Citation: MANU/OT/0192/2021, Delhi High Court  

Hon’ble Judges/Coram: K.V. Prabhu, Chairperson 

Introduction 

In Kavitha Kuruganti v. PepsiCo India Holdings Private Limited, the Indian plant variety protection law comes into a historic limelight. This decision by the Protection of Plant Varieties and Farmers’ Rights Authority (PPV&FRA) to revoke the registration of the potato variety FL 2027, which PepsiCo India holds in its name, and is known by the commercial name FC,5, was brought into sharp focus the conflict between the rights of farmers and the constitutionally claimed rights of the corporate plant breeders. The case also revealed systemic weaknesses in the Registry’s “scrutiny procedures. This comment critically analyses the factual matrix, the legal reasoning of the Authority, the relevance of the findings in terms of the PPV&FR Act, 2001 (hereinafter “the Act” or “Section 34”) and the implications for the plant variety protection law in India. 

Factual Background 

The potato variety FL 2027 was applied for registration by PepsiCo India Holdings Private Limited (the Registered Breeder), a subsidiary of PepsiCo Inc., a multinational food and beverage company before the PPV&FR Authority on 18th February 2011. It was a variety developed in the United States by Dr. Robert W. Hoopes from Frito,Lay Agricultural Research. Dr. Hoopes transferred the rights to the variety to Recot Inc. (now Frito Lay North America or FLNA) by deed of assignment dated 26th September 2003. 

A problem in the law emerged: PepsiCo India, the applicant for obtaining Indian registration was either not the breeder nor a proper documented assignee of the variety. According to the complainant FLNA, which had the rights, it had given PepsiCo India an “oral assignment” for the variety in India. This oral assignment had not been backed by any written documentary proof at the time of filing or within the six month time limit provided for under Rule 27(2) of the PPV&FR Rules, 2003. 

It was originally filed under the “New Variety” category which was clearly wrong as the variety had been commercialised in India since December 2009 and sold abroad to Chile as early as October 2002. Even after admitting that it is an error, PepsiCo India’s corrected application dated 16th February 2012 once again classified the variety as “New Variety”, when, significantly, there was no record of it in the Registry’s own records. 

It went a dramatic public round in 2018–19 when PepsiCo India filed the infringement cases against nine farmers of Sabarkantha and Aravalli districts of Gujarat under Section 64 of the Act, seeking damages in the range of Rs. 100 and 50 crore from every farmer. These farmers were also involved in the illegal growing of FL 2027, outside of PepsiCo’s contract farming systems, the suits claimed. The aggressive enforcement action resulted in a lot of public outrage and ultimately the suits were pulled in May 2019 due to political and public pressure. 

In June 2019, Kavitha Kuruganti, a civil society activist on farm livelihoods for sustainability, filed a Revocation Application (PV,15) requesting cancellation of the FL 2027 registration under the PPV&FR Act based on the following reasons:  

(a) violation of CLTS guidelines,  

(b) failure to submit the annual reports,  

(c) violation of the guidelines of the PPV&FR Act,  

(d) failure to contact the relevant officials, and  

(e) failure to ensure the temporary worker is not actively working on the farm. 

Issues framed and decided 

Chairman, K.V. Prabhu stated the following salient issues: 

1. Whether the Revocation Applicant was a “person interested” for the purposes of Section 34 of the Act. 

2. Whether or not Dr. Robert W. Hoopes was the breeder of FL 2027 and whether he had validly assigned it to Recot Inc. 

3. If Recot Inc. had changed its name to FLNA and whether this change was properly recorded. 

4. Whether the oral assignment from FLNA to PepsiCo India is lawful in terms of the Act. 

5. Whether there was any subsequent letter from FLNA dated 12th September 2019 which could validate the purported oral assignment retroactively. 

6. If the registration of FL 2027 could be cancelled under Section 34 of the Act. 

The analysis of the key legal findings is organized by the following categories: 

1. Locus Standi “Person Interested” Under Section 34 

The first and perhaps most wide, ranging holding of the Authority is about standing. The Revocation Applicant had, however, challenged the right of PepsiCo India to file the application, stating that it was “mala-fide” and “motivated”. In response, PepsiCo India had challenged the right to file the application, saying it was “mala-fide” and “motivated”. The Authority strongly disputed this claim. 

There is provision for revoking a certificate of registration, under Section 34 of the PPV&FR Act, acting on behalf of a “person interested. The Authority considered that anyone working on farmer livelihoods, who finds it inappropriate that a registered plant variety is being used to bully and intimidate farmers, is a person with a public, spirited interest. The reasoning is based on the safeguarding principle of the Act. The Chairperson said that Section 34(h) (allowing revocation where it is not in the public interest) clearly means that someone acting in the public interest would have to have something to lose because the grant of registration is not in the public interest. 

Very welcome development of the doctrine of locus standi in plant variety law. The PPV&FR Act is a law that was conceived to protect farmers’ rights, and by its very legislative intent, takes civil society actors into account as legitimate stakeholders in the protection of farmers’ rights. This holding of the Authority is consistent with a larger constitutional case law on the issue of public interest litigation in India and reaffirms that the Act is not simply a commercial act, but a social welfare act. 

2. Defective Assignment and Invalidity of Oral Transfer 

The most legally relevant finding in the Application filed by PepsiCo India is the absence of a chain of assignments. As you can see, this discovery takes place on several levels. 

First, the only documentary assignment on record was between Dr. Hoopes and Recot Inc. and even this was fatally defective, being unstamped in contravention of the Indian Stamp Act, 1899. The Indian Stamp Act provides that the document is not admissible as evidence under Section 35 of the Indian Stamp Act. It is the Authority’s rightful view that this was an assignment deed which lacked any basis for PepsiCo India’s claimed right. 

Second, more importantly, is that there was no documentary assignment whatsoever from FLNA (which replaced Recot Inc.) to PepsiCo India. In the Notice of Opposition (PV,16), PepsiCo India’s own admission was that no such document was submitted since it was done “orally” on the assignment from FLNA. The Authority was right in holding that there is no place for oral assignment in the Indian jurisprudence of IPR. 

This finding is backed up by a solid legal argument. In view of above, it is mandatory for an assignee,applicant to submit documentary evidence of assignment when making an application or within six months of that application on Form PV,2 as per Section 18(3) of PPV&FR Act, read with Rule 27(2) of PPV&FR Rules, 2003. Oral transfer of plant variety rights is not recognised by the Act and is not even possible. The Authority observed that the same requirement is also described under Section 7(2) of the Patents Act and hence it is a universal requirement in Indian IP law to provide documentary evidence of assignment. 

The Form PV,2 submitted by PepsiCo India also was found to be “non,est in the eye of law”: It was signed by the PepsiCo India representative, not the PepsiCo India assignor (FLNA/Recot Inc.), and included only one witness’s signature. The Authority’s finding that the Registrar should have rejected this and not accepted it on its face shows a lack of care and pride on the part of the Registrar. 

3. Retroactive Validation (September 2019 FLNA Letter) 

The question of whether FLNA’s letter dated 12th September 2019, issued amidst the revocation proceedings and claiming to confirm having allowed PepsiCo India to register FL 2027, was capable of curing the defect in the application was one of the most curious issues in the case. 

The answer from the Authority was a resounding NO on two specific bases. First, the documentary proof must be submitted at the time of making the application or within six months of the application under Section 18(3) and Rule 27(2). The letter was sent almost eight years after the filing, and it was sent only after the proceedings for revocation of the license had been filed. Second, even on the basis of a declaration of proprietary rights, the letter does nothing more than passing on a permission to apply to register FLNA, which, as the Authority correctly analysed, is not a formal assignment of proprietary rights. An assignment in law requires that rights be passed on in their entirety from assignor to assignee, and a mere permission to file is not a legally sufficient assignment. 

The general rule of the Authority, which could not be performed in the future after the date of the registration, is correct and significant. It prevents post,hoc attempts to legitimise procedurally deficient registrations, and maintains the integrity of the registration process. 

4. Incorrect Categorisation New Variety versus Extant Variety 

One significant subsidiary finding was that FL 2027 was classified as a “New Variety” when it was indeed an “Extant Variety. For the purpose of Section 15(3)(a) of PPV&FR Act, a new variety will be considered as new only if it has not been commercially exploited in India one year before the date of application and in the case of field crops four years before the date of application. FL 2027 was commercially sold as far back as October, 2002 (as per PepsiCo’s own application in the USA), and tested in India from 2007, and was introduced into India by December, 2009. The application was made in February 2011. The three dates of “first sale” on which PepsiCo India relied upon 28th October 2002 (US application), 17th December 2009 (Indian application) and 18th December 2009 (invoice) conclusively put the variety outside the “novelty” window. 

The three conflicting dates of first sale were themselves deemed by the Authority to be giving false information under Section 34(a). This lack of identification and correction of such an inconsistency and suo motu consideration of the application by the Registrar as an extant variety without formal notice to PepsiCo India for changing the category as mandated by Section 20(2)(a) was an important procedural lapse on the part of the Registry. 

Significance on Grounds of Revocation 

The Authority granted revocation for four of the reasons listed in Section 34: 

• Section 34(a): Grant on wrong information wrong dates of first sale, defective and unstamped assignments deed. 

• Section 34(b): Certificate issued for persons who are not entitled to protection In case of PepsiCo India, a validly documented assignee was not found and the company was not the breeder. 

• Section 34(c): Breeder failed to give Registrar required information, documents or materials Form PV,2 was not completed and assignment from FLNA was not included. 

• Section 34(h): Grant not in Public interest Disproportionate filing of infringement suits against farmers in their name was violation of Public Interest. 

The invocation of Section 34(h) in addition to the documentary grounds is very noteworthy. It shows that the technical validity of a registration is not sufficient to protect a registered breeder from a revocation if the exercise of rights granted by the registered breeder has caused unjustifiable harm to farmers or the agricultural community. This is an intentional reading of the Act that is in line with its declared aim of realizing a balance between the incentives afforded to the breeders and the welfare of the farmers. 

A criticism of the conduct of the Registrar. 

• The rare point of the judgment is that it involves a very sharp attack on the PPV&FR Registrar. The Authority decided that the Registrar: 

• Filed his own June 2011 query letter but failed to obtain a complete and properly signed Form PV,2 and deed of assignment. 

• Unquestioningly accepted an unsigned and incomplete PV,2 without proper investigation. 

• Did not refer the application for an existing variety, instead of directing it as a new variety, in violation of Section 20(2)(a). 

• The inconsistencies in the dates of the first sale, which are apparent from the documents themselves, were ignored. 

• Advertised & Registered as FL 2027 “utter disregard of law” 

The Authority ordered the Registrar to prepare a standardised form of evaluation sheet for the applications, to set up a committee to prevent such incidents and to do so immediately with regard to procedural requirements. The following directions highlight a systemic problem, not some simple mistake, in how directions are applied to the scrutiny of applications. The case, in the Chairperson’s memorable words, is a “text book illustration of what non, processing of an application for registration of plant varieties in accordance with PPV&FR Act, Rules and Regulations could do to this country. 

Critical Appraisal 

In general the judgment is reasonably sound and well, informed. Several observations, however, should be noted: 

First, the Authority have no cause to question the finding in relation to documentary deficiency but the judgment could have been more definite in relation to the question of Section 39(1) (iv). A well, defined statement of the extent of farmers rights in relation to breeders exclusive rights would have given more certainty and clarity, especially to the agrarian community. 

Second, from the Authority’s perspective, it was not an “obviously malafide intention” on PepsiCo India’s part to cause the omission but was a result of “negligent or indifferent handling of procedures by the Registry”. It is difficult to see how a multinational conglomerate with a wealth of experience in IP registration worldwide can say that it did not know that it had to file a formal written assignment deed. The Authority didn’t attribute bad faith, which makes sense from a judge’s perspective on decorum, but could be an understatement of the authority’s calculation of the procedural problems. 

Third, it is questionable whether costs should have been imposed. The nine farmers’ infringement actions affected the farm financially and psychologically. An award of costs, even a symbolic cost, would have confirmed the message that enshrines in law the norm that the use of PVR against farmers has consequences. 

Thirdly, the case has evoked significant doubts on the need for a better plant variety registration infrastructure in India. The regulatory rigour of the PPV&FRA, which was created as a result of a ground,breaking law passed by the Indian government as a sui generis system under Article 27.3(b) of the TRIPS Agreement, needs to be heightened if it is to meet its dual mandate to protect farmers’ rights and genuine innovation. 

Conclusion 

The Kavitha Kuruganti v. PepsiCo India Holdings case is a landmark in the Indian plant variety law for a number of reasons. Sets out the requirement for civil society actors to seek revocation pursuant to Section 34 of the PPV&FR Act. It clearly excludes oral assignment as a possible way of transferring plant variety rights. It has the rule that a condition precedent to registration can’t be fulfilled after the fact. It takes a very broad view of the public interest ground for revocation (Section 34(h)) and includes the use of registered variety rights for the purpose of farmer harassment. 

In addition to its specific holdings, the case provides a compelling message that plant variety protection is not just a tool for the corporate plant breeder to provide a commercial incentive for commercial plant breeders, but part of the agricultural and rural welfare system of the country. The PPV&FR Act was meant to be for the sake of innovation and equity. The Act gives, and the Authority will take, the power of revocation in the event of some sort of procedural shortcut or aggressive enforcement of its rights that falls short of what is warranted by the rights themselves. The fact that this corrective action was initiated by a public spirited citizen, acting on his own, against one of the world’s largest food companies, further underscores the democratic promise of the Indian IP regime.