By Mayank Bhardwaj and Sumit Khanna
NEW DELHI (Reuters) - An Indian court rejected PepsiCo (NASDAQ:PEP) Inc's appeal against an order that revoked a patent for a potato variety grown exclusively for the New York-based company's popular Lay's potato chips.
The Protection of Plant Varieties and Farmers' Rights (PPVFR) Authority in 2021 revoked intellectual protection granted to PepsiCo's FC5 potato variety, saying that India's rules do not allow a patent on seed varieties.
The authority removed PepsiCo's patent cover after Kavitha Kuruganti, a farmers' rights activist, argued that the company cannot claim a patent over a seed variety.
PepsiCo petitioned the Delhi High Court against the revocation of the patent cover.
In its order dated July 5, Delhi High Court judge Navin Chawla dismissed PepsiCo's appeal against the authority's decision.
"We are aware of the order ... and are in the process of reviewing the same," a PepsiCo India spokesperson said in a statement.
The U.S. snacks and drinks maker, which set up its first potato chip plant in India in 1989, supplies the FC5 seed variety to a group of farmers who in turn sell their produce to the company at a fixed price.
PepsiCo has maintained that it exclusively developed the FC5 variety and registered the trait in 2016. The FC5 variety has a lower moisture content required to make snacks such as potato chips.
In a statement, Kuruganti said: "It is good that the judgement of Justice Navin Chawla upheld the revocation order . . ."
In 2019, PepsiCo sued some Indian farmers for cultivating the FC5 potato variety, accusing growers of infringing its patent. The company also sought more than 10 million rupees ($121,050) each for alleged patent infringement.
Within months, PepsiCo withdrew lawsuits against farmers.
In its order, the Delhi High Court did not uphold accusations of any public interest violation by PepsiCo.
PepsiCo is the second large U.S. company to face patent infringement issues in India.
After a long-standing intellectual property dispute, seed maker Monsanto (NYSE:MON), now owned by German drugmaker Bayer AG (ETR:BAYGN), withdrew from some businesses in India.
($1 = 82.61 rupees)