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Appellate Court Rules in Favor of WSU in Apple Tree Case

A variety of red apples.

Delicious red apples on retail display at supermarket - No people

The United States Court of Appeals for the Federal Circuit backed a district court ruling in favor of Washington State University (WSU) in a decision filed on Tuesday and affirmed summary judgment in WSU’s favor. The court ruled that the plaintiff did not have rights from a previous contract to propagate and sell WA 38 apple trees which the parties had developed together.

Phytelligence, Inc., the plaintiff, was an agricultural biotechnology company that develops, propagates, and sells trees, however, the company has since ceased its operations. The company worked with WSU in 2012 to create WA 38 apple trees. According to section 4 of their agreement, Phytelligence could not sell the trees without approval from WSU and the signature of a separate contract. The parties discussed the uncertainty related to future licensing, and Phytelligence expressed concern with section 4, but the propagation agreement was signed without any changes being suggested.

In 2014, WSU accepted a proposal to grant Proprietary Variety Management (PVM) an exclusive license to sell WA 38 trees, and they were required to subcontract with Northwest Nursery Improvement Institute so members of the institute can sell the trees as well. Years later, in 2017, Phytelligence sought to sign a contract with WSU to be able to sell the apple tree variety, but they were directed to PVM. The plaintiff rejected WSU’s suggestions which would allow them to propagate and sell the tree, but allegedly participated in a sale.

WSU terminated the propagation agreement in 2018 and claimed that Phytelligence’s actions infringed the patent for WA38 and its trademark “Cosmic Crisp.” The university was sued by the company a month later on February 26, 2018, the company sought damages and alleged that WSU breached its contract. The Western District of Washington ruled in favor of WSU, leading to an appeal from Phytelligence.

Phytelligence claimed in its appeal that section 4 was an “enforceable agreement with open terms and not an unenforceable agreement to agree,” and that the evidence shows at minimum it should create “a material factual dispute precluding summary judgement.” However, the appellate court ruled that the company’s arguments were “unpersuasive.”

Phytelligence is represented by Wilson Sonsini Goodrich & Rosati.  Washington State University is represented by Davis Wright Tremaine. 

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