- 44 -
Kellen exercised Utah I's option under the R&D agreement on
December 31, 1982, when he signed the license agreement. There
is no evidence in the record that any useful technology ever was
developed by U.S. Agri for Utah I under the terms of the R&D
agreement. However, even if any technology had been developed,
under the terms of the license agreement, the licensor, Utah I,
relinquished any control over the technology for a 40-year
period.
Utah I's election, contemporaneous with its execution of the
R&D agreement, to convey the "right to utilize the technology
developed" to U.S. Agri exclusively for a 40-year period reflects
the passive nature of Utah I's investment. Additionally, it is
evident from the words of the R&D agreement that Utah I was not
going to be actively involved in the development of the jojoba
plantation. As section 2 of the R&D agreement states:
The Partnership * * * [Utah I] hereby engages
Contractor * * * [U.S. Agri] to conduct the R&D Program
and Contractor * * * [U.S. Agri] accepts such
engagement hereunder and agrees to use its best efforts
to develop a Jojoba plantation in the vicinity of
Desert Center, California, at a specific location to be
selected by Contractor * * * [U.S. Agri] to be used to
conduct research on the domestication, commercial
cultivation, planting and irrigation techniques, weed,
disease and insect management and harvesting of the
Jojoba plant. Said plantation to be eighty (80)acres.
It is unlikely that Kellen ever intended Utah I to enter into a
trade or business. The contractual arrangements between Utah I
and U.S. Agri made the prospects unrealistic that Utah I would
Page: Previous 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 NextLast modified: May 25, 2011