PepsiCo,  the world’s second-largest food and beverage corporation, has finally won the long-term court battle against a group of Indian farmers with respect to the IP rights over their registered potato variety.

Recently, the Hon’ble Delhi High Court Division Bench set aside a Single Bench ruling that revoked PepsiCo’s registration for ‘FL 2027’, a potato variety that is specifically used for the production of Lay’s Potato Chips.

PepsiCo’s first Indian plant for manufacturing potato chips was established in 1989. The Company registered the potato variety ‘FL 2027’ (commercial name being FC 5),  in 2016 for a 15-year period under the Protection of Plant Varieties and Farmers’ Rights Act, 2001 (‘the PPVFR Act’). Due to its stable sugars, abundant dry matter, high solids content, and low exterior flaws, this potato variety is ideal and best for manufacturing of chips.

PepsiCo entered into a contract with a group of Indian farmers, under which the Company supplied the registered potato variety to a set of farmers, and they produced and sold the output back to the Company at a previously agreed rate. In 2019, the company filed rights infringement cases under the PPVFR Act against some farmers in Gujarat, claiming that those farmers who were not part of its “collaborative farming contract” were unauthorisedly using the registered seed variety to produce and sell potatoes in the state. However, they withdrew their cases after stiff resistance from the farmers’ organisations and attempted to bind the farmers into their contractual agreements. 

In June 2019, a renowned farmer’s rights activist Kavitha Kuruganti filed a petition to revoke PepsiCo’s registration for the FC 2027 potato variety and claimed that the registration was granted based on false information provided by the company.  She objected to the validity of the registration certificate, citing the following grounds:

• The Certificate of Registration was issued based on incorrect and unclear facts submitted by the Company.
• Granting the Certificate of Registration did not serve the public interest.
• The Company failed to present a properly stamped and attested assignment deed.

The Petitioner stated that the Company knowingly provided inaccurate information with the goal of misleading the authority. It was discovered while filing the application Company had purposefully marked the potato variety as ‘New variant’ instead of ‘Extant variant’.

On December 3, 2021, The PPVFR Authority ordered the cancellation of the Plant Variety Protection (PVP) Certificate granted to PepsiCo (India) Holdings Pvt. Ltd. The Authority was of the opinion that based on the facts of the case and the sequence of events that occurred, there was no doubt that several farmers have been subjected to hardship, including the possibility of having to pay a large penalty for the purported infringement that did not occur because the defendant filed an infringement suit against the farmers despite not being the registered breeder. The authority also added that this was against the interests of the general public.

PepsiCo later filed a case before the Delhi High Court challenging the said revocation of the PVP Certificate. However, on July 5 2023, PepsiCo’s appeal against the Authority’s ruling was dismissed by the Delhi High Court Single Bench.

On January 9, 2024, a Division Bench of the Hon’ble High Court of Delhi allowed PepsiCo’s appeal and overturned the July 2023 judgment of the Single Bench. According to the Division Bench, a registration of a plant variety could not be withdrawn for procedural reasons such as incorrect application submissions, but rather only for reasons pertaining to validity or registration. Accordingly, the Division Bench nullified the Authority’s order canceling PepsiCo’s Plant Variety Protection Certificate.

Authors’ Comments

Considering that India is an agrarian economy, PepsiCo’s victory is significant. The case continues to shape discussions around plant varieties and its Intellectual Property protection. This case underscores the delicate balance between safeguarding farmers’ rights and incentivising private investment in agricultural research. Lay’s chips may continue to sizzle in the market, but the legal landscape around plant varieties will remain dynamic. PepsiCo’s victory sets a precedent. It reminds us that the humble spud can spark legal fireworks and that even in the world of chips, Intellectual Property matters.

Written by Aathmaja Menon and Sunil Jose of Suns Legal Patent & Trademark Lawyers. Originally published in The Patent Lawyer Magazine on 30/01/2024 ( https://patentlawyermagazine.com/chips-and-justice-pepsicos-battle-over-potato-variety-in-india/ )