Zespri Group Limited v Gao - [2020] NZHC 109

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-436-00094

[2020] NZHC 109

UNDER The PLANT VARIETY RIGHTS ACT 1987

BETWEEN

ZESPRI GROUP LIMITED

Plaintiff

AND

HAOYU GAO

First Defendant

SMILING FACE LIMITED
Second Defendant

XIA XUE

Third Defendant

Hearing:
5, 6, 7, 8, 9 and 12 November 2018

(final submissions received 10 July 2019)

Counsel:

L A O’Gorman, A N Birkinshaw and H H K Yeldizian E St John and S Moore for defendants

Judgment:

10 February 2020

JUDGMENT OF KATZ J

This judgment was delivered by me on 10 February 2020 at 12:30pm pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors: Buddle Findlay, Auckland
Yu Lawyers, Auckland

Counsel: E St John, Barrister, Auckland

S Moore, Barrister, Auckland

ZESPRI GROUP LIMITED v GAO & ORS [2020] NZHC 109 [10 February 2020]

Table of Contents

Introduction.......................................................................................................... [1]

Background and overview of Zespri’s claims................................................... [4]

Zespri’s development and commercialisation of the G3 and G9 varieties [4]

Haoyu Gao and Xia Xue [9]
Zespri’s concerns that the G3 and G9 varieties were being grown in China [11]
Overview of Zespri’s claims [13]

Infringement of PVR rights - the legal framework........................................ [16]

The Plant Variety Rights Act 1987 [16]

Cropmark Seeds Ltd v Winchester International (NZ) Ltd [23]
Issues of Extraterritorial Application [26]

Witness credibility.............................................................................................. [42] Circumstantial evidence.................................................................................... [46]

Alleged licence and supply of G3 and G9 to Mr Shu..................................... [49]

Hearsay issues - Mr Shu [50]

Mr Gao’s dealings with Mr Shu in 2012  [52]
Mr Gao’s ongoing relationship with Mr Shu  [63]
Zespri’s interactions with Mr Shu  [68]

Key factual findings [85]

Alleged joint venture with Mr Yu through Liangshan Yi [87]

Mr Gao’s initial dealings with Mr Yu [88]

The Liangshan Yi Co-operation Agreement  [90]
Mr Gao’s investment in the joint venture  [93]
Other evidence relating to the Liangshan Yi orchard  [95]

Key factual findings [99]

Alleged joint venture with Mr Yuan, and offer to sell G3 to Mr Li [100]

Mr Gao’s dealings with Mr Li [101]

Alleged joint venture between Mr Yuan and Mr Gao [106]

Key factual findings [112]

Alleged dealings with Jiashang Agriculture and Mr Yang [114]

The evidence [114]

Key factual findings [118]

First cause of action: Did Mr Gao breach Zespri’s PVR rights? [119]

Mr Gao’s relevant acts within New Zealand  [120]
Can Mr Gao and Smiling Face be concurrently liable for the same
conduct?  [125]
Can the export of a protected variety infringe PVR rights?  [128] Can an offer to sell a protected variety infringe PVR rights?  [131] What consequences have flowed from Mr Gao’s relevant acts within
New Zealand?  [134]
How have these consequences impacted Zespri?  [138]
Conclusion  [143]

Second cause of action: Did Smiling Face breach Zespri’s PVR Rights

under the PVR Act in G3 and/or G9?............................................................ [144]
What damages are appropriate for the breaches of the PVR Act by
Mr Gao and Smiling Face?............................................................................. [148]

Extraterritorial application and damages issues [149]

What approach should be taken to quantifying damages?…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] NZHC 109
Decision Date: 10 February 2020

CaseChat Overview and Summary

The case of Zespri Group Limited v Gao was heard in the High Court of New Zealand. Zespri Group Limited, the plaintiff, is a company that controls all kiwifruit exports from New Zealand to countries other than Australia on behalf of New Zealand growers. The defendants, Haoyu Gao, Xia Xue, and their company Smiling Face Limited, are alleged to have engaged in conduct that infringed Zespri's exclusive rights under the Plant Variety Rights Act 1987. The case revolves around Zespri's two gold kiwifruit varieties, G3 and G9. The court was required to decide whether the defendants' actions breached Zespri's plant variety rights, and if so, what damages should be awarded. The court found that Haoyu Gao and Smiling Face Limited breached Zespri's exclusive rights under the Plant Variety Rights Act 1987 by engaging in various activities related to the G3 and G9 varieties. The court also found that Haoyu Gao and Xia Xue breached the G3 licence agreements they entered into with Zespri. The court awarded Zespri damages of $14,894,100 for the breaches of the Plant Variety Rights Act and $10,824,300 for the breaches of the G3 licence agreements. The total quantum of damages recovered by Zespri from the defendants was not to exceed $14,894,100 to avoid double recovery. The court also granted Zespri a permanent injunction against the defendants, restraining them from further infringing or procuring any further infringements of Zespri's plant variety rights in the G3 and G9 varieties.

Orders