NSW Can I sign away my right to resell fungi spawn?

[vorpal]

I grow and sell mushrooms. Aussie mushroom supplies is a supplier that sells mushroom spawn. If I buy off them they require I agree to a contract where one of the clauses is that I can sell mushrooms that I grow from the spawn, but I cannot sell spawn I grow from their spawn.

Fungus primarily reproduces vegetatively, that is, as if I cut off your arm and you grew a new body from that arm. If I divide up my fungus spawn, each new bit is a perfect clone of the others. Spawn refers to a clone from which you can propagate more clones. So the contract they want you to sign says you agree not to make more clones for the purpose of selling them. In addition to this, one could grow a mushroom (the fruiting body of the fungus) to produce spores (as opposed to spawn). Each of these spores will contain half of the genetic information of the parent. If two of these spores are combined they will produce a new individual referred to as a 'culture' which will contain a non-identical sub-set of the genetic material of the parent fungus culture. Producing these new child cultures is also prevented by the contract.

As far as I can see, Aussi Mushroom supplies has not asserted any IP over the genetic material of their spawn and are only relying on this contract. Is this contract enforceable? It seems like it shouldn't be. Are there limits to what can be put into a purchase contract?

The wording of the contract is as follows:

Limitation of use of Aussi Mushroom supplies product, “mushroom spawn, Cultures and Mushroom kits” is conditionally delivered subject to your agreement to comply with the following limitation of culture(s) use:

You may not sell, transfer, market or assign Aussi Mushroom Supplies spawn or cultures—or any spawn or cultures subsequently derived therefrom—in any way, shape or form without our written consent.

You may not represent these cultures as being connected with Aussi Mushroom Supplies without our written consent.

You may only use these cultures for fresh and dried fruit body products, and for your personal use to grow spawn for fresh and dried fruit body products.​

 

[Rob Legat - SBPL]

I think you'll find the intention of the contract is relatively clear in that you can sell the 'fruit' of the fungus but not the spores, and only use the cultures for the propagation of 'fruit body products'. It might ultimately come down to what is defined by a "spawn or culture", but I think it's clear they're not intending to give you any rights past the ability to grow and market the mushroom.

Fungus can be patented, so you might want to check that.

 

[vorpal]

Thanks for the answer!

I think you'll find the intention of the contract is relatively clear in that you can sell the 'fruit' of the fungus but not the spores.

Thanks for the answer. The conditions of the contract are clear to me, my question was to weather the terms were legal or enforceable. As I understand it, I can sign a contract with someone saying I'll sell them my kidneys, but it has no legal effect, because I am not able to sign away my rights to my kidneys. Similarly, again as I understand it, a lot of the conditions in software EULAs are not actually legally enforceable because they involve giving up rights that I can't actually give up. I feel like if I am getting property rights over the spawn, then I have a basic right to resell that property irrespective of any contract I sign.

If it is indeed a legal contract, why don't other retailers of goods sell them with contracts saying they cannot be resold? Is it just a cultural custom that retailers don't use such contracts? Surely it would be in car retailers interests to prevent the creation of a second-hand car market, for example.

 

[vorpal]

Looking at IP Australia, it appears that fungi (despite being much more closely related to animals than plants) are covered by plant breeders rights which are designed to specifically disallow the resale of seeds (or propagules more generally) however I can not find any of the species being sold by aussie mushroom supplies on their database.

The fact that plant breeders rights, is a thing, suggests to me that contract terms to limit resale of propagules without plant breeders rights asserted is not enforceable. Why create a new form of IP if it could be covered by existing contract law? But maybe I'm just barking up the wrong tree.

 

[Rob Legat - SBPL]

The terms of their contract appear to say that you are not getting property rights over the spawn, merely a limited right of use. The law draws fundamental differences between selling a car (for example) and selling a seed/spore. The parallel would be that you cannot disassemble the car, copy it, make a whole bunch the same and sell them. The law recognises that you can re-sell that car. It simply draws the line somewhere as to the extent of property rights.

This is the same sort of philosophy that feeds into the whole 'pirating of digital content' argument.

As for your example with the sale of a kidney, there are specific laws against the sale of body parts.

I don't think fungus comes under plant breeders' right, but patents for micro-organisms instead.

As for why it goes beyond contract law is the notion of 'privity'. Generally, a contract is only enforceable against someone who is a party to it. Obviously, if fungus spawn is propagated, once it goes beyond the original parties to the contract it cannot easily be enforced under contract law. Being able to register a patent, for example, overcomes that restriction.

 

[vorpal]

I don't think fungus comes under plant breeders' right, but patents for micro-organisms instead.

It is covered by both. IP Australia specifically says fungi are counted as plants for PBR purposes.

As for why it goes beyond contract law is the notion of 'privity'. Generally, a contract is only enforceable against someone who is a party to it. Obviously, if fungus spawn is propagated, once it goes beyond the original parties to the contract it cannot easily be enforced under contract law. Being able to register a patent, for example, overcomes that restriction.

So if I buy the spawn and then resell it, action can be taken against me, but not against the people I sold it to who are now free to resell it as much as they like.

OK, that makes sense. Thanks so much for taking the time to explain that.