Pepsico Farmer Row Highlights the Lacunae in IPR laws.


PepsiCo’s infringement suit against the farmers who have been accused of illegally cultivating a licensed variety of potato used for PepsiCo’s chips brand, “Lays”. “Lay off”, is the hottest topics around Legal media these days.

Who is the rightful owner of the potato variety, FL 2027? Is it the farmer who bought, planted, harvested the potatoes from his own farm, or is it the innovator who cross-bred and modified the potato to have a low moisture content for crispier chips? The question here is who should be the rightful bearer of rights is central to the conduct of liberal democracies and free markets.

There was a time when, transnational corporations were the biggest votaries of a free-market economy (or so we thought). They wanted a level playing field, wanted trade barriers to be removed so that every corporation, irrespective of their country of origin, could participate freely without being discriminated against. This is the kernel of the GATT agreement and the driving logic of the WTO. So, why can’t the farmer be left free to cultivate a variety of potato that he considers as a profitable proposition? In this “free world”, why is it that a PepsiCo India feels emboldened to take away this freedom from nine farmers?

The dominant framework of international intellectual property (IP) law — TRIPS (Trade Related Aspects of Intellectual property Rights) and the UPOV (Union for the Protection of Plant Varieties) — gives plant breeders exclusive rights over the varieties they develop, and mostly disregards customary rights of indigenous and farming communities to their genetic resources and associated knowledges. This bias has percolated to various national laws, rendering ownership claims of farmers subordinate to corporate breeders’ rights.

Unlike other realms of IP, the biological realm is self-propagating. The technology of propagation is not external but internal to the plant system. Therefore, it is never rational for a farmer, as Berland and Lewontin point out, to pay a second time for something he has already bought and still possesses in the form of his seed crop. This creates a barrier for full commodification and monopoly profits. So, in order to prevent free replication of seeds, IP law creates enclaves of prohibition and protection, making the farmer’s natural right to save, re-use and sell seeds illegal in many countries.

Recognising the bias in international law, the Indian PPV & FRA law (2001), entitles not just the breeder but also the farmer. The conjoining of the two rights, it was argued, would facilitate the growth of the seed industry, ensure the availability of high-quality seeds, as well as secure the livelihood and plant varieties of the farmers. Accommodating these twin purposes meant granting recognition of the proprietary claims of both the farmers and breeders, more accurately, of farmers as breeders (Section 2(c)). It gives the farmer the right to “save, use, sow, re-sow, exchange, share or sell” produce/seeds (S. 39 (1)(iv)). Importantly, the Indian farmer is permitted to even “brown bag seeds” — sell any variety of seed on the condition that they are sold in an unbranded form. This means that the nine farmers were well within their rights to cultivate the potato FL 2027 variety without entering into a licencing or technology agreement with PepsiCo.

With the farmers refusing to back down, and with PepsiCo now offering an out-of-court settlement, the latter has effectively withdrawn the threat of the infringement suit. Perhaps it was never about legality, just brute economic might masquerading as legality. That PepsiCo was on weak legal ground may have been a matter well-known to its lawyers. But interestingly, even the worst-case scenario may have held the promise of dividends. How a legal provision plays out is seldom a foregone conclusion. It is contingent on a number of factors coming together — political, legal, financial, media attention, to name just a few — not an easy conjuncture to replicate, especially for the small guys. A precedent like this will always hang like a sword, possibly deterring future farming of these “hot potatoes”.

Indian law grants the farmers and breeders co-equal rights. But the PPV&FRA law is mired in conflicting claims and jurisdictions, may not be able to enact a similar redress in future contests. Beyond legalities, it’s time we, as a society, understood a simple truth — unfettered IP rights will always have the capacity to hurt the small farmers. It’s time we understood that they also serve who only stand and wait. Put contextually, they also innovate and earn from what they cultivate.

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