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analysis to reach their conclusions. We were not surprised that,
using the same methodology, they reached results on opposite ends
of the spectrum and that the results each reached favored the
party that paid his fees.18 The difference in the values
advocated lies in the differing assumptions and variable factors
used by each expert in his analysis. Respondent’s experts
premised their choices of rates and factors on beliefs that the
DHL name had high marketplace recognition for quality and had
become an important factor in the success of the DHL network and
constituted a desirable and valuable asset.
One of respondent’s experts began his computation by
conducting a discounted cash-flow analysis to determine whether
18 Cf. Nestle Holdings, Inc. v. Commissioner, 152 F.3d 83
(2d Cir. 1998), revg. and remanding T.C. Memo. 1995-441. That
case involved the valuation of trademarks and trade names, and
the court described the relief-from-royalty method as follows:
Underlying this methodology is the view that the only
value a purchaser of a mark receives is relief from
paying a royalty for its use. Using this model, the
fair market value of a trademark is derived by
calculating the net present value of the stream of
royalty payments from which the purchaser of a mark is
relieved. This stream is calculated by (i) determining
if the trademarks are profitable, or capable of being
licensed, (ii) picking a royalty rate for each
trademark, and (iii) multiplying this rate by the
estimated revenue stream of the product associated with
the mark. * * *
Id. at 87-88. After describing the relief-from-royalty
methodology, the Court of Appeals expressed disagreement with its
use in arriving at a trademark’s fair market value because, in
the court’s view, it understates trademark value. Any appeal
from our decision in these cases would be to the Court of Appeals
for the Ninth Circuit.
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