Lessons from Pepsico’s farmer Lawsuit

Though the firm withdrew the cases after a public outcry, the episode has important ramifications for India’s progress in agriculture

Published: 08th June 2019 04:00 AM  |   Last Updated: 08th June 2019 03:14 AM   |  A+A-

The recent tussle between potato farmers in Gujarat and multinational food giant PepsiCo India on the issue of alleged infringement of exclusive rights over a potato seed variety, namely FL 2027, has opened up a heated debate on the rights of farmers and plant breeders on a plant variety registered under the Protection of Plant Varieties and Farmers’ Rights (PPVFR) Act, 2001. PepsiCo had filed legal suits against 11 potato farmers seeking damages ranging from `20 lakh to `1 crore as they allegedly grew FL 2027 on which the company has got intellectual property rights (IPR) by a plant variety protection (PVP) right obtained under the PPVFR Act. Though PepsiCo withdrew the lawsuits due to public outcry and subsequent government intervention, the concerns raised by this episode have important ramifications for India’s agricultural progress.

PepsiCo has been engaged in distributing the seed in Gujarat as part of its contract farming operations. Under this arrangement, farmers receive agricultural inputs either directly from the firm or indirectly through a third-party/independent input supplier. It is highly unlikely that farmers who are outside the contract farming system, as in the present case, can access a seed variety on which the firm has got IPR. However, the farmers have claimed that the seeds were supplied by a local trader with whom they had a buy-back arrangement. This raises two concerns.

First, the holders of PVP right have a responsibility to put in place an effective mechanism to protect their plant variety from being supplied in the market by unauthorised entities. The fact that the FL 2027 seed has reached the hands of the local trader in large quantities shows that PepsiCo has failed to guard its seed variety from infringement. This is considering that plant variety piracy is much more difficult, as opposed to piracy of copyrighted products like movies or books.

Second, PepsiCo has spared the local trader who allegedly supplied the seeds from the legal battle. Instead, the company has moved against the weaker party, the farmers. Grown once, the FL 2027 seed variety cannot be saved and reused. It may be the case that the seeds used by the farmers were obtained from PepsiCo’s third-party input supplier or they were of a spurious variety supplied by unorganised players. This brings to our attention a major pain point in India’s plant variety regulatory mechanism—the large presence of spurious seeds in the market, which affects all stakeholders.

The present case also raises doubts about the relevance of the PPVFR Act, which was enacted under India’s obligation under the Trade Related Intellectual Property Rights Agreement (TRIPS). Article 27 of the TRIPS agreement requires each nation to put in place a domestic legal framework for PVP. The Act has been conceived as a balancing measure to ensure the protection of the rights of farmers and plant breeders. In doing so, unlike many other countries that allow for plant patenting, India has chosen to exclude innovations about plants, seeds and agricultural practices per se from patenting.

The implication is that, as opposed to an exclusive right provided for plant breeders under patent protection, under the PPVFR Act, farmers are given the right “to save, use, sow, resow, exchange, share or sell” a seed variety protected under it, but are restricted from selling a “branded seed” variety protected under the same legislation. This unique sui generis mechanism was established for protecting farmers’ rights. At the same time, the Act allows the breeders to take the legal course of action if a person produces a plant variety registered under it without the permission of its breeder.

With the law aiming to create a delicate balance of rights for both farmers and plant breeders, the larger purpose of innovation in seed technology gets compromised. Innovation and technological advancement in the agricultural sector are the key factors behind bestowing PVP requirement under the TRIPS. But the regulatory dilemma and confusion that get created as in the PepsiCo vs. farmers case could open a Pandora’s box with conflicting contestation regarding the PVP rights. The present popular civil society view of completely diluting the rights of plant breeders and providing complete autonomy to the farmers on seed use could be a regulatory setback and impede much-needed innovation in Indian agriculture. It would also lead to India being perceived as a weak protector of intellectual property rights.

The experience of South Asian countries such as Indonesia, Philippines, South Korea, and the EU nations shows that finding a balance between corporate interest and farmers’ right in plant variety-related IPR remains an elusive pursuit. The International Union for the Protection of New Varieties of Plants (UPOV) consisting of 121 member nations serves as a global model for plant variety protection. But the lack of effective protection for farmers under UPOV makes it an unviable alternative for India.
A practical solution could be to supply high-yielding and quality seeds to farmers through public sector research enhancement programmes. The best example is the development of a genetically modified mustard variety namely Dhara Mustard Hybrid 11 by scientists at Delhi University using government funding. Alternatively, a greater public-private partnership in finding the right balance between the corporate interest and farmers’ rights would help in reducing the conflict due to PPVFR. From a corporate accountability perspective, the multinational food giants holding the PVP rights need to come forward to help farmers in the global South.

Sthanu R Nair
Associate Professor of Economics, IIM Kozhikode
Email: srn@iimk.ac.in 

Deva Prasad M
Faculty of Law,IIM Kozhikode
Email:devaprasad@iimk.ac.in

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