Court Opinion

ID: 9492189
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:34:22.738142+00
Date Added: 2024-06-11T17:55:09.848331
License: Public Domain

CLEVENGER, Circuit Judge,
dissenting.
This case asks whether Sinkers is hable to Delta under three provisions of the Plant Variety Protection Act: transferring possession of protected seed without Delta’s consent (section 2541(1)), failing to mark bags of protected seed with the required notice (section 2541(6)), and inducing infringing acts by others (section 2541(8)). The district court correctly held that Sinkers is not liable to Delta under these provisions. We should affirm the judgment of the district court.
In this case, Sinkers delinted several varieties of cottonseed obtained mainly from two sources: the Nodena cooperative (discussed by the majority) and Bur-geen and Black Gin and Fertilizer Co. (a cotton gin). After delinting,- the cottonseed was sold in transfers arranged by others, without any substantive participation by Sinkers. Sinkers argues that ah of its delinting activity relates to seed being transferred from farmer to farmer under the protection of section 2543 of the Act, which shields farmer-to-farmer transfers from infringement under the sections with which Sinkers is charged. Because Sinkers was a mere passive participant in farmer-to-farmer transactions arranged by other persons (a finding that the majority accepts), it contends that it should escape liability under the Act, even though it is clear that it did effect transfer of possession of allegedly protected seed, a literal violation of the Act if the transferred seed is protected.
The majority concedes that a literal reading of section 2541(1) produces absurd results. If any transfer of possession of protected seed without consent violates the Act, then completely innocent parties who handle protected seed are swept under the Act. To avoid that result, the majority creates an exception to section 2541(1). Only the guilty party, that is, the one who knew or should have known that the seed is protected, is caught under section 2541(1). The innocent transferor escapes liability.
I agree that some limit must be placed pn the transfer of possession statute to avoid absurd results. Even the Supreme Court has noted that this statute is virtually impossible to parse satisfactorily. See Asgrow Seed Co. v. Winterboer, 513 U.S. 179, 185-86,115 S.Ct. 788, 130 L.Ed.2d 682 (1995)(“It may be well to acknowledge at the outset that it is quite impossible to make complete sense of the provision at issue here.”). Some 17 years ago, the *1358Fifth Circuit (which incidentally knows more about cotton growing, ginning and delinting than we) grappled with the Act and found another way of placing some sensible limits on the transfer and labeling provisions of the Act. In Delta and Pine Land Co. v. Peoples Gin Co., 694 F.2d 1012 (5th Cir.1983), that court held that a party who is but a passive participant in a farmer-to-farmer transfer cannot be held liable under the Act.1 In that case, the defendants were found to have arranged sales transactions among the farmers; not being merely passive, they were held liable under the Act. From 1983 until today, Peoples Gin has been the law of the Cotton Belt. Indeed, when this case was brought, the plaintiffs were under the impression that Sinkers had been actively participating in arranging the farmer-to-farmer transfers, and that this presumably would be an easy ease for them to win under the law of Peoples Gin. As is so often the case, however, discovery proved the plaintiffs wrong: the evidence proves, as a matter of fact, that Sinkers has been a mere passive conduit in the farmer-to-farmer sales. For that reason, the district court simply applied the law of the Cotton Belt and relieved Sinkers from liability under the Act. The court quite reasonably noted that a delinter who is merely passively carrying out the instruction of its customers in delivering or releasing delinted seed is not substantively different from a delinter who merely returns the delinted seed to the person who asked it to be delinted. The court opined, and I agree, that a mere return of delinted seed to the sender should not violate the transfer of possession provision.
The majority prefers not to follow the lead of the Fifth Circuit. Instead, it holds that the transfer provision is only violated by knowing, or “should have known,” farmer-to-farmer transfers of seed that are impermissible under Asgrow. I think it is a mistake to read a scienter requirement into the transfer of possession provision. It seems clear that Congress put the scienter element where it belongs, in section 2541(8), where to “instigate or actively induce performance of any of the foregoing acts” leads to liability. I prefer to follow the lead of the Fifth Circuit, which settled the law that has governed the market in all these intervening years.
Under the law as stated in Peoples Gin, ginners and delinters were saved the need to create a “paper trail” to protect completely passive conduct from liability under the Act. Under the rule devised by the majority in this case, ginners and delinters will become paper-keeping traffic cops. Ginners and delinters will have to keep up-to-date records on the membership of cotton cooperatives, including the acreage planted in cotton each season by each member of the cooperative. Under the *1359majority’s rule, a forty member cooperative (forty farms of roughly a square mile each) will be a prima facie suspect of delivering excess seed to the ginner or delinter. Ginners and delinters will also have to keep current with any increase in acreage purchased by farmers during the course of a year, so they can satisfy themselves that a farmer is not delivering too much seed for ginning or delinting. Presumably gin-ners and delinters will want to ask those who deliver seed to them to provide them with certificates that say something like “the seed we are delivering is within the current section 2543 exemption.” Those who deliver the seed to those who deliver it to ginners and delinters will also want some kind of certificate, to the same effect. The paper trail presumably will lead right back to the section 2543 farmer who is trying to save seed for his own use, or for sale as now permitted under section 2543. I can see mountains of paper piling up throughout the Cotton Belt. I can also see lots of work for lawyers trying and defending this kind of case. And many headaches for judges, who will have to decide if a case is lost, or won, when there are (as there inevitably will be) glitches here and there in the paper trial that, in a perfect, Federal Circuit world, will lead from farmer Joan on her south 40 to her neighbor with the truck who brings her seed to a coop, which gives the seed to a another to take it first to the ginner, then to the delinter and finally either back to Joan or to the person who buys her seed. Now all of this seems like a whole lot of trouble being visited on a settled law that went unchallenged for a very long time, and only got challenged in this case when the proofs under the settled law ran against the plaintiff.
The majority responds to my concern by guessing what goes into a cottonseed delinting contract, assuming farmer Joan signs such a contract, and then postulating that all a ginner or delinter needs to do to avoid liability is to stick a clause in the contract saying something like “you promise me that the amount of seed you are delivering does not exceed the amount you can lawfully save for replanting.” That it will be so easy to satisfy the scienter requirement seems to me all the more reason why we should leave settled law alone.
The burden of establishing liability under the statute is of course on Delta. In addition to holding that liability cannot attach for mere passive conduct in transfers arranged by others, the trial court held that Delta had failed to prove that the delinted seed from the Burgeen and Black gin is “a protected variety belonging to plaintiff.” Delta and Pine Land Co. v. The Sinkers Corp., No. 93CV77-DJS, slip op. at 21 (E.D.Mo. Mar. 5, 1998). For failure of such proof, Sinkers cannot be held liable for transfers of that particular seed. I think the majority is trying to say the same thing in its footnote 8.
The majority opinion notes that Congress amended the Act in 1994. That amendment preserves the right of a farmer to save seed from the crop he produces from protected seed he has purchased. The farmer must either use such saved seed “in the production of a crop for use on the farm of the person,” or sell such amount of the saved seed in a “bona fide sale for other than reproductive purposes.”
This case, of course, arises under the statute before its amendment, and therefore neither the majority nor I can say with authority how the holding of the majority will apply to the future. We can predict, however, that a farmer who has purchased protected seed, and who wishes to use or sell the seed propagated by his plantings of protected seed — as the amended Act permits — will need the services of a delinter. It thus seems that, in order to avoid the absurd results that follow from an unrestrained reading of the Act, either a “passive” or a “knowing” *1360exception to the statute, or some other escape valve, is required.
I of course recognize that I, like the majority, read an exception into an otherwise broad statute. Whether either of us is correct in so doing is a matter for others to determine. Perhaps the Supreme Court will wish to grapple with the Act, again.
I respectfully dissent.

. Peoples Gin actually was simply a farmer's co-op cotton gin that ginned farmers’ cotton first, and then arranged for the sale of delinted seed that an owner farmer did not want for himself. The majority discounts the force of Peoples Gin on the ground that it involved a third party {i.e., a nonfarmer) who arranged sales of farmer-owned delinted cottonseed. This hardly is a ground to discard the law as stated in Peoples Gin. Instead, it is the precise reason why the outcome in Peoples Gin— liability — would be incorrect in this case, where the "third party” is but a passive conduit in farmer-to-farmer transfers, which may or may not violate the statute.
The majority also wrongly rejects the law as stated in Peoples Gin as dictum. The rule that active participation leads to liability (the rule of Peoples Gin) however necessarily includes the rule that no active participation leads to no liability. An example suffices. In Case A, the trial court finds that fact x (say, active participation) is proven, and, based on that fact-finding, determines that the defendant has violated the act. In Case B under the same act, the plaintiff fails to prove fact x {i.e., fails to prove active participation), so the defendant moves for judgment of no liability as a matter of law, citing Case A. Will the court in Case B reject the rationale of Case A as dictum? I think not.
Rather than struggle so to escape from Peoples Gin, I think the majority should respect and follow its rationale.