South African producer-exporter Colors Fruit has been granted ownership in the country by the South African High Court of the plant material for a number of new table grape cultivars, which the company imported and developed in South Africa under terms of a license agreement entered into in 2003.
Colors Fruit brought the application against Sheehan Genetics, a 100 per cent subsidiary of the AMC Group, and a South African nursery Voor-Groenberg Nursery, after AMC recently advised Colors Fruit that it had decided to end the licensing agreement.
Voor-Groenberg Nursery has asked for leave to appeal against the judgment handed down by Judge Dennis Davis in the Western Cape Division of the High Court.
The Court ruling grants ownership to Colors Fruit for all the plant material in South Africa, while the legality of the sub-license agreement will be the subject of arbitration in the UK at some future date.
Riaan van Wyk, chief executive of Colors, says his company concluded an agreement with the AMC Group in 2003 to obtain the sub-licensing rights for South Africa and Namibia for a number of seedless table grape varieties from California.
The cultivars were developed by well-known American breeder Tim Sheehan, owner of Sheehan Genetics, who died in 2009.
'Colors Fruit brought the cultivars to South Africa during the past eight years and invested R3m (€269,000) to bring five of the cultivars to commercial status and to supply them to growers,' he notes.
This process involved a quarantine period of two years, followed by planting the cultivars, improving their performance and evaluating them.
'These cultivars performed extremely well, giving a higher yield with attractive bunches and firm flesh which will make them very popular internationally, but specifically in Canada and China,' Van Wyk explains.
Colors Fruit appointed the Voor-Groenberg Nursery near Wellington in the Western Cape to propagate the material and produce the vines.
Lawyers for Voor-Groenberg Nursery said during arguments that AMC cancelled its main license agreement for the cultivars with Sheehan Genetics after the death of Mr Sheehan, with AMC arguing, that due to this cancellation, the licensing rights held by Colors Fruit had lapsed.
Colors did not agree and it is likely that the legality of the sublicensing agreement will now be decided on, as per original agreement, in arbitration in the UK.
Fruitnet.com has learnt that prior to the death of Mr Sheehan, AMC held a 49 per cent stake in Sheehan Genetics. After Mr Sheehan's death, AMC acquired the rest of Tim Sheehan's shares via Special New Fruit Licensing (SNFL), a subsidiary of AMC.
Sheehan Genetics, which owns the plant breeder's rights to the varieties, then granted the South African rights for the commercialisation of the five cultivars to SNFL.
'What happened was that they actually cancelled a contract with 'themselves' and re-appointed 'themselves' again,' says Van Wyk.
Following this, Voor-Groenberg Nursery started supplying plant material and collected royalties on instructions of Sheehan Genetics and SNFL, without permission from Colors Fruit. This forced Colors to bring an urgent application in August to protect its rights to the ownership of the South African material.
Judge Davis granted cost to Colors Fruit and Voor-Groenberg Nurseries asked for leave to appeal. It is not certain when the application for leave to appeal will be granted.
Colors Fruit has meanwhile decided to approach the High Court for an urgent ruling for all plant material to be returned to it immediately, despite the possibility of an appeal. Van Wyk pointed out the growers were waiting to plant significant numbers of vines this year and that unless the court grant the ruling urgently, it will be too late to plant this year. This could result in major losses for the company and the producers.
In the Orange River the last plantings will take place before the end of September.
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