New Delhi: In 2021, PepsiCo India lost its exclusive rights to the FC5 potato variety, grown for its popular Lay’s potato chips. But on Wednesday, the Delhi High Court, in a major relief for the food and beverage giant, allowed it to seek renewal of the registration of the potato variety.
The high court was hearing appeals challenging a judgment passed in July last year by a single judge of the court upholding an order passed by the Protection of Plant Varieties and Farmers Rights Authority that revoked Pepsico India’s registration of the potato variety.
PepsiCo had challenged an order passed in December 2021 by the Protection of Plant Varieties and Farmers’ Rights Authority in New Delhi, revoking a PVP (plant variety protection) certificate granted to PepsiCo India Holding. The authority is set up under the Protection of Plant Varieties and Farmers’ Rights Act 2001. Registration under the law confers an exclusive right on the breeder or his successor, his agent or licensee, to produce, sell, market, distribute, import, or export the variety.
The authority had ruled that the registration for the potato variety was granted to PepsiCo India Holdings Private Ltd despite the company not having submitted several documents at the time of registration. It further highlighted the “hardship” caused to farmers because of this as well.
However, on Wednesday, the bench comprising justices Yashwant Varma and Dharmesh Sharma felt that “neither the application nor the ultimate grant thus suffered from a fundamental misdeclaration or a failure to provide information as required by the provisions of the act, read along with the rules”.
It, therefore, allowed PepsiCo’s appeal and set aside the single-judge bench’s judgment. This meant that the renewal application as made by PepsiCo will stand restored in the file of the registrar, who can now look into it.
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Why is this potato variety special
The FC5 variety, registered in the US as FL2027, has 5 percent lower moisture content — 80 percent compared to the usual 85 — than other varieties. This variety is, therefore, considered more suitable for processing and for making snacks such as potato chips.
According to the Potato Association of America, the variety was first cultivated by Robert W. Hoopes, who holds the most potato patents and potato variety protections in the world. He was hired by the Frito Lay Company (an American subsidiary of PepsiCo) as a principal scientist /potato breeder at a research center in the US in 1987. He then developed disease-resistant potato varieties superior in flavour and colour. Several of his varieties are grown all over the world for PepsiCo’s famous potato chips.
FL2027 came to be registered in the United States in 2005. PepsiCo applied for registration of the potato variety in India June 2011 and it was registered in 2016. Initially, the application was made describing FL 2027 as a “new” variety and the date of first commercial sale was indicated as 17 December 2009.
In April 2019, PepsiCo sued nine Gujarat farmers for cultivating the same potato variety, accusing the farmers of infringing its patent. It sought over Rs 1 crore each from the farmers for alleged patent infringement under the Protection of Plant Varieties and Farmers’ Rights Act, 2001.
The patent infringement case triggered a backlash from farmers and political parties alike. However, PepsiCo withdrew the suit soon after, “after discussions with the government”. In a statement, it said that it was “relying on the said discussions to find a long-term and an amicable resolution of all issues around seed protection”.
The hot potato
Concerned about the impact of the registered variety on the livelihood of the farmers, Kavitha Kuruganti, convenor of the Alliance for Sustainable and Holistic Agriculture (ASHA), filed an application for revocation of the patent in June 2019.
She had sought revocation on several grounds, including incorrect information provided by PepsiCo, and alleging that the grant of protection was not in public interest.
Among other things, Kuruganti had claimed that PepsiCo had violated the 2001 law by suing the farmers. The law lists farmers’ rights and says under Section 39 (1) (iv) that “a farmer shall be deemed to be entitled to save, use, sow, resow, exchange, share or sell his farm produce including seed of a variety protected under this Act in the same manner as he was entitled before coming into force of this Act”.
Citing this provision, she had asserted that by suing the farmers, PepsiCo violated this right and that “the farmers’ rights supersede the right given to the breeder (PepsiCo in this case)”.
She also said that necessary documents were not submitted to the registrar at the time of registration. For instance, while Hoopes was shown as the breeder of the variety, the application for registration was filed by Recot Inc., later changed to Frito-Lay North America (FLNA).
However, only an unstamped assignment deed between Hoopes and FLNA was submitted, and no assignment deed between FLNA and PepsiCo India Holdings Private Limited was submitted, she argued.
While Kuruganti submitted that the law only confers a right on an assignee of the breeder to apply for registration, PepsiCo had claimed that there was an oral assignment between it and FLNA — a submission that was rejected by the authority.
PepsiCo India Holdings Private Ltd and FLNA are both affiliates of PepsiCo, Inc.
However, Kuruganti had contended that the absence of a formal assignment by FLNA in favor of PepsiCo was fatal to the application.
Why registration was revoked
In its December 2021 order, the authority noted that the registration for the potato variety was granted to PepsiCo India Holdings Private Ltd despite the latter not submitting several documents at the time of registration. It further referred to several discrepancies in the entire process of granting PepsiCo the registration for this variety — such as the ones concerning the date of the first sale of the variety — and went on to highlight the “hardship” caused to farmers because of this as well.
In its order, the authority opined that not only had PepsiCo described the candidate variety incorrectly as a “new” variety but that it had also falsely asserted that the revised application was corrected manually so it could be considered as being an application for registration of an “extant” variety.
The authority also said that the registrar in this case had been “superficial by only cursorily glancing through information documentation provided in reply to his own query to the Applicant (PepsiCo) while accepting incomplete or obviously incorrect documents”.
Why HC reversed the revocation
In July 2023, the single judge ruled in favor of PepsiCo on certain points, while ruling in favor of Kuruganti on a few other points. However, it upheld the order passed by the Protection of Plant Varieties and Farmers Rights Authority revoking Pepsico India’s registration of the potato variety.
However, the division bench of the high court felt that PepsiCo would have derived no benefit or advantage in making a deliberate or conscious declaration of the date of first sale as 17 December 2009. For example, the provision says that PepsiCo had the right to apply for registration under the “extant” variety within 15 years from the date of the first sale.
Therefore, PepsiCo’s application would have been in this period, whether it had shown its first sale as 2002 or 2009, the court said. Also, the court said that the protection under the act flows from the date of registration and not from the date of the first sale. Therefore, even if the first sale was 2009, PepsiCo did not derive any added or additional benefit from this declaration, it said.
The court further noted that, on the point of describing the variety as “new” or “extant”, PepsiCo, while responding to a communication of the Registrar in June 2011 and in another letter in February 2012, had informed the authority that it was seeking registration of FL 2027 under the “extant” category.
As for the dispute over FLNA authorising PepsiCo to file a registration application, the court said that the provision enables not only the assignee of the breeder but even one who may have been empowered by the assignee to make such an application. It then noted that in September 2019, a letter was filed by Frito Lay North America clarifying that it had allowed PepsiCo to file the application for registration.
As for the argument that the grounds of PepsiCo filing various suits violated the rights conferred on farmers under the Act, the high court now felt that the petitioners should have established that PepsiCo had commenced those actions merely to pressure and intimidate farmers and that they were based on allegations that were completely frivolous or unsubstantiated.
It observed that the petitioners had been unable to show that those suits were vexatious or that they had been instituted as part of PepsiCo’s predatory tactics.
(Edited by Uttara Ramaswamy)
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