Pepsico Vs Farmers ( A Case of Misplaced Priorities or Possibility of Laying Down A News Precedent?)

22nd July, 2019 - 11:02 am Categories: Legal Issues 0 Comments

Introduction:

Recently, a big controversy caught everyone‘s attention, when corporate behemoth PepsiCo was in the news for suing some farmers in Gujarat, India, for cultivating a variety of potato that the multinational claimed was its own. The controversy evoked strong reactions from politicians, farmers and activists alike. This article shall discuss the proverbial David v. Goliath battle that played out, albeit for a limited time, in the Court at Ahmedabad.

Facts of the Case:

The Protection of Plant Variety and  Farmers‘ Rights  Act,  2001  (hereinafter  referred to  as

_The Act‘) provides for establishment of an effective system for protection of plant varieties and rights of farmers, while encouraging development of new varieties of plants. This was the first of its kind case under the Act, where PepsiCo instituted a suit for permanent  injunction to restrain infringement of the variety, FL 2027 (commercial name ‗FC-5‘) and also seeking damages to the tune of Rs. 1.05 crores from each farmer. The company contended that the farmers had been illegally producing, selling, etc. the variety without their permission, thereby violating PepsiCo‘s statutory right under Section 64¹ and 65² of the Act. PepsiCo claims to have first hand knowledge about the production of the said variety by the farmers in January, 2019, following which samples were collected and sent for testing. The DNA samples matched with that of the farmers‘ potato variety, confirming a possible infringement and resulting in PepsiCo being granted ex-parte ad-interim injunction vide an order dated 8^th April, 2019, thereby restraining the farmers from producing, selling the produce of the variety registered by PepsiCo until the next hearing, i.e. 26^th April.³ PepsiCo was known to have agreements with farmers in Punjab for cultivation of the concerned variety under the buyback system, however, this was the first time that a farmer in Gujarat was found in possession of the variety allegedly registered with PepsiCo.

Controversy:

The order of the Court elicited a huge uproar, as politicians, activists, farmers‘ organisations vociferously protested, thereby trying to paint the company as some sort of a tyrannical capitalist trampling upon the rights of poor farmers. Some experts, on the other hand, supported PepsiCo and argued that this was indeed an intellectual property violation by the farmers. The fact of the matter is that PepsiCo had filed an application for registration of the variety as a ‗new variety‘ on 02^nd February, 2012 and was subsequently granted registration by the Plant Variety Registry, effectively making PepsiCo the registered owner of the variety. On the other hand, the sued farmers are claiming that they bought the potato seeds locally where they are available, in what is known as the grey market. Furthermore, farm activists have also argued that while the potato variety was introduced in India in 2011, it was only registered five years later in 2016; therefore, it is natural that  it  spread among farmers who are not under any contractual arrangement with the company.

The pertinent question is who can grow what crops, as IPR has been invoked for the first time under a law governing the rights of breeders and farmers in India. The law in India, however, is unique as it protects the rights of the farmers as well as, the breeders.

Legal experts are divided over whose side the law is actually on. Section 39 (1) (iv) ⁴ of the Act, begins with the words ―Notwithstanding anything contained in this Act‖, which means that the Section has precedence over all the other sections from the Act. It further entitles a farmer to do all things mentioned therein in the same manner as he was entitled to before the Act came into force, thereby meaning that any act of farmer shall remain unaffected.

PepsiCo, on the other hand, is relying on Section 64 (supra) which states that a right established under this Act is infringed when a person who is not the breeder, registered agent or licensee of a variety, sells, exports, imports or produces such variety without the permission of the breeder by such selling, exporting, importing, causes confusion in the minds of general people. It remains to be seen whether the farmers sold potato seeds (to be cultivated), or sold the unprocessed potato produce, which is the raw  material which is used to make Lay‘s chips. Another interesting point to note is that farmers claim protection under Section 39 (1) (iv) claiming that the seed was already available in the market much prior to registration by PepsiCo, raising the question as to why PepsiCo took action only in 2019 when it could have been initiated much prior to it.

However, things took a rather unexpected turn, when on 10^th May, 2019, the company reportedly withdrew all its cases against the farmers under intense pressure from its headquarters as well as the public and political parties in India. In a statement, PepsiCo stated: ―After discussions with the Government, the Company has agreed to withdraw cases against farmers. We are relying on the said discussions to find a long term and an amicable resolution of all issues around seed protection.‖⁵

In the opinion of the author, it was rather surprising that the company decided not to pursue the litigation against the farmers, especially since the law on this point is ambiguous, which could well have laid down a new precedent in a law which is yet untested. Furthermore, PepsiCo stands much more to lose than the farmers since the potato is the very essence of their product, i.e. Lay‘s which guarantees the company billions of dollars in revenue each year. It also raises an interesting question as to whether the case could have received the same traction had the country not been in the throes of a general election where any action against farmers, the proverbial David, strikes at the very root of socialism by Goliath, a profit-driven, capitalist corporate behemoth. We may well have to wait for some more time to get the answer to that question.

Author: Vidushi Trehan, LL.M from Symbiosis Law School, Pune , Intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com

References:

[1] Infringement.—Subject to the provisions of this Act, a right established under this Act is infringed by a person—

(a) who, not being the breeder of a variety registered under this Act or a registered agent or a registered licensee of that variety, sells, exports, imports or produces such variety without the permission of its breeder or  within  the scope of a registered licence or registered agency without permission of the registered licensee or registered agent, as the case may be;

(b) who uses, sells, exports, imports or produces any other variety giving such variety, the denomination identical with or deceptively similar to the denomination of a variety registered under this Act in such manner as to cause confusion in the mind of general people in identifying such variety so registered.

[2] Suit for infringement, etc.—(1) No suit –

(a) for the infringement of a variety registered under this Act; or

(b) relating to any right in a variety registered under this Act, shall be instituted in any court inferior to a District Court having jurisdiction to try the suit.

(ii) For the purposes of clauses (a) and (b) of sub-section (1), ―District court having jurisdiction‖ shall mean the District Court within the local limit of whose jurisdiction the cause of action arises.

[3] PepsiCo vs. Bipin Patel, file:///C:/Users/Admin/Downloads/PEPSICO%20vs.%20Bipin%20Patel.pdf

[4] Farmers‘ rights. – (1) Notwithstanding anything contained in this Act,— (i) a farmer who has bred or developed a new variety shall be entitled for registration and other protection in like manner as a breeder of a variety under this Act; (ii) the farmers‘ variety shall be entitled for registration if the application contains declarations as specified in clause (h) of sub-section (1) of section 18; 21 (iii) a farmer who is engaged in the conservation of

genetic resources of land races and wild relatives of economic plants and their improvement through selection and preservation shall be entitled in the prescribed manner for recognition and reward from the Gene Fund: Provided that material so selected and preserved has been used as donors of genes in varieties registrable under this Act;

(iv) 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.

Explanation.—For  the purpose  of  clause (iv),  ―branded  seed‖  means any seed  put  in  a  package or  any other container and labelled in a manner indicating that such seed is of a variety protected under this Act.

(ii) Where any propagating material of a variety registered under this Act has been sold to a farmer or a group of farmers or any organisation of farmers, the breeder of such variety shall disclose to the farmer or the group of farmers or the organisation of farmers, as the case may be, the expected performance under given  conditions, and if such propagating material fails to provide such performance under such given conditions, the farmer or the group of farmers or the organisation of farmers, the case may be, may claim compensation in the prescribed manner before the Authority and the Authority, after giving notice to the breeder of the variety and after providing him an opportunity to file opposition in the prescribed manner and after hearing the parties, may direct the breeder of the variety to pay such compensation as it deems fit, to the farmer or the group of farmers or the organisation of farmers, as the case may be.

5 Karthikeyan Hemalatha, Pepsico vs farmers: Plant varieties cannot be patented, emphasise legal expertshttps://india.mongabay.com/2019/05/pepsico-vs-farmers-plant-varieties-cannot-be-patented-emphasise-

legal-experts/