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1979, he has been the president of Technology Licensing Corporation
and "of counsel" to a patent law firm, Larson & Taylor, in
Arlington, Virginia.
Mr. Parker's expert report and his rebuttal report were limited
to examining the reasonableness of the royalties paid pursuant to
the Tri-Podd license agreement. Mr. Parker began by analyzing the
relevant factors identified in section 1.482-2(d)(2)(iii), Income
Tax Regs. He determined that under the Tri-Podd license agreement,
Powertex received "a can't lose, practically risk free, patent
protected, competitive [sic] free, fully developed, commercially
successful and a higher priced, high profit product together with a
built-in, ready to purchase, large consumption customer." He
concluded that a "high royalty" was warranted.
Mr. Parker calculated a reasonable rate by hypothesizing that
the parties to a licensing agreement would initially determine a
starting value for the royalty rate. The approach he used to
determine the starting value was (1) to evaluate the royalty with
reference to rates for similar patents in similar circumstances, and
(2) to treat the royalty as a direct function of forecasted profits
to be derived from the sale of Amoco liners.
Under the first approach, Mr. Parker considered the
Powertex/Sea-Land license regarding the Sea Bulk patents and the
Powertex/Insta-Bulk sublicense regarding the Sea Bulk patents to be
comparable to the Amoco patents. He concluded, however, that the
Tri-Podd license agreement gave many special advantages not found in
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