PepsiCo, Inc., a renowned American multinational food, snack and beverage corporation, applied for registration of its potato variety FL-2027 on February 18, 2011, with the Protection of Plant Varieties and Farmers’ Rights (PPV&FR) Authority (hereafter “the Authority”) to secure its intellectual property rights in India. On February 01, 2016, a certificate of registration was issued by the Authority. On June 17, 2019, Kavita Kuruganti, a famous farmers’ rights activist, filed an application for revocation of registration on the ground that registration was based on incorrect application details and was granted to a person not eligible for protection, also the grant of registration not being in the public interest. After hearing both parties, the Authority revoked the registration of the plant variety registration of PepsiCo., under section 34(a), (b), (c) and (h) of the PPV&FR Act. Being aggrieved by the order of the Authority, PepsiCo filed an appeal against the order at the Delhi High Court. The learned single judge upheld the revocation. PepsiCo preferred the present appeal to the Division Bench of Delhi High Court.
In the present case, the key issues before the Court were whether the submission of incorrect information relating to the date of first sale of the candidate variety by PepsiCo, as well as its failure to provide the requisite documentation at the time of registration, are appropriate ground for revocation of its registration under section 34 (a), (b) & (c) of the PPV&FR Act. Also, whether the act of PepsiCo for instituting various suits against farmers is not in the public interest, therefore, the certificate of registration granted is liable to be revoked under clause (h) of Section 34 of the PPV&FR Act.
Decision of Learned Single Judge
In the impugned judgement, the learned single judge held that as the certificate for registration was ultimately granted under the ‘extant’ category,’ therefore the appellant PepsiCo could not have been held guilty of having obtained the registration by providing incorrect information on the category of candidate variety in the application form and thus it could not be a ground to revoke the registration under section 34 (a) of the Act. However, since the applicant had made a bona fide mistake by providing an incorrect date of commercialisation of the variety, the learned single judge in the impugned judgement held that the date of the first sale of the variety is important and material information for the application. It is the duty of the applicant to provide correct information in the application, failing which it opens itself up to revocation of the registration granted under section 34 (a) of the Act. Also, PepsiCo, during the prosecution of the application, did not file any document that it is authorised to file the application as an assignee; therefore, the learned single judge in the impugned judgement upheld the revocation of registration granted under section 34 (b) of the PPV&FR Act. Regarding section 34 (c) of the PPV&FR Act pertaining to the issue of the assignment deed not being signed by the breeder and being insufficiently stamped, the learned single judge in the impugned judgement held that the appellant PepsiCo filed the amended application without rectifying the error therefore, the application filed by the appellant contains deficiencies and the Authority, under section 34 (b) and (c) of the Act, was justified in revoking the registration granted. Regarding section 34 (h) of the PPV&FR Act pertaining to the issue that PepsiCo had instituted various suits against innocent farmers, the learned single judge in the impugned judgment decided the issue in favour of appellant PepsiCo and decided that mere filing of litigations by the appellant-respondent against the farmers cannot be construed that registration not being in public interest therefore the PPV&FR Authority erred in revoking the registration under section 34 (h) of the PPV&FR Act.
In the present case, two cross-appeals were filed by PepsiCo India Holdings Pvt. Ltd. (hereafter “the appellant-respondent”) and Kavita Kuruganti (hereafter “the respondent-appellant”) against the learned Single Judge judgement dated July 05, 2023. After hearing both the parties and based on the review of the impugned judgement of the learned single judge, the Court observed that as per paragraph 48 of the impugned judgement, there did not appear to be any dispute that FL 2027 was an extant variety. Also, in paragraph 57 of the impugned judgment, it was observed that PepsiCo had nothing to gain by representing FL 2027 as a new variety. In view of the above, the Court observed that the appellant-respondent could not be held guilty of having obtained the registration by furnishing an incorrect declaration on the category of candidate variety. It was a clerical error noticed by the Registrar, and registration was granted in the correct category. Therefore, this is decided in favour of the appellant-respondent. After examining the records of the PepsiCo application, the Court observed that the prescribed rigorous registration process was followed before the granting of registration. In view of the above, the principal issue for consideration before the division bench is the scope and intent underlying section 34 and identifying the circumstances which would warrant the power of revocation being invoked, as exercised by the Authority.
After a close reading of Section 34 (a)-(e) of the PPV&FR Act, the Court establishes that these clauses are concerned with the inherent invalidity of the grant and specify grounds which would have a material and foundational impact on the validity of the grant. Therefore, the Court decided that section 34 power is neither intended to be exercised nor would it be attracted at the slightest infraction. Section 34 (a) and (b) would be merited when the Authority finds that circumstances and facts evidence that registration could not have been granted at all. Section 34 (c) says that the breeder has failed to provide the information and documentation that would have a material bearing on the grant itself. In view of the above, the power of revocation would thus be confined only to situations where it is found that the grant has come to be made in favour of a person or variety which was ineligible or where a variety which was otherwise not entitled to be registered has been accorded protection. To substantiate its decision on the issue of incorrect information furnished by the appellant-respondent, the Court referred to the Delhi High Court Division Bench judgment in Koninklijke Philips Electronics N.V. vs Maj. (Retd) Sukesh Behl & Anr. (CS (OS) No. 2206 of 2012), where it was held that revocation is not automatic, and it would follow only if the Court believed that omission to furnish the information was deliberate.
In the present case, although PepsiCo had repeatedly ticked the box meant for the new variety, it had clearly communicated in response to the Registrar’s letter dated June 09, 2011, that it was seeking registration of FL-2027 under the extant category. Therefore, the Court concurred with the findings of the learned single judge that registration was not liable to be revoked under section 34 (a) of the PPV&FR Act. The Court disagreed with the conclusion drawn by the learned single judge that incorrect disclosure of the date of the first sale of candidate variety would materially affect the grant and observed that PepsiCo would not derive any benefit in making a deliberate or conscious declaration of the date of first sale as December 17, 2009, as the variety is still eligible for registration and it would also not affect the term of protection. Therefore, this issue is also decided in favour of the appellant-respondent. Further, the Court observed that section 2(j) and section 15(3)(a)(ii) pertain to novelty clauses with respect to new varieties and are not relevant to extant varieties. Therefore, the Court disagrees with the possibility of PepsiCo having made declarations with respect to the first sale, bearing in mind the language in which Section 2(j) of the Act stands couched. Also, the Court is not satisfied with the submission of respondent-appellant that the absence of a formal assignment by FLNA in favour of PepsiCo was fatal to the application. The Court observed that section 16(1)(c), read with clause (e), empowers the assignee of the breeder, FLNA in the present case, to authorise PepsiCo to seek registration of FL2027 under the Act, thus obviating the requirement of the original breeder signing the application. In view of the above, the Court decides that neither the application nor the ultimate grant suffers from fundamental misdeclaration or a failure to provide information as required by the provisions of the Act read along with the Rules. Therefore, the revocation of registration under sections 34(a), (b), and (c) is not sustainable and is liable to be quashed. Also, the respondent-appellant failed to discharge the burden that suits filed by the appellant-respondent are intimidatory or vexatious. Therefore, revocation under section 34 (h) is also unsustainable and liable to be quashed.
Decision of Division Bench
The Division bench of Delhi High Court consisting of Justice Yashwant Varma and Justice Dharmesh Sharma had decided that the learned single judge in the impugned judgement rightly concluded that the mistake of styling the candidate variety as new variety is remediable and not fatal since the Registrar itself had decided to process the application under extant category. The Court also affirmed the impugned judgement in so far it negatived the challenge based on section 34 (h). However, the Court does not uphold the view of the learned single judge pertaining to the incorrect mention of the date of the first sale as well as a conclusion drawn on the ineligibility of PepsiCo to apply for registration and non-submission of relevant documentation. The appeal of PepsiCo is allowed, and the impugned judgment and order dated July 05, 2023, is set aside to the extent mentioned above. Consequentially, the order of the Authority dated December 03, 2021, and the letter issued by the Authority on February 11, 2022, is also annulled. The application for renewal of registration made by the appellant-respondent dated January 28, 2022, shall stand restored and will be proceeded by the Registrar in accordance with the prescribed law.
In the present case, the division bench of Delhi High Court decided that a registration certificate issued under the PPV&FR Act is liable to be revoked under section 34 of the Act only if the error noticed is fundamental, deliberate, or intentional. Accordingly, in future, the Authority should use such discretionary powers only if the deficiencies pointed out go to the very root of the registration and cloud the eligibility of the applicant. The examination process of the application at the Registry of the Authority should be done diligently to avoid such clerical errors, and the applicant must follow the prescribed procedures to comply with the requirements of the Act. Also, the Authority should take effective measures to promote the enforcement of plant breeders’ rights granted under the Act and should create awareness among the farmers about the provisions of the Act. It would help promote plant variety registration in India so that improved crop varieties would reach the farmers and ultimately boost the agricultural economy of India.
Authors: Manisha Singh and Vijaya Choudhary
First Published By: Mondaq Here