Revocation of plant variety registration of PepsiCo India’s potato variant upheld by the High Court

Introduction:

In one of the first revocation-related action taken by the Indian courts under the Protection of Plant Varieties and Farmers' Rights Act (hereinafter referred to as the ‘Act’), a significant legal battle reached its culmination in the case of Pepsico India Holdings Pvt. Ltd. vs Kavitha Kuruganti. In a recent order, the Hon'ble High Court of Delhi upheld the revocation of PepsiCo India’s registration for a potato variant - FL 2027 used in the manufacture of the very famous potato chips sold under the brand name “Lays”.

Background:

PepsiCo India Holdings (hereinafter referred to as ‘the Appellant’) was granted a certificate of registration for a potato variety FL 2027 as an “extant variety” on February 1, 2016 by the Protection of Plant Varieties and Farmers Rights Authority (hereinafter referred to as the Authority).

However, this registration was revoked by the Authority on 3rd December 2021 with rejecting the appellant’s application for renewal of its registration.

The revocation was passed in response to a petition submitted by farm activist Kavitha Kuruganti (hereinafter referred to as the respondent).

The Appellant thereafter filed an appeal in the Delhi High Court in order to challenge the decision as passed by the Authority.

· Major reasons for Revocation

1. Pepsico had provided confusing information regarding the category of the variety by depicting FL 2027 as a “New Variety” instead of an “Extant Variety”.

2. PepsiCo also gave an inaccurate first date of the commercialization.

3. The certificate of registration has been granted to a person who is not eligible for protection under the Act and the breeder (PepsiCo) did not provide the Registrar with complete information, documents or materials as required under the provisions of the act.

4. That the protection of variety provided to PepsiCo India on a potato variety was against the public interest.

The registration with respect to plant variety- FL 2027 potato variety was revoked on the grounds provided under Section 34(a), (b), (c) and (h) of the Act.

Facts and Judgement of the Court

1. Clerical error in the form regarding the plant variety

The appellant had applied for the registration of FL 2027 variety under the Act on February 18, 2011, however, the appellant due to a bona fide mistake ticked the box in the form depicting FL 2027 as a “New Variety”. The Registrar, however, informed the appellant that the application is being considered under the “Extant Category” and hence the Registrar granted registration to FL 2027, treating it as an “extant variety”.

The appellant had claimed that registration cancellation due to "New Variety" application is arbitrary, irrational, and harsh. He claimed that this was just a technical flaw and there was no concealment of significant facts.

However, according to the respondent, even in the updated application, the appellant checked the box next to "new variety" instead of and instead of "extant variety." He claimed that the appellant made a conscious attempt to offer inaccurate information and also the Registrar could not have considered the appellant's application for "extant variety" as such. In doing so, the Registrar went above his authority.

Court’s observations:

The court emphasized that the appellant could not have been held guilty of having obtained the registration by providing incorrect information with respect to FL 2027 being a “new variety‟. The said mistake could not have provided a ground to the Authority to revoke the registration granted to the appellant by invoking Section 34(a) of the Act. However, this was a clerical error, which was noticed by the Registrar and the registration was granted in the correct category.

2. Inaccurate first date of the commercialization

PepsiCo was found to have given an erroneous first date of sale of the variety in its application as December 17, 2009, when it had already been commercialised on October 28, 2002 in Chile.

The appellant claimed that they gave the date of commercialization of the variety as December 17, 2009, considering that they were supposed to offer the initial date of commercialization in India rather than the rest of the globe as there was an ambiguity in the specified application form, which resulted in the appellant's error.

However, the respondent claimed that because FL 2027 was initially sold in Chile in 2002, it became ineligible for registration after 2017 and also as per the provision of the Act, the right to this variety would belong in the Central Government, and that the appellant would be ineligible to seek renewal of the registration since the subject variety is now in the public domain.

Court’s observations:

The Court disagreed with the appellant’s submissions and noted that “for the purposes of Section 34 (a) of the Act what is important is that the Certificate of Registration has been obtained on an incorrect information furnished by the applicant”.

The Court observed that “The onus of providing correct information in the application is on the applicant and the applicant cannot shift this onus on the Authority or, having given incorrect information, plead that no difference would have resulted in the consideration of the application had correct information been provided by the applicant”.

The Court conclusively held that “The applicant must, therefore, be put to strict and vigilant compliance with the requirements of the Act, the Rules, and the Regulations, failing which it opens itself up to revocation of the registration granted”.

3. Certificate of Registration has not been granted to an eligible person

FL 2027 was developed in the USA by Dr. Robert W. Hoopes and the same assigned his rights to Recot Inc., a group Company of PepsiCo Inc., by a Deed of Assignment. Recot Inc. subsequently changed its name to Frito-Lay North America, Inc. (hereinafter referred to as FLNA) also a group company of PepsiCo Inc. By the virtue of their corporate relationship and the fact that the appellant is incorporated in India and carries on its business in India, FLNA permitted the appellant to develop and use FL 2027 and seek registration for FL 2027 under the Act.

The appellant argued that the Assignment Deed was executed in the USA, where FLNA is reflected as an assignee by the patent office. Non-stamping would only result in penalty impoundment and penalty, not invalidating the granted registration. The appellant had submitted the Assignment Deed, name change certificate, and letter to FLNA during revocation proceedings, indicating that any deficiencies were removed before the Authority. He argues that Form PV-2 was not signed by breeder Dr. Robert W. Hoopes, but the Registrar accepted it, and hence the registration cannot be revoked under the provisions of the Act.

However, the respondent argued that the Act mandates registration applications in a specified form, with proof of right to make the application provided at the time or within prescribed periods. The appellant's application lacks documentary proof of right, no valid assignment, and lacks a signed Form PV-2 by the Breeder and stamped Assignment Deed and also the letter from FLNA to the appellant did not meet the requirement of assignment; it was merely a clarification.

Court’s observations:

The Court noted that the registration application of the appellant was deficient for its failure to provide necessary documents required under of the provisions of the Act read with Form PV-2 of the Rules. The impugned order records that the Assignment Deed produced by the appellant from the breeder, Dr. Robert W. Hoopes, to Recot Inc. cannot have been relied upon being unstamped and the proof of change of name not been filed. In fact, the Authority, in the impugned order, has held that, "The Assignment Deed is inadmissible in evidence as there are too many omissions to even consider the document as any valid document of evidence in principle."

The Court perceived that the Act states that upon receipt of an application, the Registrar may, after making such inquiries as he thinks fit with respect to the particulars contained in such application, accept the application absolutely or subject to such conditions or limitations as he may deem fit. It further states that if the Registrar believes the application does not conform with the provisions of the Act or any Rules or Regulations adopted thereunder, he may order the applicant to alter the application to his satisfaction.

The Court, while upholding the findings in the impugned order, noted that the appellant’s application seeking registration of the potato variety “was deficient for its failure to provide necessary documents required” under provisions of the Act and its rules, at the time of seeking registration, and that the authority was “justified in revoking the registration granted”.

Conclusion

One of the key takeaways from this important decision is that the rules prescribed by the Indian statutes ought to be given due importance and consideration while applying for protection of plant variety in India. Also, the court has made it clear to all the future applicants that concealment or incorrect mention of any significant fact or submitting an incomplete set of vital documents can be detrimental for the application and can even lead to revocation of registration of the protected plant variety.