Implications of Revocation of PepsiCo’s Rights to Lay’s Variety Potato.

1.      Introduction

Recently, the Protection of Plant Varieties and Farmer’s Rights Authority has revoked the intellectual property rights granted on the Lay’s chips potato variety or the FC5 potato to the PepsiCo Company. This has been done under the ambit of the Protection of Plant Varieties and Farmer’s Act, 2001 (hereinafter referred after as Act). This step on one hand has been seen as a monumental step towards the protection of the rights of the farmers which was the primary aim of this legislation but on the other hand seen as a threat towards the stringency of the intellectual property protection which may deter investment and innovation of the foreign market in India.

2.      The Protection of Plant Variety and Farmer’s Right Act, 2001

The Act was enacted with the objective of protecting the farmer’s rights for their contribution in “conserving, improving and making available plant genetic resources”[1] and the rights of the plant breeders in order to incentivise investment in research and development of new plant varieties. The section 16 lays down who all can make application and includes the breeder and his successor amongst others. Thew section 29 states that such registration shall “confer an exclusive right on the breeder or his successor, his agent or licensee, to produce, sell, market, distribute, import or export the variety.[2]” Further the section 34 provides the ground for revocation of protection.

3.      The Background of the Dispute

3.1.   PepsiCo’s Right on the FC5 Potato variety

The FC5 potato variety which is registered in US as FL-2027 is low in moisture content by 5% in comparison to other varieties and is ideal for making potato chips. This was first cultivated by Dr. Robert W. Hopes who was hired by PepsiCo’s subsidiary Frito Lay as Potato Breeder in year 1987. The FL-2027 variety potato was introduced in India in the year 2009 wherein under an exclusive contract the company was to supply the seeds to around 12,00 farmers and all the produce was to be bought back as a fixed price. The company applied for registration of this potato variety in 2011 and was granted the same in 2016 under the PPV&FR Act.

3.2.   The 2019 case against the farmers

In April 2019, under the allegation that even the farmers who were not the part of the collaborative farming programme were also indulged in illegally growing and selling the FL-2027 potato variety, the company sued nine farmers from Gujarat for alleged infringement of section 29 of the Act and also brought a 4.2 crore lawsuit against four farmers from the state. However, later after the interference by the Gujarat government, the company withdrew all the cases.

3.3.   Aftermath of the case and the Application to the Protection of Plant Varieties & Farmers’ Right

The lawsuit by a multinational company against nine poor farmers was seen as a tool of harassment and subjugation of the farmers’ rights and drew lots of criticism and protests within the nation. It was seen among the first cases of alleged IPR infringement against the farmers in India in a post Worl Trade Organisation world. As a result, in June 2019, an application by filed by Ms. Kavitha Kurungani, a farmer’s rights activist for revocation of the PepsiCo’s registration.

4.      Contention of Both the Parties

4.1.   Of PepsiCo

PepsiCo claimed that it had developed the FC5 variety and even registered the trait in 2016 and so has the sole right over the specific protected variety of the potatoes. It claimed to be India’s largest potato buyer which works in association with the farmers who are the part of the program. Thus, illegally dealing in the registered variety was detrimental not just to the rights of the company but also of the farmers who were benefiting from the programme.

4.2.   Of Ms. Kavitha Kurunnganti

The section 39 of the Act lays down that 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”[3]. Thus, it was asserted that PepsiCo had violated this right. The rights of the farmers were said to be superseding the rights of the breeder under the law.

Moreover, it was contended that the grant of certificate of registration to PepsiCo India was on the basis of the supply of incorrect information. For example, while Dr. Hoopes was shown as the Potato Breeder, the application was filed by various other entities including Frito-Lay Noth America. As evidence, merely an assignment deed between Dr. Hoopes and Frito-Lay without proper stamp was submitted and there was no submission regarding assignment deed between the Frito-Lay and the PepsiCo India. It was claimed that there was oral assignment.

 Lastly it was said that it was contended that the multinational company had harassed the poor farmers by bringing such huge cases against them and thus it was a matter of public interest.

5.      Revocation of the varietal registration and the reasons thereof.

On 3^rd December, 2021 the registration of PepsiCo on the potato variety FL-2027 was revoked in accordance with Section 34. It was noted that the grant of the certificate of registration and

5.1.   Absence of proper documents for registration.

There was no submission of any proper documentations or specially assignment deed between the Frito Lays and PepsiCo India and so the authority rejected the submission that there was an oral assignment between them. So, it was noted that the certificate was based on incorrect information furnished by the applicant (Section 34(a)), was granted to a person not eligible for protection (Section 34(b)) and that the breeder did not provide the Registrar with such information, documents or material as required for registration (Section 34(c)). The authority noted that the Registrar had only cursorily glanced through the information without checking its incompleteness and incorrectness.

5.2.   Hardship to farmers and so matter of public interest.

It was stated that fact that several farmers were put in looming possibility of paying huge penalty for casing infringement of rights that did not even exist undoubtedly caused severe hardship upon the farmers. This violated the public interest (Section 34(h)) because even “without being the legitimate breeder or without being the legitimate breeder or his successor and also not being the assignee of the breeder of the potato variety FL 2027, the Registered Breeder (PepsiCo) exercised his Plant Breeder’s right to file a suit for infringement against farmers”[4]. It was noted that "the registrar being protector of farmers' rights, violated the rules and this has caused hardship to farmer and other."

6.      Implications of the Decision

6.1.   As a win for farmer rights

The decision has been seen as a historic victory for the farmers in India and as a precedent that anything threatening the farmer’s right under section 39 would be a matter of public interest and ought to dealt accordingly. This decision would act as deterrent against attempts of “any other seed or food company from transgressing legally granted farmers’ seed freedoms in India”.[5]

6.2.   As a guiding light for procedural matters under the

The decision brought to light the various procedural gaps in the grant of plant variety registration certificates. The authority noted that the many lessons are to be taken from this case so that the rights of the plant breeders as well as the farmers are protected. The registrar was asked to develop a standardised sheet evaluation process for application of registration of plant varieties in consonance with the Act and the rules and regulations thereof. Moreover, a composition of a committee by the Registrar was suggested that would submit detailed reports on ways of avoiding such instances in future.

6.3.   As a symbol of weak IP protection and lapses in the system

The case pointed towards various lacunas in the registration process of plant variety in India as the ground for revocation in this case was mainly the lack of proper documentations. The company had been enjoying the rights for last five years and had been present in the country since more than decades. This revocation moreover on the grounds of public interest may deter plant breeders to invest and do trade in India.

7.      Conclusion

It was among the first time when a multinational company faced such a defeat. The Act was passed in order to give effect to the TRIPS[6] agreement which in its article 27 provided for protection of plant varieties. Thus, there needs to be a balance between the right of farmers and the plant breeders. It is yet to be seen whether if proper documents be supplied, the registration be again allowed to PepsiCo and that would raise further doubts regarding the supremacy of farmers rights or of the plant breeders. Till then, the case shall be a landmark for protection of the rights of the farmers.