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under like circumstances. For the reasons set forth below, the
Court disagrees with petitioners' contentions.
First, the principal flaw in the structure of Blythe II was
evident from the face of the very documents included in the
offering. A reading of the R&D agreement and the licensing
agreement, both of which were included as part of the offering,
plainly shows that the licensing agreement canceled or rendered
ineffective the R&D agreement because of the concurrent execution
of the two documents. Thus, the partnership was never engaged,
either directly or indirectly, in the conduct of any research or
experimentation. Rather, the partnership was merely a passive
investor seeking royalty returns pursuant to the licensing
agreement. Any experienced attorney capable of reading and
understanding the subject documents should have understood the
legal ramifications of the licensing agreement's canceling out
the R&D agreement. However, petitioners never consulted an
attorney in connection with this investment, nor did they read
the offering themselves.
Secondly, in making their investment in Blythe II,
petitioners relied on the advice of their accountant, Mr. Meyers;
Mr. Sheets, who was a promoter for the partnership; and
petitioner's brief visit to a local supermarket to determine
whether any women's beauty products actually contained jojoba
plant derivatives. At the time of trial Mr. Meyers was deceased;
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