FALL 2010

Trade Secrets

 

Course No. 9200-704 (& 804)-801

ID No. 85737 & 85736

Time:  W 6:30 - 9:30 p.m.
Room:  W-215
Professor Jay Dratler, Jr.
Room Across from 231D (IP Alcove)
Home: 330-835-4537
Copyright © 2000, 2002, 2003, 2006, 2008, 2010   Jay Dratler, Jr.   For permission, see CMI.

Questions and Notes on Rice Researchers, Inc. v. Hiter


1.  Hiter is an odd trade-secret case for a number of reasons.  First, there is the evidence.  After reading the appellate opinion, do you agree with the court's conclusion that Williams got Kokuho Rose rice only from the abandoned field?  If you had been the trier of fact, would you have found as the chancery court had?

As this case illustrates, it is very hard to overturn factual findings on appeal, for appellate courts do not sit to re-try issues of fact.  See Fed. R. Civ. P. 52(a) (in part: "Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses").  Some appellate courts, however, reduce the deference they pay to lower courts' factual findings when the lower court appears to have adopted wholesale findings advanced by an advocate of one of the parties.  Should this appellate court have been less deferential for that reason?  Or were the factual findings of the chancery court well within the "range of reasonableness" in which appellate courts should not (and usually do not) substitute their judgment for the trial court's?


2.  The most interesting questions raised by this case relate to trade secrets.  What precisely was the alleged trade secret?  the rice itself?  its existence?  its genetic constitution, or what today we would call its "DNA sequence"?  Look at the definition of "trade secret" in the UTSA.  Does the word "rice" or "seed" appear there?  Is any of the specific words in the definition capable (without stretching) of being construed to cover grains of rice?  Did the court or the parties confuse intangible information with tangible property?


3.  At our present state of knowledge of biotechnology, scientists often need to have a seed or cell line in tangible form in order to propagate a plant or animal or to study the cells' offspring.  Without the seed or cell, the uncertainty inherent in biological experimentation makes further experimentation difficult or impossible.  Although some day the genetic information in the seed or cell (i.e., the DNA "sequence") by itself may be suffiicient, today it ordinarily is not.  When experimentation cannot proceed without actual seeds or cell lines, is it appropriate to consider the tangible seeds or cells to be "trade secrets," or should they be considered tangible property, just like any chattel?

In Moore v. Regents of the University of California, 51 Cal. 3d 120, 124-125, 271 Cal. Rptr. 146, 793 P.2d 479, 15 U.S.P.Q.2d (BNA) 1753 (1990), a patient sued to assert a property interest in cells taken from his body, allegedly without his fully informed consent, after the University had patented the cells and they appeared to be useful in possibly lucrative medical research on hairy-cell leukemia.  Although the court recognized a possible cause of action against the doctors for breach of fiduciary duty in failing to get the patient's fully informed consent, it rejected "extending" the tort of conversion to give the patient a property right in his cells.  See id., 51 Ca. 3d at 142-143, 147.  Does this case suggest that the law relating to information or to duties or confidence is more relevant in cases involving biotechnology than traditional property concepts?  Does Hiter support the same conclusion?


4.  Suppose Williams had been able, using his notes on the structure of DNA in Kokuho Rose rice, to re-create the strain by synthesizing the necessary portions of the plant's DNA and inserting the relevant genes in another rice plant.  Or suppose he had simply re-created the strain by re-doing his cross-breeding experiments.  If he had taken either such approach, would/should he have been liable for misappropriating RRI's trade secrets?  If so, how long would/should an injunction against him last?


5.  Wasn't this case really about competition?  In 1968, Williams had transferred all his right, title, and interest in Kokuho Rose rice to RRI—a transfer on which PIRMI and Nomura later relied in creating the joint venture.  What did this transfer mean?  Although the contractual language is awkward, wasn't it clear that the goal of the parties was to give RRI, PIRMI and Nomura exclusive rights to the rice?  If so, for how long?

Is it possible to transfer exclusive rights of that sort without some kind of government grant, such as a patent or plant variety certificate?  (A certificate of plant variety protection is a limited method of protecting varieties of seed plants, such as rice; it resembles a patent in certain limited respects.  See 7 U.S.C. §§ 2402, 2483.)

In the absence of that sort of valid government protection, isn't an agreement like Williams' a naked covenant not to compete?  If construed as such, was there any time limit on the covenant?  If not, wouldn't the covenant be unenforceable even under the rule of reason?  Was there then a method in the court's madness all along?  If the litigants did not mention the question of competition, which seems to be at the heart of the matter, should the court have done so sua sponte?  Does this case suggest that difficult questions of trade secrecy often, even usually, involve questions of competition?  

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