Never ending story? Update on the PepsiCo vs Indian farmer fight over a potato patent

PepsiCo has at last been given the green light to claim for a patent for a special Solanum tuberosum (potato) variety after the Delhi High Court set aside a July 2023 judge order to uphold the revocation of the patent in 2021.

The David vs Goliath-style case has not been an easy ride, involving a showdown between the major snacking giant and India’s potato farmers and several scrambles into court.

At the centre: PepsiCo’s FC5 varietal.

Let’s break it down.

PepsiCo vs potato farmers

In 1999, PepsiCo set up a tissue culture and mini-tuber facility in Zahura, Punjab, to develop seeds of its own potato varietals.​​

The FC5 – also known as the FL2027 – was put into commercial use in 2009. It is considered the standard for potato chip processing because of its low water content (80% compared with 85% of other varieties). According to the Lay’s brand owner, these qualities make it unsuitable for use as a table potato, as it requires more time and energy in the cooking process.

In 2016, the snacks producer was issued with the IP (intellectual property) rights for the varietal under the Protection of Plant Varieties and Farmers Rights (PPV&FR) Act, 2001.

PepsiCo India was granted a certificate of registration for FL 2027 as an ‘extant variety’ for six years. During the validity of the certificate – which could be extended for up to 15 years – the breeder has sole authority over that variety, meaning no one could commercially produce, sell, market, distribute, import or export it without its authorisation.

Potatoes are one of the primary crops of India and PepsiCo has set up an ever-expanding farmer partnership network. As such, the FC5 seeds were provided to thousands of local farmers who entered a legal agreement to sell the crop at a fixed price back to the company for exclusive use for its Lay’s chips.

IP violation

However, in April 2019, PepsiCo brought a legal suit against four Gujarati farmers for allegedly illegally cultivating the potato.​​

“The company was compelled to take the judicial recourse as a last resort to safeguard the larger interests of thousands of farmers who are engaged with its collaborative potato farming programme,” said a PepsiCo spokesperson.

The backlash was almost immediate as the farmers claimed to be unaware of any wrongdoing and were just following an age-old tradition of exchanging seeds with other farmers.

PepsiCo was also accused of using strongarm tactics and threatened with a national boycott of its products.

At the time, sentiment was very much in favour of the farmers. The sector had been hard hit with poverty and as part of his election campaign, Prime Minister Narendra Modi had promised to double farmer’s incomes.

This brought in support from all sectors, including other governments, agricultural unions and social media posts from as far away as the US and Brazil.

Within weeks, PepsiCo had backed down.

“After discussions with the [Indian] government, the company has agreed to withdraw cases against farmers,” said the New York-based company, noting it wanted to settle the issue amicably.

Laws, technicalities and the small print

Enter activist Kavitha Kuruganti, who persisted with her fight for farmers and in 2021, submitted a petition to the PPV&FR Authority for the withdrawal of IP rights granted to the FC5.

Her argument: India’s rules do not allow a patent on seed varieties.

In a major win for the farmers, the Authority agreed with Kuruganti’s contention and cancelled the certificate of registration with immediate effect.​

In 2023, PepsiCo countered with a petition against the revocation of the patent cover, but this was dismissed by Delhi High Court Judge Navin Chawla.

Her decision was based on a technicality. In its application in 2012 to obtain registration of FL 2027 as a ‘new variety’, PepsiCo correctly submitted the date of the potato variety’s commercialisation in India as 17 December 2009.

However, a ‘new variety’ requires conformity with the criterion of originality, which means the harvested material should not have been sold in the country sooner than one year before the date of application.

As it did not satisfy the requirement for novelty, it had been granted registration as an ‘extant variety’, which compiles with distinctiveness, uniformity and stability, but not originality.

Reports by local media also claimed the varietal had actually first been sold in Chile in 2002, which meant PepsiCo had also provided incorrect information. As per Indian law, any protection granted for a plant variety is subject to complete disclosure from the applicant about their invention or development.

The final chapter?

Again, Pepsi countered with an appeal and in a controversial move, the division bench of the same court set aside Judge Chawla’s order.

“We … find ourselves unable to uphold the view taken by the learned Single Judge insofar as it holds against PepsiCo and pertaining to an incorrect mentioning of the date of first sale as well as the conclusions ultimately rendered in the context of the eligibility of PepsiCo to apply for registration and non-submission of relevant documentation,” the judgment said.

It added, “The appeal of PepsiCo is allowed. We consequently also set aside the order of the Authority dated December 3, 2021, and the letter issued by the Authority dated February 11, 2022. The renewal application as made by PepsiCo shall stand restored on the file of the Registrar who shall dispose of the same in accordance with law.”

The court also rejected Kuruganti’s concerns that PepsiCo was acting against public interest. It added the respondent had failed to prove the lawsuits were vexatious or part of predatory tactics against farmers by the Lay’s maker.