28 



Mr. Chairman, this concludes my statement. My associates and 

 I will be pleased to respond to any questions that you or the com- 

 mittee might have. 



[The prepared statement of Mr. Clayton appears at the conclu- 

 sion of the hearing.] 



Mr. Stenholm. Thank you very much. 



One scenario that has come to my attention would be a company 

 has contracted with a group of growers to produce seed. The com- 

 pany doing the contracting for the variety either through a guess 

 of the market, a change in the market, weather, et cetera, suddenly 

 finds that they have way more seed than they have a market for 

 and, therefore, default on certain contracts. Under the bill what 

 would happen to the individual producer? 



Mr. Clayton. I think, Mr. Chairman, if I understand the sce- 

 nario you have laid out, the 



Mr. Stenholm. Let me say I am company x. I have contracted 

 with you to produce seed for me, and I have agreed to buy your 

 seed, but for circumstances beyond anyone's control there is no 

 longer a market, and, therefore, I cannot honor my contract. I 

 would like then to take the seed and sell it, but under the bill, as 

 proposed, that would be illegal, would it not? 



Mr. Evans. The Senate has proposed an amendment which 

 would allow you, the grower — if the company refused to accept it, 

 would allow the grower to take possession of that seed and sell it. 



Mr. Stenholm. I don't believe the Senate amendment quite spe- 

 cifically says that. But what I am asking, would the administration 

 be amenable to an amendment that would provide that, under the 

 circumstance that I have described in which there is a default of 

 a contract, that an individual grower could then in turn sell the 

 seed without breaking the law? 



Mr. Clayton. Mr. Chairman, I think if we move too far in that 

 direction we do run some risk of being inconsistent with the UPOV 

 convention. 



One way that you might play out your scenario, of course, is that 

 in that circumstance, if the grower were to receive permission from 

 the owner of the variety, then certainly the grower would be able 

 to sell that seed. We are assuming here, of course, we are talking 

 about a protected variety of seed, I would guess. 



Mr. Stenholm. We are assuming a protected variety, and we are 

 assuming only one assumption. And that is I, as a grower, have 

 had a contract to sell which has been defaulted, and, therefore, I 

 cannot receive compensation for whatever reasons. I cannot receive 

 compensation for my contract. I still have the seed. 



Under that narrowly defined scenario — and perhaps you don't 

 want to answer it any further today, but as we move to markup 

 of the bill I think this is something that we do need to consider 

 making some clarifying statements even regarding the Senate- 

 passed language. 



Mr. Clayton. Well, certainly, we would be happy to work with 

 the committee as you look at possible language. 



I would just observe, I think there probably are two issues inher- 

 ent in the question or the scenario that you have laid out. One is 

 an issue of breach of contract, and certainly there are remedies 

 available in situations where contracts have been breached. 



