Revocation of PepsiCo's PVP Certificate for FC5 Potato & its Implications on India's IPR Regime

Introduction

The issue of Intellectual Property Rights (IPR) and its impact on India’s agriculture sector has been a topic of concern in recent years. The revocation of PepsiCo’s Plant Variety Protection (PVP) certificate for their FC5[i]  potato variety by the Protection of Plant Varieties and Farmers’ Rights (PPV&FR) Authority is the latest development in this area. In 2016, PepsiCo obtained the PVP certificate[ii], which granted them exclusive rights to produce and sell the FC5 potato in India for 15 years. However, in 2019, they sued several farmers in Gujarat for growing and selling the FC5 variety without permission. The farmers argued that their traditional rights were being infringed upon by PepsiCo’s monopoly. The revocation of the PVP certificate was a response to the legal challenge by farmers’ organizations, who contended that the PVP Act was enacted to protect the interests of both breeders and farmers. The move emphasized the government’s commitment to protecting the rights of both plant breeders and farmers in India’s agricultural sector and preventing the abuse of IPRs.

PepsiCo’s PVP certificate for the FC5 potato was revoked on December 3, 2021, by the PPVFRA Chairperson under the Protection of Plant Varieties and Farmer’s Act, 2001.[iii] The ruling is considered a landmark decision that has significant implications for India’s intellectual property regime. While the decision has been lauded for protecting farmers’ rights, some have criticized it for compromising intellectual property protection laws and potentially deterring foreign investment and innovation in India.

Background of the Dispute­

In April 2019, PepsiCo (India) Holdings Pvt. Ltd. sued four Indian farmers for violating its FC5 potato patent, seeking Rs. 1 crore in compensation from each. The lawsuit drew criticism from farmers and political parties. PepsiCo withdrew the lawsuit after discussions with the government and stated its intention to find a mutually acceptable resolution to all seed protection issues.

Ms. Kavitha Kurungani, a farmer’s rights activist, filed an application in June 2019 to revoke the certification of the registered variety, citing factors such as erroneous information provided by PepsiCo and claims that the protection granted was not in the public interest. Her primary concern was that the certification of the variety would negatively impact farmers’ livelihoods and their ability to support their families.[iv]

Arguments put forth by the parties

PepsiCo (India) Holdings Pvt. Ltd. filed a lawsuit against four farmers for infringing its patent on the FC5 potato variety, which the company claimed to have developed with significant investments of time and resources. PepsiCo argued that the farmers had no right to produce and sell the variety without its authorization, and had acquired seed potatoes from an unauthorized source. Despite attempts to settle the dispute amicably, PepsiCo resorted to legal action as a last resort to deter other farmers from violating its intellectual property rights and to protect its R&D investments. The company believed that such measures were necessary to prevent unauthorized use of its patented varieties and to maintain incentives for innovation in agriculture.

The farmers claimed that they had purchased the seed potatoes from local markets and were unaware of the legal implications of cultivating and selling the FC5 variety. They argued that they had been growing potatoes for generations and were therefore entitled to protection under Section 39 (1) (iv), which allows farmers to save, use, sow, re-sow, exchange, share, or sell their farm produce, including protected varieties. The farmers asserted that their rights were superior to those of breeders and that the compensation demanded by PepsiCo was excessive, which they couldn’t afford. Farmers argued that PepsiCo India’s registration certificate was based on false information as it failed to address the assignment deed between Frito-Lay and PepsiCo India. The application was filed by multiple organizations, with the potato breeder named as Dr. Hoopes. Additionally, the deed provided between Frito-Lay and Dr. Hoopes lacked the necessary stamp.

Reasons behind varietal registration revocation

1. The authority responsible for granting Plant Variety Protection (PVP) certificates rejected PepsiCo India’s claim of assignment with Frito Lays for the FC5 potato variety, citing insufficient supporting documents. This violated Sections 34(b), (a), and (c) of the regulations, and the PVP certificate was granted to an unqualified person. The authority concluded that the certificate was based on false information, and the breeder failed to provide the Registrar with necessary information, documents, or materials. Additionally, the Registrar failed to verify the accuracy and comprehensiveness of the submitted information.
2. Farmers are facing the risk of substantial fines for purportedly breaching PepsiCo’s rights regarding the FL 2027 potato variety, but the rights may not have existed. This has caused significant challenges for farmers, and the situation is against the public interest as per Section 34(h) of the regulations. Although PepsiCo filed an infringement suit against the farmers, they are not the legitimate breeder, successor, or assignee of the potato variety FL 2027. This violated the regulation and has put the farmers in a challenging position.

The Registrar in charge of issuing Plant Variety Protection (PVP) certificates and safeguarding farmers’ rights broke the rules[v], failing to protect the farmers. This led to substantial difficulties for the farmers and others affected.

Implications of the Decision and Conclusion

The ruling sets a precedent that recognizes the rights of small-scale farmers under Section 39 and considers any violation of those rights a public interest issue. This provides legal protection to farmers who rely on their crops for livelihoods and warns seed or food corporations against violating India’s farmer seed freedoms. The ruling reinforces the significance of protecting farmer rights, fair competition, and ethical business practices in agriculture.

The judgement exposed issues in the process of granting plant variety registration certificates and the need for a standardized document review procedure. The registrar was directed to establish this process, and a committee was recommended to avoid future incidents. The case emphasizes the need for a strong regulatory framework for IPRs in agriculture to protect farmers and breeders’ interests[vi]. It underlines the importance of reviewing and updating laws and regulations to effectively safeguard all stakeholders’ interests. The cancellation of the registration of a plant variety in India due to inadequate documentation exposed flaws in the registration process. A more transparent and thorough procedure is needed. Cancelling the certificate on public interest grounds has raised concerns among plant breeders as it could discourage investment and innovation. A balance between breeder rights and public interests is essential. A well-designed regulatory framework for IPRs in agriculture is necessary to protect the interests of all stakeholders. The case highlights the need for such a framework and emphasizes the importance of considering all stakeholders in the process.

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