Mumbai: When a quasi judicial body issued an order on 3 December 2021 that effectively cancelled snacks and beverage behemoth PepsiCo’s exclusive rights in India over a variety of potato, farmers and farm activists across the country were delighted. It was the classic win of the underdog over a powerful multinational corporation.
Allowing an application filed by farm activist Kavitha Kuruganti, the Protection of Plant Varieties & Farmers’ Rights Authority, a statutory body under the Protection of Plant Varieties and Farmers’ Rights (PPV&FR) Act, 2001, revoked the registration granted in 2016 to PepsiCo for ‘FL 2027’, a hybrid variety of potato that is used to manufacture the popular Lays chips. Under the law, registration gives the breeder or his successor, agent or licensee exclusive rights to produce, sell, market, distribute, import or export the variety, “subject to other provisions” of the law.
In 2018 and 2019, the company had used this certificate of registration it held for FL 2027 to file civil suits claiming damages from four farmers in Gujarat who it found were growing this variety though they were not part of ‘collaborative farming’ clusters of farmers cultivating the tuber to be sold exclusively to PepsiCo.
While the cancellation of its registration was largely based on procedural lapses including inaccurate information furnished by the company, failure to provide documents required for registration, etc, the order laid emphasis on public interest. It accepted Kuruganti’s application as legally valid though she is not a directly affected party but filed her intervention as a public-spirited citizen; it stated that the issue of farmers’ harassment was “germane” to the case; and it accepted Kuruganti’s contention that section 34 (h) was applicable in this case—the grant of the certificate of registration was not in public interest.
The order was a clear win for farmers.
“We hope that this revocation and the earlier public campaign we mounted have taught a lesson to companies not to go after farmers in this country,” said Kuruganti, who represents Alliance for Sustainable And Holistic Agriculture (ASHA), a network of organisations that work on farm issues.
The order sets an important precedent, said experts. A considerable portion of India’s seed production is done by seed producing farmers contracted by companies, and these farmers do tend to keep some seeds aside for themselves or fellow villagers, even though they may not keep the parental lines with them. Across the country, farmers also traditionally save seeds for a subsequent crop. PepsiCo vs Gujarat farmers was a test case for all future intellectual property rights (IPR) disputes over plant varieties.
The farming community is considered India’s largest seed producer, with a 2020 report by the Federation of Seed Industry of India (FSII) saying the “informal sector” continues to supply 39% of India’s seed demand. The body representing the Indian formal seed industry, valued at US $ 3.6 billion, did not respond to a request to speak to Article 14 for this report.
Shalini Bhutani, an expert IPR in agriculture and biodiversity, said the 3 December order was “significant and historic” because it upheld the freedom of farmers over their seeds and sent a signal that farmers’ rights cannot be taken lightly by IPR-holders in the country.
“This should prevent further intimidation of farmers through vexatious IP lawsuits,” said Bhutani. “The grounds for revocation include section 34(h) of the PPV&FR Act that the grant of the certificate of registration is not in public interest; this is a fundamental safeguard for farmers’ inherent seed rights.”
Global Goliath Versus Gujarati Farmers
In February 2019, farmer Bipin Patel of Sabarkantha in north Gujarat received a phone call from a stranger who claimed to be a potato trader from Punjab with investments in a potato wafer factory. He wanted to purchase potatoes directly from the farmer, and said he would pay Rs 50 per 20 kg over the market rates, in advance and in cash.
But the man wanted to see Bipin Patel’s farm first.
When five or six men visited him later that month, they asked if they could take a few potatoes. “Kisan thodi mana karega (a farmer would never refuse),” the farmer told Article 14.
They asked Patel if he was cultivating FC-5, the trade name for the FL 2027 variety. He told them the region’s farmers had fallen into a traditional rhythm of saving seed potatoes from their harvest, and sharing these with acquaintances, in exchange for seed potatoes from their farms.
“I told them the seeds had been given to me as being FC-5,” said Bipin Patel, “but I had no independent way of knowing.”
PepsiCo had filed cases against farmers in Aravalli in 2018, and Patel thought it wise to ask the visitors whether they were representing the company. They claimed to be buyers.
In April, said Bipin Patel, he was “shocked” to receive a notice from a commercial court in Ahmedabad, about 120 km from his village, Lakshmanpura Kampa, in Sabarkantha’s Vadali tehsil, for “illegally dealing” in FC-5.
“One of the world’s biggest beverage companies had slapped a suit against me, of Rs 1.05 crore,” said Patel. “I was terrified.”
It was not a randomly fixed sum—a claim lower than Rs 1 crore would have to be heard in the district court.
By evening, Bipin Patel found that three others from Vadali, all prominent for taking the lead in big transactions, had received identical notices. “They are a big company, and we had never stepped foot into a district court or even a tehsil court in our lives,” said Chhabil Patel of Badol Kampa village, one of the four.
They said court officials or lawyers visited their villages, “with police protection”, to collect samples for ground-truthing. “There was a feeling in the air that we were grave criminals. If the police had come, it must be because we are cheats,” Bipin Patel said.
Kuruganti submitted sworn affidavits from two of the farmers who spoke at length about their ordeal to the PPV and FR Authority.
In court, it emerged that the company hired a detective agency to entrap the Sabarkantha farmers, that a notary went along with the team pretending to be traders, and that they captured secret video footage. It was a sting operation by a large multinational company on mid-sized farmers owning 5 to 10 acres of land each.
“We are unhappy that the fact that a large multinational company harassed farmers and used immoral and unethical means to do so was not made a strong basis in the order by the PPV & FR authority,” Kuruganti said.
The company offered out-of-court settlements for the suits, on the condition that farmers offered an apology.
“By then, I had learnt that we had done nothing wrong, that there is no illegality in growing or selling FL 2027,” said Bipin Patel. He refused to apologise and decided to contest the suit. He himself returned to cultivating the Lady Rosetta variety that was more suitable for his soil, but union members encouraged hundreds of farmers in Gujarat to thumb their nose at the company by cultivating the FC-5 potato.
With just weeks to go for the 2019 general elections, and as farm unions, civil society groups and political parties across the spectrum criticised PepsiCo’s move, the Bharatiya Janata Party (BJP) government in Gujarat held discussions with the company.
Eventually, in a move seen by many as compelled by election logic, the company announced that it would unconditionally withdraw all the cases it had filed, against four farmers in 2019 in the commercial court and against seven other farmers filed in 2018 in Aravalli and Banaskantha.
For ASHA and other farm organisations, however, PepsiCo’s back-pedalling was not enough.
“We were very clear that public campaigns making somebody withdraw cases, that too during election season, is not the soundest way of setting a legal precedent,” said Kuruganti. They decided to approach the PPV&FR authority, she said, to test the progressive provisions central to India’s law, to see if they worked in favour of farmers, and to see if the lawmakers’ intent would be interpreted correctly.
On 14 June 2019, just weeks after the cases against farmers were withdrawn, Kuruganti filed an application seeking that the PPV&FR Authority revoke the registration granted to PepsiCo for FL 2027, its perfect chip potato.
A PepsiCo India spokesperson said the company would not comment in detail on the order. “We are aware of the order passed by the PPVFR Authority and are in the process of reviewing the same,” said the spokesperson.
FL 2027: Perfect Chip, Imperfect Documentation
With a moisture content of 80% instead of 85% that is common among other varieties, the FL (Frito Lays) 2027 makes for an ideal potato chip.
Developed through crossbreeding of potatoes over generations, researchers found this variety to have the characteristics the chip industry places a premium on—it withstands cold storage and factory-processing, has a high content of solids, high yield, resistance to diseases and pests, is adaptable to various growing areas or conditions and, when fried, has a light yellow chip colour.
A tuber with lower solids is more expensive to fry on account of using more fuel, while higher solid content in a potato also reduces the oil content of the final chip.
The FL 2027 goes by the trade name of FC-5. Its parents are FL1867 and Wischip, a variety developed by the University of Wisconsin in the US and freely available for breeding and commercial use.
The FL 2027 arrived in India in 2007, when the Central Potato Research Institute in Shimla conducted tests on the plantlet tissues received for post-entry quarantine. Since 2009, the FC-5 has been commercially traded in India.
PepsiCo told the PPV & FR authority that Robert W Hoopes—a senior scientist at their Frito-Lay agricultural research unit who holds the most potato patents in the world—was the original breeder of FL 2027, and that in September 2003, Hoopes assigned the variety to Recot Inc, (the previous name of Frito Lay North America, a subsidiary of PepsiCo Inc), at a consideration of US$ 1.
This assignment deed was unstamped, and therefore could not be relied upon for registration—it was also not on a company letterhead , nor did it have witnesses’ signatures, the authority held, censuring the company and also the PPV&FR registrar.
“I find it most unconvincing to believe an organised business conglomerate with more than a century of global IP protection-related experiences made such omissions by oversight,” said the order, signed by PPV&FR authority chairman K V Prabhu .
Case Won, Struggle For Seed Rights Continues
The PepsiCo-Gujarat case has emerged as one of the first real tests of the functioning of India’s intellectual property regime on plant varieties.
It was in the wake of India becoming a signatory to the World Trade Organisation’s Agreement on Trade Related Intellectual Property Rights (TRIPS) that the PPV &FR Act was enacted.
“We fought tooth and nail and eventually prevailed on the issue of farmers’ rights,” said Suman Sahai, PhD, founder and chairperson of Gene Campaign, a research and advocacy organisation set up in 1993 by a group of scientists concerned about the impact of international developments on the genetic resources of a still-developing India, and on the livelihood security of rural communities. Sahai, a vociferous opponent of patents on seeds, honoured with the Padma Shri later in 2011, was on the expert committee drafting the law.
The PPV&FR Act is the only such law in the world that gives farmers inalienable rights, Sahai told Article 14. “Every other law gives farmers exemptions — the principal right is that of the breeder,” she said.
In a consultative process that took years, Sahai and others fought against allowing patents on plant varieties. Once a sui generis (of its own, referring to every signatory country’s option to legislate for itself ) legislation was agreed upon, Sahai and others fought to include the much-contested clause 39 (1) (iv), pertaining to the farmer’s right to sell seeds, even of a variety registered or protected under the Act.
“The reasoning I gave the Parliamentary committees was that ours is a tradition where farmers are India’s biggest seed producers, they can only survive if this system continues,” Sahai said.
Sahai said section 39 in the initial drafts of the law was worded to refer to farmers’ rights to “save” and “exchange” seeds. The seed industry opposed it hard, but Sahai was firm that seeds must not be curtailed, and even improved seeds must not be denied to farmers just because an entity has a breeder’s right on it.
Section 39 (1) (iv) of the PPV&FR Act reads: “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 the coming into force of this Act. Provided that the farmer shall not be entitled to sell branded seed of a variety protected under this Act.”
According to Sahai, this was “the most hated clause” by the industry.
In its response to Kuruganti’s revocation application, PepsiCo contended that 39 (1) (iv) is not “all-encompassing”. It contended that as a registered breeder, the company alone could produce, sell, market, distribute, import and export FL 2027.
According to Sahai, no trade by the farmer, including trade of seeds of FL 2027, could have been considered illegal, except if the seeds had been packaged and branded for sale. By that interpretation, PepsiCo’s suits against 11 farmers were on grounds of infringement of a non-existent right, said activists.
The 3 December order of the PPV&FR authority, however, steered clear of this aspect of the law entirely.
‘A Partial Victory, The Battle Is Not Over’
The real battle to establish farmers’ rights on seeds, said Kapil Shah of rural community organisation Jatan Trust, was left incomplete by the authority’s order.
“This was a good opportunity for the authority, which has a mandate to protect farmers’ rights too, not only breeders’ rights, to interpret various sections of the PPV&FR Act that pertain to rights of breeders, and to note that farmers’ rights are superimposed over breeders’ rights in the law,” Shah told Article 14.
He said the technical aspects of the judgement have set a precedent related to procedures, and there is a chance that the company may correct its documentation and attempt to re-register as sole breeders of FL 2027.
He called it a “poor order overall” even though it was in favour of farmers insofar as revoking PepsiCo’s registration.
A good order would have clarified whether the Gujarat farmers had violated the breeder’s rights at all, he said, and would have defined the limitations that the law sets to the breeders’ rights.
Kuruganti said the order did set a precedent in accepting her contention that the registration was against public interest. “Could it have been stronger?” she asked. “Certainly, yes. I wish it was stronger.”
In a wider sense, Kuruganti’s application to revoke PepsiCo’s claim of exclusive rights over a potato variety was also an argument against corporatisation in agriculture, which has been actively promoted including through the now-repealed farm laws.
Breeders’ rights are based on the logic that seed use royalty pays for the huge investments made by seed companies in technology and facilities for research over long periods of time. Plant breeders’ rights are an internationally recognised form of intellectual property, growing stronger with every iteration of the International Convention for the Protection of New Varieties of Plants, adopted in Paris in 1961 and revised in 1972, 1978 and 1991.
India’s application for membership to the Union for the Protection of New Varieties of Plants (UPOV), a Geneva-headquartered intergovernmental organisation established by the Paris convention on new varieties of plants, was still-born in 2002 when Gene Campaign filed a litigation against it and initiated an advocacy campaign among elected representatives.
While the PPV&FR Act seeks to balance the competing interests of the seed industry and the rights of poor farmers, the UPOV recognises only the rights of the breeder, according to Sahai. Gene Campaign helped draft an alternative convention that they named convention of farmers and breeders (CoFaB), but that did not take off.
It was India that held up UPOV’s wider impact in the developing world, said Sahai. “Had India crumbled, no other country would have been able to keep even farmers’ privileges, never mind rights.”
The Patel farmers cultivating potatoes in Lakshmanpura Kampa, Badol Kampa and Medh Kampa villages of Vadali, Sabarkantha, however, saw the revocation of PepsiCo’s rights as a grand success for India’s farmers, coming close on the heels of the repeal of the farm laws in November.
“We have really begun to see the power of mobilising,” said Bipin Patel. “Aur ek kisan andolan tha (This was another farmers’ movement).”
(Kavitha Iyer is a senior editor with Article 14 and the author of ‘Landscapes of Loss’, a book on India’s farm crisis.)