Cosmic Crisp Apple Lawsuit: WSU vs. Phytelligence and Its Collapse

The Cosmic Crisp apple lawsuit was a two-year legal fight between Washington State University and its biotech spinoff Phytelligence, which WSU accused of selling more than 100,000 patented Cosmic Crisp trees without a license. WSU won at the trial court in 2019 and again on appeal to the Federal Circuit in 2020. The loss drove Phytelligence into receivership within months of the district court ruling.

Who Phytelligence Was

Phytelligence was founded in 2012 by Amit Dhingra, a WSU professor who served as its chief science officer. The company used tissue-culture propagation, a nutrient-gel technique that grows fruit trees faster and with higher survival rates than conventional methods. At its peak it employed about 100 people and had raised $23 million from investors.¹

In November 2012, Phytelligence signed what WSU called a Propagation Agreement covering WA 38, the cultivar sold commercially as Cosmic Crisp. WSU holds plant patent USPP24210P3 on the variety.² The agreement was structured as a research arrangement: Phytelligence could work on propagation techniques, but the trees themselves remained WSU’s property.³

The document also included a Section 4 titled “option to participate as a provider and/or seller in [WSU] licensing programs.”⁴ Phytelligence read that clause as giving it a right to a future commercial license. WSU read it as merely contemplating a separate contract that neither side ever negotiated. That single disagreement became the entire case.

What WSU Said Phytelligence Did

WSU alleged that in April 2016, Phytelligence sold 135,000 Cosmic Crisp trees to Evans Fruit Company without a commercial license.⁵⁶ The propagation agreement, WSU said, expressly barred transfers to third parties without a separate license.

Phytelligence CEO Ken Hunt disputed the framing. He told the Spokesman-Review that the company had moved Cosmic Crisp “budwood” to an Evans Fruit orchard “in anticipation of getting a license,” but that “no grafting ever took place” and no trees were generated. Hunt said Phytelligence had refunded Evans Fruit and recovered the budwood.⁶

On January 16, 2018, WSU terminated the propagation agreement and demanded that Phytelligence destroy its WA 38 trees.⁵

The Lawsuits Filed in 2018

The dispute quickly split across state and federal courts.

On February 26, 2018, Phytelligence filed a breach-of-contract suit in King County Superior Court in Seattle, asking a judge to rule that WSU had violated the 2012 agreement by refusing to grant a commercial license.⁵

On March 8, 2018, WSU responded on two fronts. In the U.S. District Court for the Western District of Washington, it filed a patent infringement suit seeking compensation and attorney’s fees. In King County Superior Court, it filed a counterclaim alleging violations of the Washington Consumer Protection Act, seeking to bar Phytelligence from using the “Cosmic Crisp” trademark, and asking the court to order the destruction or return of all WA 38 plant material.⁵

Both sides publicly signaled interest in settling. WSU’s Chris Keane and Phytelligence’s Ken Hunt each said they hoped for a mutually beneficial outcome.⁷ No settlement came.

How the Courts Ruled

On June 14, 2019, Chief U.S. District Judge Ricardo Martinez granted WSU summary judgment and dismissed Phytelligence’s claims. Section 4, he held, was unambiguously a placeholder for a future deal, not an enforceable contract, and outside evidence could not rewrite it.⁸

Phytelligence appealed to the U.S. Court of Appeals for the Federal Circuit. On August 25, 2020, a panel of Chief Judge Sharon Prost and Circuit Judges Jimmie V. Reyna and Kara F. Stoll affirmed. Writing for the court, Judge Reyna held that Section 4 was an unenforceable “agreement to agree” under Washington law. Because the clause said Phytelligence “will need to sign a separate contract” to exercise its option, a further meeting of the minds was required, and the agreement supplied no objective method for a court to fill in the missing terms.⁴

The panel pointed to emails in which WSU had told Phytelligence there were “no guarantees” and the university had “no idea how WA 38 would be licensed.” A Phytelligence representative had acknowledged the “wispy forward commitment” of the option. “Courts are not in the business of making contracts,” Judge Reyna wrote.²

WSU waived damages on its own patent and trademark counterclaims to clear the way for the appeal, and the parties entered a stipulated injunction in the district court.⁴

Phytelligence’s Collapse

The trial-court loss ended the company. On September 25, 2019, just months after Judge Martinez’s ruling, Phytelligence’s board determined the company was insolvent and could not continue. Directors unanimously authorized management to appoint a general receiver to liquidate assets under the Washington Receivership Act.⁹

The company had operated facilities in Seattle and Pullman, Washington, and a tissue culture lab in Portland, Oregon. Steve Rector, an investor with the Cowles Company, said “the Phytelligence protocol is still the best method out there” and hoped the technology might survive the liquidation.⁹ The available record does not show a buyer acquiring the company’s technology.

A Separate Enforcement Action: Angel’s Grafting and Nursery

The Phytelligence case is often confused with a second, separate lawsuit. In June 2020, WSU sued Angel’s Grafting and Nursery of Tieton, Washington, owned by Luis Jorge Angel, alleging that the nursery had been asexually reproducing and selling Cosmic Crisp trees since 2016 without a license from Proprietary Variety Management.¹⁰

PVM said it had located a block of roughly 100,000 unlicensed Cosmic Crisp trees on land leased to Angel, with invoices showing the nursery had been hired by an orchard owner in Naches, Washington, to propagate them. WSU alleged Angel initially admitted the reproduction and then stopped communicating with PVM. The suit sought an injunction, costs, and up to treble damages under federal patent law. Angel said he was unaware the lawsuit had been filed and denied wrongdoing. The landowner had already begun disposing of the trees to avoid legal exposure.¹⁰

Why WSU Litigated So Hard

The scale of the licensing program explains the university’s willingness to fight. WSU controls who grows and sells WA 38 through Proprietary Variety Management and the Northwest Nursery Improvement Institute, and every licensed tree carries a $1.00 royalty at purchase plus a 4.75% production royalty on box sales of $20.00 or more.¹¹¹⁰¹²¹³

The Federal Circuit’s ruling in Phytelligence v. WSU set the terms for that program going forward: a vague contractual option does not entitle a company to commercialize a patented plant variety, and a university that patents a cultivar keeps firm control over who propagates and sells it.

1
The Grower. Phytelligence Shuts Down
2
Findlaw. Phytelligence Inc. v. Washington State University
3
Washington State University. WSU Files Counter Suits to Protect New Apple Variety
4
Justia. Phytelligence Inc. v. Washington State University, No. 19-2216
5
GeekWire. Cosmic Crisp Conflict: Washington State University Sues Spinoff Company in Dispute Over Apple Future
6
The Spokesman-Review. A Battle of Cosmic Proportions: WSU, Biotech Firm Sue Each Other
7
Fruit Growers News. WSU, Spin-Off Phytelligence Duel Over Cosmic Crisp Apple
8
Capital Press. Judge Sides With WSU in Cosmic Crisp Lawsuit
9
GeekWire. Agriculture Tech Startup Phytelligence Shuts Down After Losing Dispute Over Cosmic Crisp Apple Variety
10
Capital Press. Company Accused of Cosmic Crisp Patent Violation
11
Washington State University. Cosmic Crisp FAQs
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The Spokesman-Review. Counting on the Cosmic Crisp: Washington’s Premier Apple
13
Capital Press. Washington State University Royalties Led by Cosmic Crisp Surpass $19 Million