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(compact disk read-only memory).5 Moreover, computer programs
can be received preinstalled on a computer's hard disk drive
(internal storage device) and can be transferred from one
computer to another via electronic transmission over telephone
lines without the use of intervening tapes and disks. Although
telephonic transmission was technologically possible during the
years in issue, it was slow and unreliable and, therefore, was
not a feasible method of transferring a large computer program.
All of the software in issue was delivered to petitioner as
computer programs encoded on magnetic tapes and disks. The
software was purchased separately from computer hardware.
Petitioner's Software Expenditures
All of the software expenditures in issue were for software
developed by third parties and sold to members of the Norwest
affiliated group for use in their banking and financial services
operations. The software was either of a type available to the
general public or a specialized type of software used by
financial institutions like petitioner. The software was sold
subject to license agreements that entitled petitioner to use the
software on a nonexclusive, nontransferable basis for an
indefinite or perpetual term. Petitioner did not purchase any
exclusive copyright rights or other intellectual property rights
5 Although CD-ROM technology had been developed, it was not
widely used as a means of distributing software during the years
in issue. Further, during the years in issue, punch cards had
become obsolete.
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Last modified: May 25, 2011