Wilmer Beats Growers' Bid to Invalidate Grape Patents
For six years, Lawrence Hadley of McKool Smith has represented a small group of grape growers in California who think they're over-regulated and over-taxed by a state agency called the California Table Grape Commission. Hadley took aim at the CTGC's patents on two grape varieties, hoping to block the commission from demanding licensing fees from growers in the state. But his quest to invalidate the patents came to a likely end last week, when a judge in Fresno ruled that the patents pass muster.
In a concise ruling issued on Thursday, U.S. District Judge Sam Haddon sided with the CTGC's lawyers at Wilmer Cutler Pickering Hale and Dorr and upheld patents for grape varieties Scarlet Royal and Autumn King. The judge determined that Hadley's clients failed to prove that the claimed inventions were in public use before the CTGC sought patent protection.
For decades the U.S. Department of Agriculture has developed new grape varieties. Farmers paid part of the cost of the government research through an assessment on each box of grapes they sold. The USDA released its new varieties to the farmers at no additional cost.
California's state government put a new twist on the process in 2002. At the urging of the CTGC, the USDA began patenting its new varieties. The USDA exclusively licensed these patents to the CTGC, which in turn licensed them (for a fee) to farmers interested in growing the varieties. The farmers alleged that they could only obtain the varieties at three nurseries handpicked by the CTGC, one of which was owned by the son of a CTGC member.
The CTGC and USDA said their activities were improving grape quality, but Hadley thought he saw a classic case of government overreach. In his complaint, filed in 2007 on behalf Delano Farms Company and two other California grape farms, he pointed out that growers had already funded the development of the patented varieties they were now being asked to license. "Our clients believe the grape commission has overextended its authority, to really insert itself into private industry and become more of a regulatory body instead of a promotions program," Hadley told McClatchy Newspapers last year.
According to Hadley's complaint, the government patents on Scarlet Royal and Autumn King were invalid because the claimed varieties came into public use well before the USDA sought patent protection in 2004. Specifically, Hadley argued that two farmers, brothers Jim and Larry Ludy, were able to grow and sell both varieties because a USDA employee gave them unauthorized samples back in 2001. The brothers sold Scarlet Royal and Autumn King under different names.
The case climaxed in a three-day bench trial in June. The Wilmer team representing CTGC included Randolph Moss, Cindy Vreeland, Brian Boynton, and Tom Saunders. Lawyers from the U.S. Department of Justice represented the USDA, which was named as a co-defendant.
Siding with Wilmer and the DOJ, Judge Haddon ruled Thursday that the Ludy brothers' conduct didn't trigger the "public use" bar. "[N]o testimony was received from any member of the public indicating public awareness of the Ludys' possession of the unreleased varieties," the judge wrote. "Simply put, the Ludys' use of the Scarlet Royal and Autumn King varieties prior to the critical date was limited, isolated, and unknown."
Update: An earlier version of this story reported that growers could only obtain the grape varieties at issue from three nurseries handpicked by the California Table Grape Commission. The story has been update to reflect that the CTGC disputed that characterization during the litigation. According to the CTGC, it didn't "handpick" three nurseries. More nurseries could have applied sold the varieties, so long as they passed certain objective criteria, the CTGC claimed.