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U.S. breeders have limited ability to enforce their patents on plants in foreign 

 countries with on-site inspections. By monitoring the volume of flowers imported from a 

 given country versus the royalty payments, patentholders could detect cheating. Because 

 flowers are not even marked with country of origin information, U.S. patentholders cannot 

 determine whether imported merchandise is being propagated and sold without payment of 

 royalties. Thus, breeders have an incentive to collect much lower royalties from foreign 

 growers in order to obtain any payments at all. See generally N. Laws, Royalties . 

 FloraCulture Int'l at 34 (March/April 1992). Consequently, even when foreign growers 

 pay royalties, they are frequently lower than the royalties paid by U.S. growers — 

 conferring a competitive advantage and, potentially, a restraint of trade. 



m. H.R. 2927 SHOULD REQUIRE A PROMPT USTR REPORT AND 

 COUNTRY OF ORIGIN MARKING FOR FRESH CUT FLOWERS 



Not only is the breeder disadvantaged by inadequate protection of plant 

 varieties, but the disparity in U.S. and foreign growers' royalty payments places U.S. fresh 

 cut flower growers at a real competitive disadvantage. Because the United States is a net 

 importer of fresh cut flowers, U.S. growers compete on a daily basis with low-priced, 

 imported fresh cut flowers primarily from Central and South American countries. See ITC, 

 Industry & Trade Summary: Cut Flowers, USITC Pub. 2737 at 15 (March 1994). 



To address this disparity in patent protection, H.R. 2927 should require the U.S. 

 Trade Representative ("USTR"), in conjunction with the U.S. Department of Agriculture, to 

 issue a prompt report reviewing the level of protection actually afforded to U.S. 

 patentholders in countries exporting fresh cut flowers to the United States. That report 

 should also compare royalty payments made by U.S. and foreign growers. If USTR finds 

 inadequate patent protection of U.S. breeders' rights or a disparity between royalties paid 

 by U.S. versus foreign growers, USTR should then consider whether action pursuant to 

 Section 301 of the Trade Agreements Act of 1979, as amended (19 U.S.C § 2411(a)) is 

 appropriate. Section 2411(a) requires USTR to take action against activity which violates a 

 trade agreement or is unjustifiable and burdens or restricts commerce. "Unjustifiable" 

 activities includes acts, policies, or practices which are inconsistent with the protection of 

 intellectual property rights. 19 U.S.C. § 2411(d)(4)(B). The following language is 

 suggested: 



