Grape growers can sue USDA as Supreme Court stays out of the fight

McClatchy NewspapersNovember 26, 2012 

FOOD GRAPES 1 FR

Red flame grapes, foreground, nestled with Thompson seedless, top left, and champagne grapes, top right, burst with flavor.

JOHN WALKER — Fresno Bee/MCT

— The Supreme Court on Monday provided legal juice for growers who want to sue the U.S. Agriculture Department and the California Table Grape Commission over grapevine patents.

In a decision noteworthy for farmers nationwide, the high court declined to review a lower court’s ruling that waived USDA’s customary immunity from lawsuits. The decision, issued without comment, effectively upholds the earlier appellate ruling and gives a green light for further legal battle over the “Scarlet Royal” and “Autumn King” grapevine variety patents.

“It’s part of an effort by growers to curtail the power grab by the table grape commission,” Lawrence Hadley, an attorney for the growers who are challenging the patents, said Monday. “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 represents Delano Farms, Four Star Fruit and Gerawan Farming, which united in the lawsuit filed in November 2007 against the Agriculture Department and the Fresno-based table grape commission. From the sidelines, some other growers have been cheering on the lawsuit as a way to curtail the table commission’s power.

“They deserve to be sued,” prominent Visalia, Calif.-area grape grower and nursery owner Luther J. Khachigian said Monday. “They don’t belong in the nursery business . . . they’re interfering in a business they don’t know anything about.”

The lawsuit will now proceed in U.S. District Court in Fresno.

The relationships among the various parties are “complex,” the U.S. Court of Appeals for the Federal Circuit acknowledged in its decision last year. The potential implications also could extend beyond California’s $1.4 billion-a-year table grape industry, as federal agencies control many patents.

Because the Agricultural Research Service developed the grapevine varieties starting in the 1990s, the USDA owns them, though the industry-supported table grape commission funded much of the research. The Agriculture Department licensed three patents to the commission, which in turn sublicensed the patents to three nurseries that served as the sole authorized distributors.

Under the licensing agreement, the Agriculture Department keeps 60 percent of the revenues and the California Table Grape Commission keeps the remaining 40 percent. But some grapevines have circulated outside of the licensing controls.

In May 2004, the table grape commission wrote table grape growers and shippers, informing those who were in possession of the Sweet Scarlet variety that they could keep their vines and avoid a lawsuit if they paid the commission $2 per vine reproduced and $2 per box of Sweet Scarlet grapes previously shipped.

Seventeen California growers subsequently advised the commission that they had legally obtained the grapevine variety more than a year before the patent application was filed. Delano Farms and its allies contend this prior public use invalidated the subsequent patents, which means the table grape commission cannot command license payments.

The USDA has since given the Sweet Scarlet patent over to public use, Hadley said, while the legal battle continues over the Scarlet Royal and Autumn King patents.

Generally, the federal government cannot be sued unless Congress has explicitly waived the government’s traditional sovereign immunity. For this reason, among others, Fresno-based U.S. District Judge Oliver Wanger dismissed the lawsuit in 2010.

Last year, the U.S. Court of Appeals for the Federal Circuit reversed Wanger, reasoning that a law called the Administrative Procedures Act waived sovereign immunity on certain non-monetary claims such as the patent claims filed by the unhappy table grape growers. The growers are not asking for money from the federal government, but rather for a declaration that the grapevine patents in question are invalid.

If the patents are invalid, the grapevine varieties are open for public use by anyone.

Email: mdoyle@mcclatchydc.com; Twitter: @MichaelDoyle10

McClatchy Washington Bureau is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service