only op­tion is to grow green ki­wifruit which re­turns a lower OGR than new va­ri­eties.

“If the ac­tions as al­leged are proven to be true, then per­haps the penal­ties are not tough enough,” Brown said.

Last year Ze­spri re­ceived in­for­ma­tion that its gold ki­wifruit va­ri­eties Gold3 (Ze­spri SunGold) and Gold9 (Ze­spri Charm) may be grow­ing il­le­gally in China and im­me­di­ately be­gan an ex­ten­sive due dili­gence process.

The re­ports were con­firmed late last year, and Ze­spri con­tacted New Zealand po­lice re­gard­ing a pos­si­ble breach of Ze­spri's plant va­ri­ety rights.

The of­fice in charge of the case, de­tec­tive se­nior sergeant Greg Turner said po­lice are not cur­rently in­ves­ti­gat­ing the mat­ter, but it re­mains an open in­ves­ti­ga­tion. “Should there be any per­son in the com­mu­nity with in­for­ma­tion about this mat­ter po­lice en­cour­age them to pro­vide that in­for­ma­tion to ad­vance this in­ves­ti­ga­tion.

“The in­ves­ti­ga­tion iden­ti­fied a sus­pect liv­ing in New Zealand who was li­censed to grow the pro­tected va­ri­ety. As pre­vi­ously re­ported by Ze­spri, a li­censed grower within New Zealand has had their rights to grow that va­ri­ety with­drawn.”

Po­lice in­ves­ti­gated this mat­ter as an "ob­tain­ing by de­cep­tion" in­ci­dent, which is a fraud of­fence. The al­le­ga­tion was that a li­censed grower in New Zealand ob­tained pay­ment by falsely rep­re­sent­ing that they had the author­ity to sell rights to grow the pro­tected va­ri­eties.

No mem­ber of the New Zealand Po­lice vis­ited China dur­ing the course of this in­ves­ti­ga­tion. There was li­ai­son with New Zealand Po­lice staff sta­tioned in China and with other gov­ern­ment agen­cies

“Ze­spri main­tains ex­cel­lent net­works and re­la­tion­ships across the world. As a re­sult, Ze­spri be­came aware of the mat­ter and the iden­tity of the sus­pect.”

De­tec­tive se­nior sergeant Turner said po­lice will not be com­ment­ing on how the bud wood may have got to China.

This is an al­leged case, said Brown, how­ever, should it be proven, it is un­ac­cept­able for a grower to break the plant va­ri­ety rights.

“I am per­son­ally deeply dis­ap­pointed and to­tally back Ze­spri to en­force the li­cence penalty pro­vi­sions to the nth de­gree. If proven, the ac­tions of the grower have put at risk not only the New Zealand Ki­wifruit in­dus­try but New Zealand Inc as well as the ki­wifruit in­dus­try con­trib­utes sub­stan­tially to the New Zealand econ­omy.”

The whole point, said Brown, in Ze­spri and the in­dus­try in­vest­ing heav­ily in tak­ing out plant va­ri­ety rights (known as PVR) is to pro­tect the in­vest­ment in in­tel­lec­tual prop­erty and mar­ket ad­van­tages the va­ri­eties of­fer all grow­ers.

“In 2016 Ze­spri spent $13 mil­lion in in­no­va­tion plus an­other $13 mil­lion on new cul­ti­vars – which re­flects the large in­vest­ment the in­dus­try is mak­ing to keep pro­duc­ing the best fruit.

“En­force­ment must be car­ried out. We have enough is­sues with­out shooting our­selves in the foot. We have to pro­tect our in­tel­lec­tual prop­erty.

“The strength of the New Zealand ki­wifruit in­dus­try is in our unity and hav­ing the best fruit va­ri­eties and best qual­ity. If a grower has put that at risk it is very dis­ap­point­ing.

“The in­dus­try spends mil­lions each year to bring grow­ers an eco­nomic ad­van­tage – pro­vid­ing bud wood to some­one else de­fies logic.”

No amount of money to an in­di­vid­ual grower can come near what the in­dus­try as a whole could lose through new va­ri­eties be­ing grown il­le­gally over­seas.

Brown said there is no lack of un­der­stat­ing as to what grow­ers’ obli­ga­tions are un­der the li­cence agree­ment. The con­tract grow­ers sign to grow new va­ri­eties is com­pre­hen­sive and un­am­bigu­ous in set­ting out the rights and obli­ga­tions of grow­ers.

Brown said while New Zealand’s border biose­cu­rity scru­tiny for goods com­ing into the coun­try is strict, he’s now not so sure about over­sight of what goes out. “Ob­vi­ously it’s eas­ier to get plant ma­te­rial out than we would have thought.”

Ze­spri chief op­er­at­ing of­fi­cer Si­mon Lim­mer said Ze­spri would not make any de­tails about the grower public but con­firmed that Ze­spri has taken steps against the grower who al­legedly pro­vided the bud­wood from New Zealand to pro­tect the company’s IP and the value of SunGold li­cences for all grow­ers.

“This in­cludes ter­mi­nat­ing their li­cence, drop­ping their SunGold fruit and re­mov­ing all SunGold plant ma­te­rial from their or­chard. We ac­cepted the grower’s green fruit this sea­son.”

Lim­mer said Ze­spri may also take civil ac­tion. “We want to send a clear mes­sage that we will vig­or­ously pro­tect our IP for grow­ers in New Zealand and off­shore. We’re con­tin­u­ing to work col­lab­o­ra­tively with au­thor­i­ties in China to de­ter­mine our op­tions with sup­port of New Zealand gov­ern­ment.

“We are in­ves­ti­gat­ing whether there are other plant­ings in China and while we are limited by what we can say with­out prej­u­dic­ing these in­ves­ti­ga­tions, our work to date shows this is not of sig­nif­i­cant scale. We’re not re­leas­ing de­tails about the il­le­gal plant­ing sites at this stage and the in­ves­ti­ga­tions into how the bud wood was trans­ported to China are on­go­ing.”

Ze­spri has its own trial sites to grow ki­wifruit in Shaanxi Prov­ince China, and is es­tab­lish­ing a ki­wifruit “cen­tre of ex­cel­lence” there. Shaanxi pro­duces be­tween 40% to 50% of China’s to­tal ki­wifruit pro­duc­tion.

Lim­mer said it is im­por­tant to note that; “with­out run­ning these grow­ing tri­als in China, it’s highly un­likely Ze­spri would have found out about the PVR breach in the first place, as we now have strong work­ing re­la­tion­ships across the China ki­wifruit in­dus­try.”

“We want to send a clear mes­sage that we will vig­or­ously pro­tect our IP for grow­ers in NZ and off­shore. ”

Si­mon Lim­mer, Ze­spri chief op­er­at­ing of­fi­cer

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