Impact Research Corporation, Joan C. Benz, Tax Matters Person - Page 13




                                       - 13 -                                         
          did Systems provide written periodic reports to RIC; however,               
          Systems did provide a final report to both IRC and RIC.  Systems            
          conducted frequent meetings with Gould and invited shareholders             
          of IRC and RIC to discuss the progress of the research.  None of            
          IRC’s or RIC’s shareholders became actively involved in, or                 
          monitored the substance of, Systems’ research.  However, one                
          shareholder, Paul Smith, traveled once to Utah where the actual             
          research was being performed.                                               
               The R & D Agreement further provides that IRC and RIC                  
          acquired proprietary rights in the results of Systems’ research             
          activities as follows:                                                      
                    6.01.  Ownership in IRC [and RIC].  IRC [and RIC]                 
               shall have the full exclusive right, title and interest                
               in and to all knowledge, developments, techniques,                     
               processes, discoveries, inventions, improvements,                      
               devices, designs, apparatuses, practices, methods,                     
               products and trade secrets of whatever nature, whether                 
               or not patentable, that are perfected, devised,                        
               conceived, developed, acquired or reduced to practice                  
               in performance of the [R & D] Agreement; provided,                     
               however, IRC’s [and RIC’s] rights in Preexisting                       
               Research shall be as provided in Section 3 hereof.[12]                 
          The research under the R & D Agreement was not intended to, and             
          did not result in, any commercially viable product.13                       




               12Sec. 3 of the R & D Agreement was not offered and received           
          into evidence.                                                              
               13Petitioners ask us to make this finding.  Respondent does            
          not object.  We treat this as the equivalent of a supplemental              
          stipulation.                                                                





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