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Commissioner, T.C. Memo. 1997-314; Provizer v. Commissioner, T.C.
Memo. 1992-177. Consistent with this expert testimony,
petitioners stipulated that information published prior to the
Plastics Recycling transactions indicated that several machines
capable of densifying low density materials were already on the
market in 1981. Moreover, the Northeast offering memorandum
disclosed that FMEC could encounter significant competition, and
that PI did "not intend to apply for a patent for protection
against appropriation and use by others." Consequently, any
unique capabilities of the Sentinel EPE recycler were subject to
appropriation, and any competitive advantage derived therefrom
would likely have been short lived. As an experienced business
executive, petitioner knew or should have known that in the
absence of patent protection, even if PI's machine had possessed
advantageous design capabilities, those capabilities would soon
have been incorporated into the designs of competitors if the
characteristics of the PI machine had been of significant
commercial value.
The offering memorandum also disclosed that "competition
could adversely affect the amount of Additional Rent which the
[recyclers] are anticipated to produce". This admission
undermines petitioner's argument for a purported fair market
value for the machine based upon a projected stream of royalty
income. See Provizer v. Commissioner, supra. In his testimony,
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