Chip and Del(hi) High Court: Pepsico Loses Appeal on Famous Potato Chip Plant Variety

FL 2027 variety of potatoes are used to manufacture chips for the “Lay’s” brand

On July 5, the Delhi High Court dismissed an appeal by PepsiCo India Holdings against an order passed by the Protection of Plant Varieties and Farmers’ Rights Authority in 2021, thereby effectively revoking Pepsico’s registration of the FL 2027 potato variety. The revocation application was filed by notable farmers’ rights activist, Kavitha Kuruganti, who is associated with the Alliance for Sustainable And Holistic Agriculture (ASHA), an organisation which aims to strengthen sustainable agricultural livelihoods. Kuruganti had previously accused Pepsico (apparently, an agricultural company which claims to strengthen farmer livelihoods) of being anti-farmer. Earlier, Pepsico had also allegedly conducted a sting operation to document the usage of the potato variety by farmers. This resulted in lawsuits against 9 farmers of Sabarkantha and Aravalli districts for cultivating the potato variety used in Lay’s potato chips for alleged infringement of Pepsico’s exclusive right. The multinational corporation had claimed damages worth around 1.05 crores (as mentioned on page 19 of the order) from each farmer owning a few acres of land before finally ‘amicably’ settling with them after facing backlash. The unilateral settlement offer contained many terms which could be described as unattractive, including requiring the farmers to not use the potato variety, which raises the question if the present order can impact the settlement. 

Leaving discussion on this for some other day, this post will primarily deal with the three main sets of issues that have occurred in this case – one is the incorrect information stated by the applicant, the other is the Registrar’s negligent granting of the application and lastly, the Court’s dismissal of the public interest element in the case.

Incorrect information furnished by Pepsico to acquire the Certificate of Registration: –

Pepsico had applied for registration of the potato variety in February 2012 under the column ‘New Variety’ instead of ‘Extant Variety’, which the company claims to be a bona fide mistake on their end. While it seems difficult to understand how such a large company could make a mistake of this nature, what is quite clear is that Section 15(2) of the Protection of Plant Varieties and Farmers Rights Act, 2001 (‘PV Act’) does not require the ‘extant variety’ to be novel. As explained by Arun Mohan in this post, the element of novelty and no sale prior to the application are two of the requisites for the grant of an application under ‘new variety’. In the present case, the date of commercialization was stated in the application form as December 17, 2009, while the application itself was filed on June 18, 2011, thereby removing any possibility of the grant of the application as a ‘new variety’.

Negligent Granting of the Certificate of Registration by the Registrar: –

Regardless of this, the Registrar, after seeking clarification from the Appellant, proceeded suo motu with the procedure warranted for the ‘extant variety’ category instead of the ‘new variety’ category. Apart from these suo motu corrections, the Registrar did not reject the application for lack of proper clear and complete documents and carelessly proceeded with the grant of registration. 

In the impugned order, it was observed that the Deed of Assignment signed between Dr. Robert Hoopes, the plant breeder and Recot. Inc., a group company of Pepsi Inc. which later became Frito-Lay North America, Inc. (‘FLNA’), was unstamped and unattested by witnesses. In fact, Pepsico had claimed that FLNA had orally assigned the rights of the FL 2027 potato variety to Pepsico, which was considered by the Chairperson of the Protection of Plant Varieties and Farmers’ Rights Authority as invalid. Eventually, on September 12, 2019, a letter was sent by FLNA to the authority, claiming that it had granted the right to file the application for the registration to Pepsico. 

Due to all this, the Protection of Plant Varieties and Farmers Rights Authority considered reevaluating the application as per Section 34(a), (b), (c), and (h) of the PV Act and eventually revoked the certificate.

 The Court held that the Authority had rightly revoked the registration and that the same was in compliance with Section 34 of the PV Act. The court held that the letter filed by Pepsico was not in compliance with Form PV 2 and was filed after the grant of registration. The court was thus right in identifying that Pepsico obtained the registration without obliging with the prescribed formalities and substituted the lack of appropriate documents with a letter only when the validity of the registration was questioned before the authority.

Setting Aside the Public Interest Element: –

While on the face of it, the order seems to have been delivered in favour of the farmers, the Court has dismissed the ‘public interest’ angle, which was one of the grounds on which the PV Authority had revoked the Certificate of Registration. As per the Authority, the public interest here would include the farmers’ consequent hardships and the looming possibility of paying up hefty costs for allegedly infringing the plant variety.  The Court, however, held that the infringement cases filed by the company, even if presumed to be frivolous, would not be considered as against public interest despite the fact that the farmers were dragged to court and were threatened with their livelihood security. But it did not explain the ideal criteria for revoking registration under Section 34(h). Looking at the wording of the provision “the grant of the certificate of registration is not in the public interest”, one can see that it is framed pretty broadly, and the Authority interpreted it accordingly. However, by setting aside the order, the court has not only stepped away from the broad reading of the provision but has also missed out on highlighting what could have been an accurate interpretation of the term for future reference.

Conclusion: –

While the Registrar cannot be excused for not perusing through the application thoroughly before granting the application, this also makes us question how the situation would have turned out had the owner of a legitimate certificate filed a suit against farmers. Nevertheless, the discrepancies in issuing the certificate of registration can have severe ramifications. In fact, Kavitha Kuruganti need not have filed the revocation application if the Registrar had complied with the provisions of the PV Act. This case thus highlights a situation where despite safeguards within the law, the custodian faltered in performing its duty, and in the absence of a publically spirited individual, these material discrepancies would have gone unnoticed and would have impacted the livelihood of many more farmers. Looking at the brighter side, this order seems to be a step in the right direction in precluding the corporatisation of agriculture since Pepsico is effectively prevented from claiming an exclusive right over the FL 2027 potato variety.

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