The patties are light yellow and spotted with light olive-green dots, just like SpongeBob. They are normal Krabby Patties that went "stale" and are poisonous to eat. This is what gave them their color.
Role in episode
They are accidentally invented when Mr. Krabs wants more room for the SpongeBob ice cubes as part of the Krusty Sponge restaurant. He thinks that they look like SpongeBob and tells Squidward, the new fry cook, to cook them instead of the normal ones.
When a Krusty Sponge customer eats one, they become yellow with green spots similar to SpongeBob's holes and have a stomach ache. Eventually, an agent catches Mr. Krabs and he is sent to court.
Mr. Krabs says that the Spongy Patties are Krabby Patties that were left out for awhile. In the episode "Born Again Krabs," another Krabby Patty was left out but it was old and crusty (the color of it was gray), unlike the Spongy Patty.
Ironically, in that episode, Mr. Krabs himself becomes poisoned by eating it.