NORTH CAROLINA FARM PARTNERSHIP, NORTH CAROLINA FARM OF WISE,
L.L.C. and NCF INVESTMENTS, L.L.C., Plaintiffs, v. PIG
IMPROVEMENT COMPANY, INC., Defendant
Filed: 16 March 2004
1. Appeal and Error_appealability--denial of preliminary injunction_trade secrets and
An order denying a preliminary injunction was interlocutory but immediately reviewable
because it raised issues of collateral estoppel and trade secrets and affected a substantial right.
2. Collateral Estoppel and Res Judicata_collateral estoppel_preliminary injunction
An Iowa preliminary injunction was not binding on a North Carolina trial court under
collateral estoppel because the Iowa injunction remained preliminary in nature.
3. Injunctions; Unfair Trade Practices--genetic information in pigs--not trade secret--
preliminary injunction denied
Defendant was not entitled to a preliminary injunction to protect the genetic information
in pigs as a trade secret because it failed to provide specific scientific evidence to support its
N.C.G.S. § 66-152(3).
Appeal by defendant from orders filed 10 June 2002 and 3
September 2002 by Judge Howard E. Manning, Jr. in Warren County
Superior Court. Heard in the Court of Appeals 19 November 2003.
Boxley, Bolton & Garber, L.L.P., by Ronald H. Garber; and The
Law Office of John T. Benjamin, Jr., by John T. Benjamin, Jr.,
Parker, Poe, Adams & Bernstein L.L.P., by Jack L. Cozort,
Robert H. Tiller, and John J. Butler, for defendant-appellant.
Pig Improvement Company, Inc. (PIC) appeals orders filed 10
June 2002 and 3 September 2002 denying its motion for a preliminary
In 1996, North Carolina Farm Partnership (NCF), a NorthCarolina partnership, and PIC, a Wisconsin corporation, entered
into a contract whereby NCF agreed to lease pigs and facilities in
Warren County, North Carolina for pig breeding and nursery to PIC.
At the expiration of the lease term, NCF was to retain possession
of the pigs and the facilities, subject to the contractual options
available to both parties on or before the termination of the
Following expiration of the lease on 31 March 2000, NCF filed
a complaint in Wake County, North Carolina on 27 July 2000 alleging
breach of the lease terms by PIC. In its answer and counterclaim,
PIC in turn alleged NCF breached the lease terms by continuing,
after termination of the lease, to use the progeny of [pigs] in
the breeding herd as breeding stock in [NCF's] own herd and/or [by]
transferr[ing] and/or s[elling] said progeny to other herds, rather
than selling said progeny to slaughter as permitted in the lease.
The answer and counterclaim also sought injunctive relief because
[t]he genetics incorporated into [PIC's] breeding animals are
confidential, proprietary and secret information. In January
2001, this case was transferred to Warren County.
While the case was pending in North Carolina, PIC filed a
Petition for Temporary Injunction in Iowa on 26 November 2001.
PIC attached to the motion the 1 November 2001 deposition of Martin
Engel, a NCF partner, stating NCF had placed 450 female pigs,
progeny of the herd inventory under the NCF-PIC lease, in Iowa with
the intent to sell them for breeding. On 26 November 2001, the
Iowa trial court issued a temporary restraining order, enjoiningNCF, [p]ending a final decision of the [c]ourt, . . . from
removing, transferring, or otherwise disposing or selling any of
the 450 breeding females containing [PIC pig] genetic material from
the State of Iowa.
On 7 December 2001, the Iowa trial court held a hearing to
consider whether the temporary restraining order granted on 26
November 2001 should be continued or dissolved. Following the
hearing, the Iowa trial court issued an order on 4 January 2002,
keeping the restraining order in effect. On 22 May 2002, the Iowa
trial court issued an order releasing the earlier injunction bond.
In that order, the trial court further ruled:
[NCF] remain[s] enjoined under the terms
of the January 4, 2002 ruling, which has not
been vacated or modified and was never
appealed. The purpose of a bond is to protect
against potential damages that may result from
a temporary injunction that was improvidently
or erroneously issued and which may be vacated
rather than continued. . . . In spite of what
label one might put on it, a temporary
injunction which, after hearing, was continued
indefinitely and which has never been vacated
or modified and has never been appealed
becomes, for all practical purposes, permanent
NCF appealed, and the Iowa Supreme Court held that the Iowa
trial court abused its discretion when it in effect converted the
TRO [(temporary restraining order)] into a permanent injunction
without a final hearing on the merits. PIC USA v. N.C. Farm
, 672 N.W.2d 718, 723, 726 (Iowa 2003). The Iowa Supreme
Court concluded the TRO remained a TRO.
(See footnote 1)
. at 726.
North Carolina Proceedings
On 12 April 2002, PIC filed a motion for a temporary
injunction in Warren County, North Carolina, alleging NCF:
transferred swine within the [S]tate of North
Carolina . . . and continue[s] to use and sell
[them] for breeding purposes . . . contrary to
the terms of the [lease]. . . . Actions and
conduct of [NCF] . . . are occurring within
the State of North Carolina[,] and it is
appropriate and necessary for the [trial
court] to exercise jurisdiction and issue
appropriate injunctive relief.
The North Carolina trial court requested the parties to submit
arguments on the effect of the Iowa injunctive orders on the North
Carolina action under the doctrines of collateral estoppel and res
judicata. In an order filed 10 June 2002, the trial court denied
PIC's motion for a temporary injunction on the basis that it was
not bound by the 26 November 2001 and 4 January 2002 Iowa orders
since they authorized only a preliminary injunction that did not
result from a trial on the merits.
In an order filed 3 September 2002, the North Carolina trial
court again denied PIC's motion for a preliminary injunction after
addressing two additional grounds relied upon by PIC:
misappropriation of a trade secret and breach of contract. On the
trade secret issue, the trial court concluded:
The [c]ourt accepts PIC's contention, as
supported by the evidence, that each pig
contains unique genetics in its make-up and
that the genetics and breeding processes which
led to the breeding of the pigs containing
such genetics are valuable intellectual
property. However, this fact does not make a
pig a trade secret. Because of the pig's
genetic makeup, it may be a valuable pig, but
it is not a trade secret.
On the contract issue, the trial court concluded NCF was not
restricted in its use of the breeding herd left on the leased
premises at the expiration of the lease.
The issues are whether: (I) collateral estoppel operates to
bar relitigation of the issues addressed in the Iowa orders
granting PIC a temporary injunction and (II) PIC has shown
irreparable harm from the misappropriation of a trade secret.
 An appeal of a denial of a preliminary injunction is
interlocutory and generally not immediately reviewable. N.C. Elec.
Membership Corp. v. N.C. Dept. of Econ. & Comm. Dev.
, 108 N.C. App.
711, 716, 425 S.E.2d 440, 443 (1993) (citing A.E.P. Indus. v.
, 308 N.C. 393, 400, 302 S.E.2d 754, 759 (1983)). In the
case sub judice
, however, our review of PIC's appeal is proper as
it raises issues of collateral estoppel and trade secrets and
consequently affects a substantial right. See McCallum v. N.C.
Coop. Extension Serv.
, 142 N.C. App. 48, 51, 542 S.E.2d 227, 231
(2001) (a denial of summary judgment based on collateral estoppel
may affect a substantial right and is thus immediately appealable);
N.C. Elec. Membership
, 108 N.C. App. at 716, 425 S.E.2d at 443 (an
agency's decision requiring disclosure of documents alleged to
contain trade secrets affects a substantial right and is thus
 PIC first argues the Iowa injunction was binding on the
North Carolina trial court under the doctrine of collateralestoppel.
(See footnote 2)
In its brief, PIC concedes the Iowa court issued a
preliminary injunction yet contends NCF's failure to request
reconsideration of or to appeal the injunction transformed it into
a final judgment on the merits. We note that since the filing of
the briefs in this case, the Iowa Supreme Court has ruled that the
very orders at issue here retained their temporary status and never
became final because they were not based on a hearing on the
merits. See PIC USA, 672 N.W.2d at 726. As the Iowa Supreme
Court's reasoning comports with this State's law on collateral
estoppel and final judgments, we likewise hold that the Iowa
injunction remained preliminary in nature. See State ex rel.
Tucker v. Frinzi, 344 N.C. 411, 414, 474 S.E.2d 127, 128 (1996)
([u]nder the doctrine of collateral estoppel, or issue preclusion,
'a final judgment on the merits prevents relitigation of issues
actually litigated and necessary to the outcome of the prior action
in a later suit involving a different cause of action between the
parties or their privies') (citation omitted); Milner Airco, Inc.
v. Morris, 111 N.C. App. 866, 868, 433 S.E.2d 811, 813 (1993)
([t]he purpose of a preliminary injunction is to preserve the
status quo of the parties pending trial on the merits) (emphasis
omitted). Accordingly, the North Carolina trial court did not err
in concluding that the Iowa temporary injunction has no binding
effect with respect to the issues presented in this case.
 Alternatively, PIC contends it was entitled to a
preliminary injunction because the genetic information contained in
the pigs is a trade secret at risk of being misappropriated by NCF.
The scope of appellate review in the granting or denying of
a preliminary injunction is essentially de novo. 'An appellate
court is not bound by the findings, but may review and weigh the
evidence and find facts for itself.' Wade S. Dunbar Ins. Agency,
Inc. v. Barber, 147 N.C. App. 463, 467, 556 S.E.2d 331, 334 (2001)
(quoting A.E.P., 308 N.C. at 402, 302 S.E.2d at 760). The trial
court's ruling, however, is presumed to be correct, and the
appellant bears the burden to show error. Id.
Trade secret means business or technical
information, including but not limited to a
formula, pattern, program, device, compilation
of information, method, technique, or process
a. Derives independent actual or potential
commercial value from not being generally
known or readily ascertainable through
independent development or reverse
engineering by persons who can obtain
economic value from its disclosure or
b. Is the subject of efforts that are
reasonable under the circumstances to
maintain its secrecy.
N.C.G.S. § 66-152(3) (2003).
The actual or threatened misappropriation of a trade secret
may be preliminarily enjoined during the pendency of [an] action.
N.C.G.S. § 66-154(a) (2003). Because a preliminary injunction is
an extraordinary measure, it is to be issued only upon a showingby the movant that: (1) there is a likelihood of success on the
merits of his case and (2) the movant will likely suffer
irreparable loss unless the injunction is issued, or . . . , in
the opinion of the Court, issuance is necessary for the protection
of his rights during the course of litigation. Investors, Inc. v.
Berry, 293 N.C. 688, 701, 239 S.E.2d 566, 574 (1977). If
irreparable injury is not shown, the preliminary injunction will be
denied. Telephone Co. v. Plastics, Inc., 287 N.C. 232, 236, 214
S.E.2d 49, 52 (1975); see Coble Dairy v. State ex rel. Milk Comm'n,
58 N.C. App. 213, 214, 292 S.E.2d 750, 751 (1982).
In this case, PIC fails to meet the element of irreparable
harm and is therefore not entitled to a preliminary injunction.
An applicant for a preliminary injunction
must do more than merely allege that
irreparable injury will occur. The applicant
is required to set out with particularity
facts supporting such statements so the court
can decide for itself if irreparable injury
Telephone Co., 287 N.C. at 236, 214 S.E.2d at 52; see Coble, 58
N.C. App. at 214, 292 S.E.2d at 751. PIC does not cite, and our
research did not reveal, any cases involving the application of
trade secrets law to animals. Furthermore, PIC provided two
affidavits containing general allegations but no specific
scientific evidence to support those allegations. See Telephone
Co., 287 N.C. at 236, 214 S.E.2d at 52 (the movant was not entitled
to a preliminary injunction because it did not provide information
on how the opposing party's acts affected its income); Coble, 58
N.C. App. at 214, 292 S.E.2d at 751 (unsupported statements in the
affidavits of two employees of a corporation that requested apreliminary injunction were insufficient to show irreparable harm).
PIC's technical director in one affidavit states generally that PIC
has used molecular biological research and . . . selective
breeding to develop favorable traits in pigs and that PIC's
competitors could use the pure-line pigs in NCF's possession to
duplicate those traits. The other affidavit, by a doctorate holder
who provides no information on his specialty and other credentials,
simply states that the breeding of great-grandparent female pigs in
NCF's possession with pure-line boars would produce offspring with
one-half of the positive genetic qualities and characteristics of
On the other hand, NCF provided a detailed affidavit of a
North Carolina State University professor, explaining the current
selection methodology for breeding swine, the feasibility of
obtaining PIC pigs on the market, and the degree of difficulty
competitors would face in attempting to discover and exploit
favorable traits in PIC pigs. The professor, a published Professor
of Animal Science and Genetics, has taught at the university since
1959 and been involved in research in the swine industry for more
than thirty years. According to the professor: selective breeding
is the exclusive method of genetic improvement in the swine
industry and is not a secret; [a]ny competitor could buy a
sample of PIC product on the open market and test against these
pigs; and PIC's competitors would not be able to work backwards
to figure out what [PIC] did to develop [a] pig or to take the
pigs in the possession of [NCF] and determine whether the PIC line
was a superior line of pigs without first performing years oftests.
As PIC fails to show irreparable harm, it cannot overcome the
presumption that the trial court's ruling denying preliminary
injunction was correct. Therefore, PIC's assignment of error is
overruled. We do not address the issue of breach of contract for
the reason that, even if breach of contract were assumed, PIC's
failure to show (1) the existence of a trade secret and (2) the
likelihood of irreparable harm precludes the grant of a preliminary
injunction. See A.E.P., 308 N.C. at 406, 302 S.E.2d at 762
(equitable relief such as an injunction is generally not granted
due to breach of contract when an adequate remedy at law for money
damages is available); Light and Water Comrs. v. Sanitary District,
49 N.C. App. 421, 423, 271 S.E.2d 402, 404 (1980) ([w]here there
is a full, complete and adequate remedy at law, the equitable
remedy of injunction will not lie).
Judges CALABRIA and ELMORE concur.