Agriculture Big Data Legal Issues and Protections: Part 6 – Possible Legal Protections

Written by M. Sean High – Staff Attorney

Contract Protections

The contract between a farmer and an agricultural Big Data company provides the first line of defense for any farmer seeking to determine how their agricultural information may be used. 

As with all contracts, it is important to understand the contractual terms prior to signing the agreement.  Once the contract is signed, the farmer will be bound by the terms of the agreement. 

If a farmer has certain concerns regarding how their agricultural information will be used, those concerns should be spelled out in the contract.  For example, a farmer could specifically prohibit agricultural Big Data companies from providing commodities traders or rival farmers with their individual agricultural information.  If an agricultural Big Data company were to violate such an agreement, the farmer would have the ability to seek damages for a breach of contract.

Pennsylvania Trade Secrets Law

Many farmers worry about unauthorized individuals gaining access to their individual agricultural information.  A statue that could possibly offer protection to Pennsylvania farmers’ is the Pennsylvania Uniform Trade Secret Act (PUTSA) (12 Pa.C.S.A. §§ 5301-5308). 

Enacted in 2004, PUTSA defines a trade secret as information that has economic value from not being generally known and that the owner of the information takes reasonable steps to maintain the secrecy of the information (12 Pa.C.S.A. §5302).  PUTSA makes it a crime for anyone to “misappropriate” a trade secret through improper means or to disclose or use a trade secret without the consent of the owner (12 Pa.C.S.A. § 5302).  If a trade secret is misappropriated, the courts in Pennsylvania have the ability to grant a harmed party: (1) injunctive relief to stop the violation of the owners’ rights and to maintain the secrecy of the information (12 Pa.C.S.A. § 5303); (2) damages (12 Pa.C.S.A. § 5304); and (3) attorney’s fees (12 Pa.C.S.A § 5305).    

To determine what information qualifies as a trade secret, the Pennsylvania courts will look to the following factors: “(1) the extent to which the information is known outside of the company’s business; (2) the extent to which the information is known by employees and others involved in the company’s business; (3) the extent of the measures taken by the company to guard the secrecy of the information; (4) the value of the information to the company and its competitors; (5) the amount of effort or money the company spent in developing the information; and (6) the ease or difficulty with which the information could be acquired or duplicated legitimately by others.” (Bimbo Bakeries USA, Inc., v. Botticella, 613 F.3d 102 (C.A.3 Pa. 2010)). 

Therefore, if it can be established that agricultural Big Data information qualifies as a trade secret, a Pennsylvania farmer may have the ability to bring a civil action against an offending party.  Furthermore, while PUTSA is specific to Pennsylvania, forty states and the District of Columbia have also enacted similar legislation.   

Federal Economic Espionage Act

While Pennsylvania farmers may have state trade secret protection through PUTSA, the federal Economic Espionage Act (EEA) Protection of Trade Secrets (18 U.S. Code §§1831 – 1839) also offers the federal government the potential to criminally prosecute those that steal trade secrets. 

Enacted in 1996, EEA defines a trade secret as all “types of financial, business, scientific, technical, economic, or engineering information...if the owner therein has taken reasonable measures to keep such information secret; and the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public” (18 U.S. Code § 1839).  Under EEA, anyone that “steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains such information” can be fined up to $5,000,000 and/or imprisoned up to 10 years (18 U.S. Code § 1832).

Providing that it can be established that a agricultural Big Data information meets the trade secret definition, and that the theft of that trade secret “is related to a product or service used in or intended for use in interstate or foreign commerce, to the economic benefit of anyone other than the owner,” federal prosecutors could possibly bring criminal charges (18 U.S. Code § 1832).

Insurance Company’s Request For Summary Judgment In Heinz Case Denied

Written by Katharine Richter

U.S. District Judge, Arthur Schwab, denied Starr Surplus Lines Insurance Co.’s (Starr) request for summary judgment against H.J. Heinz Co. regarding an insurance payment dispute.

According to Law360, the lawsuit arose because Starr, as alleged by Heinz Co., “breached its contract in a $25 million-per-occurrence product contamination by refusing to pay for damages after China’s food control agency found high levels of lead in high-protein dry baby cereal sold in China.”  Starr filed a counterclaim, alleging that Heinz misrepresented material facts pertaining to previous contamination incidents, therefore rendering the contract null.  This case is being decided under New York law and coverage cannot be denied to Heinz unless it is found that the misrepresentation by Heinz is material.  Starr claims if they had known about these previous incidents, they would not have extended the policy to Heinz Co.  If Starr is able to establish this, the facts will be considered material.  Heinz argued that any omission of the facts was because Starr failed to ask for it.

Schwab found there were still issues of fact that needed to be resolved which made summary judgment inappropriate.  According to the legalintelligencer, the specific issue that needs to be determined is whether the misrepresentations by Heinz Co., if there were any, were material and should be determined before a jury.  

Kraft Ordered to Fulfill Turkey Meat Contract

Written by Katharine Richter

On September 29, 2015, Philadelphia Court of Common Pleas Judge, Patricia A. McInerney granted the plaintiffs, Mrs. Ressler’s Food Products Co., a temporary restraining order and preliminary injunction against Kraft Heinz Foods Company.

The lawsuit arose when Kraft reduced its sale of turkey breast to Mrs. Ressler’s Food Products Co., a family-owner meat processor, by 10% and then ultimately suspended shipment.  In September, Kraft informed Mrs. Ressler’s they were suspending all turkey sales indefinitely.  According to the complaint filed by the plaintiffs, the reduction in turkey sales was an attempt to force Mrs. Ressler out of business.  The contract formed in late 2014 had Kraft agreeing to provide Mrs. Ressler’s with 4 million pounds of turkey breast through 2015.  This would amount to 40% of Mrs. Ressler’s turkey supply.  The contract would cost Mrs. Ressler no more than $2.70 per pound for turkey breast, but instead of supplying the company, the complaint stated, Kraft was using the turkey meat for its own products as well as selling it in the open market for a price of $5.70 per pound.

Kraft argued that that due to the avian outbreak, it had to reduce turkey breast sales and further, that the cut posed no threat to Mrs. Ressler’s.  Mrs. Ressler argued they were both economically harmed by relying on the contract as well as loss of reputation by not being able to satisfy customer orders. 

Additional documents relating to this case can be found here, by searching under the court records tab, civil dockets and searching plaintiff's name, "Mrs. Ressler’s Food Products Co."

Avian Influenza Struck Egg-Layer Farm Company Hit with Breach of Contract Lawsuit

  On June 26, 2015, Michael Foods Egg Products Co. filed suit against Hawkeye Pride Egg Farms, LLP, in the United States District Court for Southern District of Iowa.  The claim alleges Hawkeye Pride breached a January 2014 contract in which they were to supply eggs to Michael Foods.  Michael Foods is claiming they suffered irreparable harm and are seeking injunctive relief enjoining Hawkeye from breaching the contract and judgment for damages sufficient to compensate plaintiffs for the breach as well as interest and costs.

  The case was brought into federal court and the exact amount of damages requested is unknown.  The contract at issue has been sealed and is unavailable for viewing. 

  Michael Foods is a subsidiary of cereal producers Post Holdings Inc., and supplies liquid and precooked eggs products primarily.  Hawkeye Pride, located in Iowa, is a division of Center Fresh Group which owns egg farms in Iowa.  Center Fresh Group has lost approximately 7 million chickens in Iowa to Avian Influenza, 5.5 million of which were egg-laying hens.

  The death of more than 30 million laying hens in Iowa has contributed to a deficit in egg availability.  In a USDA report released June 22, 2015, Iowa egg production during May 2015 was 1.03 billion eggs, which is the lowest egg production since February 2005.  The average amount of layers for May 2015 was 44.2 million, this is the lowest inventory since May 2004.      

  Those with access can view Docket No. 4:15-cv-187 at PACER. 

Written by Katharine Richter - Research Assistant

July 2, 2015