Dharma Enterprises - Page 29

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          by the Nyingma Institute diminish the value of petitioner's right           
          to market SMMT.  Petitioner's expert did not specifically value             
          petitioner's right to market SMMT.  As we have no other                     
          appropriate basis to evaluate this licensed asset, we accept                
          Spiro's valuation of the SMMT marketing right.                              
               AVG also valued the computer software using the replacement            
          cost method and determined that the value of customized software            
          was $20,000, based on the cost of similar software, for an annual           
          value over a 5-year useful life of $4,000.  Maitland believed               
          that comparable off-the-shelf software would have cost between              
          $60,000 and $70,000.  However, petitioner did not consider                  
          purchasing software from another company.  DM did not provide               
          technical support for the software.  This decreases the value of            
          the software because petitioner had to update the software                  
          itself.  We believe that AVG's valuation of the software is more            
          reliable than Maitland's uncorroborated testimony and accept                
          AVG's valuation.                                                            
               Second, AVG relied on a market comparison to determine fair            
          market royalty payments for the licensed trade names and                    
          trademarks.  For the comparison, AVG considered royalties paid              
          for instant-print or quick-print franchises.  It identified the             
          various assets received under these franchise agreements and                
          compared the quick-print franchises with the license agreement              
          only to the extent of the licensed trade names and trademarks.              
          Royalty rates associated with trade names and trademarks                    
          represent the costs incurred by the franchisors to maintain the             


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Last modified: May 25, 2011