Billion-Dollar Strawberry Trial Moves on to the Money

SAN FRANCISCO (CN) — Attorneys for UC Davis tried to persuade a federal judge during a bench trial Wednesday that California’s powerhouse strawberry industry will be imperiled if two of its retired researchers are allowed to sell strawberry strains they created at the school.

“It would cause a fundamental disruption in the strawberry industry” if UC Davis’ public breeding program also closed, California Strawberry Commission President Rick Tomlinson testified during the first day of a two-day bench trial on equitable claims and injunctive relief.

“We feel strongly, the whole industry feels strongly that it should continue as a public program,” he told U.S. District Judge Vince Chhabria.

The case pits UC Davis against Doug Shaw, Kirk Larson and their company California Berry Cultivars (CBC), which they formed after they retired from the university.

A federal jury found last week that Shaw and Larson willfully infringed nine of UC Davis’s strawberry plant patents and used its unpatented plants without permission to breed strawberries for CBC.

Strawberries are a $2.5 billion annual business in California, and the lion’s share of the berries come from strains which Shaw and Larson developed at UC Davis.

Shaw, who developed more than a dozen varieties for UC Davis’s strawberry breeding program before he retired to start CBC, told the university he wanted to form a breeding company that would license the strawberries he and Larson had invented, develop new varieties from them, and pay the school royalties.

UC Davis rejected Shaw’s proposal after initially expressing interest. In 2016, it sued Shaw, Larson and CBC for conversion and patent infringement, claiming they used its strawberry varieties to breed new ones for CBC after it denied them a license.

The two men counterclaimed that the school acted in bad faith by trying to patent 168 varieties of strawberries in a single patent, freezing CBC’s ability to work with the plants.

In the counterclaim, they said the California Strawberry Commission — a government entity that represents the state’s strawberry farmers — pressured UC Davis to deny Shaw a license by suing the university to keep its strawberry breeding program open, because its members didn’t want to compete with CBC.

On Wednesday, Greg Lanier, representing Shaw and Larson, told the court that UC Davis granted the commission the ability to have input on its strawberry licensing decisions as part of a 2015 settlement stemming from that lawsuit, something it had never done before.

But commission president Tomlinson said that the settlement specified that any strawberry license UC Davis granted must be “in the public interest” and that the school cannot show “preferential treatment.”

Tomlinson said those conditions foreclosed Shaw’s licensing proposal because his intimate knowledge of the university’s strawberry varieties would have given CBC an unfair advantage in the marketplace.

“To the extent that no one else had the data or the pedigree records, to allow just one organization, one company, to have a license … that would definitely create an inequity,” Tomlinson said.

California farmers, who have planted 60 percent of the state’s strawberry acreage with UC Davis varieties, pay less for strawberries developed at UC Davis and get access to new and better varieties before farmers outside the state.

However, farmers who buy strawberry varieties from suppliers with private breeding programs must abide by restrictions, including agreeing to give all of the strawberries they grow to the supplier that sold them the seedlings.

Michael Carriere, an intellectual property manager in UC Davis’s Innovation Access office, which decides whether to pursue patents on its researchers’ inventions, agreed with Tomlinson’s assessment.

“CBC would be uniquely positioned to compete in a way no one else in the past had ever been,” Carriere said Wednesday. “They would have had access to one of the strongest pools of germplasm anywhere. They would be connected to the person most knowledgeable about how to use that germplasm, Professor Shaw. He has lived and breathed that material for 20 years.”

UC Davis’s $1.5 million-a-year strawberry breeding program is largely funded by patent royalties; the Strawberry Commission contributed $350,000 to it each year from 1956 to 2012. Competition from a brawny contender like CBC could reduce the program’s revenue and undermine its viability, Carriere said.

UC Davis seeks injunctions prohibiting breeding with its plants and requiring CBC to deliver it all the university-created plants and their offspring in its possession, among other things.

CBC opposed most of the school’s requests as “far-reaching relief” that “transforms the principle of restitution from one of disgorgement to one of plunder.”

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