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Flower fight: the scandalous $45 million little petunia case

Flower fight: the scandalous $45 million little petunia case

Forget for a minute that the flower industry sells beauty and fragrance. Underneath its elegance is a business as cutthroat as Game of Thrones with mulch.

Take the case of the Candy Bouquet, a pretty, magenta-and-yellow flower that resembles a petunia. It was developed by a German grower, Westhoff Vertriebsgesellschaft, that says it was on the verge of selling the variety to Home Depot when a rival swooped in, copied the plant and spread lies about Westhoff in order to win the business of the world’s largest home-improvement chain.

The allegations are contained in a May 4 lawsuit that both reveals the dark side of the garden supply industry and the growing importance of big retailers like Home Depot, Lowe’s and Wal-Mart Stores to growers. Consumers are increasingly migrating there from small mom-and-pop greenhouses, raising the stakes — as it were — for growers to win space on their shelves.

“People are not gardening the way they use to,” said Marvin Miller, market research manager of Ball Horticultural Co. in West Chicago, Illinois, a global horticultural company not involved in the case.

Outdoor garden products, which include flowers, mulch and trees, generated $6.6 billion in sales for the fiscal year ended Jan. 31 for Home Depot — or about 7.4 percent of the 2,200-store company’s revenue. For Lowe’s, lawn and garden sales were $4.8 billion, about 8 percent of revenue last year. Wal-Mart doesn’t break out those sales.

The dispute is over the calibrachoa plant, more commonly known as Million Bells or “Little Petunia” due to its resemblance to the better-known annual. The fast-growing flowers are gaining popularity, almost matching geraniums. Calibrachoa sales in the United States were $44.6 million in 2014, compared with $263 million for petunias, according to the most recent figures from the U.S. Department of Agriculture figures.

Each spring, plant breeders and marketing firms set up in central and northern California to show off their latest varieties. Home Depot sales representatives check out the offerings for looks, length of flowering and ease of growing, making the selections of what will be on the store pallets the following year.

Westhoff said it introduced Candy Bouquet at the Home Depot Spring Trials in February 2014 and a representative of the chain said the company wanted to be its exclusive seller.

That was before Proven Winners North America, a major distributor that sells other flowers through Home Depot, had “stolen the genetic material and attempted to discredit Westhoff in the marketplace and confuse the consuming public,” Westhoff said in the complaint.

Proven Winners first tried to obtain the trademark registration on the Candy Bouquet name and then told growers that Candy Bouquet and its version of the flower Holy Moly were the same plant, Westhoff alleges in documents filed in U.S. District Court for the Western District of Pennsylvania.

A Proven Winners executive told Home Depot that it was Westhoff that “stole Candy Bouquet,” and the company threatened growers of the varietal. As a result, many wholesale growers for Home Depot told Westhoff that they wouldn’t purchase or grow the plant, according to the complaint.

“Westhoff has sustained significant losses as a result of these misrepresentations, in the magnitude of hundreds of thousands of units of lost sales, as well as damage to its overall business reputation now that it has been falsely branded as an infringer of intellectual property,” Westhoff said.

Home Depot, which wasn’t named in the lawsuit, declined to talk about the case, saying “It wouldn’t be appropriate for us to comment on another company’s legal matters.”

Mark Broxon, executive director of Proven Winners, which is based in Campbell, California, declined to comment on the lawsuit, saying he needed to look into it more closely. Proven Winners is like a consortium, owned by a network of growers that got together 22 years ago, Broxon said. It’s now the leading brand for flowers in the United States.

Flowers and other plants that appear in nature can’t be patented. Instead, companies develop new varieties through grafting or budding and obtain patents on them under the 1930 Plant Patent Act for plants that produce asexually, without seeds.

The goal for breeders is to create a variety that will be more resistant to diseases, flower longer or require less water, Broxon said.

More than 375 patents have been issued for calibrachoa plant varieties alone, each describing their color, size and specific growth characteristics, according to data compiled by Bloomberg. Westhoff has 28 patents for varieties, including the “Wescacandy” patent for Candy Bouquet issued in December. Plant 21, breeder of the more yellow and less magenta Holy Moly plant and a defendant in the case, has 40 plant patents.

There were 1,049 plant patents issued in 2015, compared with almost 300,000 for inventions covering everything from electronic devices to drugs, according to the U.S. Patent and Trademark Office. There were nine lawsuits involving plant patents since 2009, contrasted with 5,800 regular patent suits in 2015 alone, according to the analytics firm Lex Machina.

There’s been consolidation among distributors and breeders, with many smaller companies being squeezed out, said Westhoff’s lawyer, Russ Orkin of the Webb Law Firm in Pittsburgh.

Miller said that, throughout the industry, tensions are rising as the industry changes. That could result in more lawsuits, which haven’t been seen since the 1970s, he said.

“The debate is what are we going to do as an industry,” Miller said. “We’re going to sue each other.”

Westhoff lawyer Orkin, who also represents other breeders, is more optimistic. Most companies still resolve their differences without the courts, said Orkin. He said Westhoff and Proven Winners have been in negotiations.

“Hopefully there will be an amicable resolution at some point,” Orkin said.

Copyright © 2016, Chicago Tribune
The Home Depot U.S. Department of Agriculture

http://www.chicagotribune.com/business/ct-candy-bouquet-flower-lawsuit-20160511-story.html

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