- 38 -
opinion of one expert over another, but may extract relevant
findings from each in reaching our own conclusions. Chiu v.
Commissioner, 84 T.C. 722, 734 (1985).
We find significant errors in the approach of each of the
parties' experts in determining a reasonable royalty rate. For
example, Mr. Parker proceeded under the assumption that a
prospective licensee would have no doubts as to the validity,
enforceability, and ownership of the Amoco patents. He made no
attempt to quantify the differences between the licenses of the Sea
Bulk patents and the license of the Amoco patents.
Mr. Thomas relied on the license of the Amoco patents by
Powertex to Insta-Bulk in settlement of their litigation as a
sufficiently similar transaction involving an unrelated party. As
we noted above, however, the fact that this license was granted in
settlement of litigation prevented it from being a sufficiently
similar transaction for purposes of section 1.482-2(d)(2)(ii),
Income Tax Regs. Additionally, we are puzzled as to his decision to
examine the factors found in Georgia-Pacific Corp. v. U.S. Plywood
Corp., 318 F. Supp. at 1120, instead of those enumerated in section
1.482-2(d)(2)(iii), Income Tax Regs. Although some of the Georgia-
Pacific Corp. factors are similar to those listed in the regulation,
several are not. For example, the Georgia-Pacific Corp. factors
include the derivative effect of selling the patented product in
promoting sales of other products of the licensee and opinions from
expert witnesses, factors which are not included in the regulation.
Page: Previous 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 NextLast modified: May 25, 2011