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The above payments constituted the following percentages of
the total worldwide royalty payments received by petitioner with
respect to the software:
Total Royalty
Year Percentage Payments Received
1987 93.89 $3,817,182
1988 95.94 5,320,816
1989 94.93 5,421,908
1990 95.60 4,987,662
Royalty Payments Received by Petitioner from SDI USA
During the years in issue, petitioner was a party to an
exclusive license agreement with SDI USA, dated October 1, 1972,
and as modified from time to time, regarding the use and
licensing of the software in the United States (the U.S. license
agreement).4 SDI USA was responsible for the direct marketing
and sales of the software in the United States.
The U.S. license agreement provided in part:
2.1 In consideration for the payment of the
royalties provided hereunder and the performance of the
other terms and conditions hereof by [SDI USA],
[petitioner] hereby grants and transfers to [SDI USA],
upon the terms and subject to the conditions
hereinafter set forth, the exclusive right and license
during the Term hereof, to have disclosed to it by
[petitioner] and to exploit, use and lease and
otherwise obtain the benefit of [the software] within
the Territory.
4 At the time this agreement was executed, petitioner was known
as Software Design Sebas B.V. (later known as Software Design
Dervis B.V.), and SDI USA was known as Software Design, Inc.
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