Whose potato is it really? Court restores PepsiCo’s rights

In a rare test of the plant variety protection law in India, a division, or appellate, bench (DB) of Delhi High Court in Pepsico India Holdings Pvt Ltd v Kavitha Kuruganti reversed a single judge bench (SJ) decision that revoked PepsiCo’s rights in FL2027, the potato variety used in its well-known Lay’s chips. It gave directions for the exercise of discretion by authorities, the material relevance of submitted information and the general approach to registration processes.

PepsiCo originally applied to register FL2027 as a new variety, but later amended the application, registering it as an extant variety in 2016. It then sued potato farmers for infringing its rights in the registered variety, but soon withdrew the cases. In 2021, the Protection of Plant Varieties and Farmers’ Rights Authority (authority) revoked the registration for FL2027 on a number of grounds.

Among other reasons, the authority said that the registration was based on incorrect information from PepsiCo, which at first filed it as a new variety with an incorrect date of first sale, that being its first sale in India not globally. It decided that PepsiCo did not qualify as a “breeder” for lack of proper documentation. Finally, it said that the registration was not in the public interest, as the infringement cases troubled the potato farmers.

PepsiCo appealed to Delhi High Court, where the SJ upheld the revocation. The SJ disagreed with the authority on some issues, such as filing originally as a new variety was not a fatal mistake as it was correctly registered in the end. The public interest finding was not based on evidence. But the SJ agreed that the revocation was correct because PepsiCo had submitted incorrect information, particularly the date of first sale. It was immaterial that the date, either India-specific or global, would have not materially affected the registration and gave no advantage to the company. There was also insufficent evidence of the assignment from the rights holder, a company in the same group, to PepsiCo.

PepsiCo appealed to the DB. That court agreed with the SJ on the categorisation of the variety in the application, but crucially held that neither the application nor its grant contained a fundamental misdeclaration or failed to provide information required by law. It analysed two aspects: whether an insistence on certain information, about which the law itself was unclear would be improper, and second whether the material relevance of the information in question should be considered.

On the first issue, it found that the law did not specify whether the date of first sale of a variety had to be global or India-specific. The definition of “variety” in the statute referred to availability “in India”, and PepsiCo was entitled to assume the application form required reference to the first sale in India. For the court to infer, without adequate statutory guidance, that the form required information to the contrary would be “narrow and pedantic”.

In the second matter, the DB found that PepsiCo would have derived no benefit by deliberately declaring the date to be the first sale in India or abroad, because for either the application was made within the stipulated 15-year time period from the date of first sale. It should be understood that protection flows from the date of registration not from the date of first sale.

With regard to the absence of a formal assignment, the DB held this was not fatal to the application.

Most importantly, the DB highlighted the wording of the revocation provision. The court held that the expression “may be revoked”, which clearly signalled that the power to revoke is discretionary. It should be exercised only when registration is granted to an ineligible person or variety, or where a variety, not otherwise entitled to registration was accorded protection. Discretion was to be exercised with particular care when the failure to furnish information or correct details was neither intentional nor deliberate.

This may not be the end of the potato wars as further appeals could yet be heard. However, the decision itself establishes a critical precedent for discretionary powers of revocation. This has implications for applicants, grantees, courts and statutory authorities alike, because it sets out fundemental principles of law and natural justice for all to follow.

Essenese Obhan is the managing partner and Charul Yadav is a partner at Obhan & Associates.