- 39 -
Finally, Mr. Thomas' basic approach was to rely on the
Powertex/Insta-Bulk settlement license of the Amoco patents as
evidence of a "clearly arm's-length transaction." He then pointed
to the advantages inherent in the Tri-Podd license agreement as
justifying a royalty of "greater than * * * 11% * * * probably 15%",
with no effort to quantify the effect of the asserted advantages.
As to Mr. Goldscheider, his entire opinion is grounded on Mr.
Lutzker's opinion that the Amoco patents are invalid, unenforceable,
and owned by Powertex. He made no attempt to evaluate the relevant
factors identified in section 1.482-2(d)(2)(iii), Income Tax Regs.,
and his reports added little to what was provided by Mr. Lutzker.
Moreover, we found Mr. Goldscheider's demeanor at the trial to take
away from his credibility, as he acted more like an advocate, rather
than the independent and detached professional that he should have
been.9
Consequently, we will evaluate the appropriate factors set
forth in section 1.482-2(d)(2)(iii), Income Tax Regs., in order to
9 In a previous case before a Federal District Court in Texas,
Mr. Goldscheider offered expert testimony on the subject of what
a reasonable royalty would be and the judge in that case
commented that Mr. Goldscheider's credibility was adversely
affected due to his appearance as an advocate rather than a
detached expert. Kerwit Medical Prods., Inc. v. N & H
Instruments, Inc., 224 U.S.P.Q. 679, 691 n.6 (N.D. Tex. 1984).
We will tolerate no less than detached neutrality from an expert
witness. See Estate of Halas v. Commissioner, 94 T.C. 570, 577-
579 (1990). An expert witness loses his usefulness and
credibility by becoming merely an advocate for one side. See,
e.g., Buffalo Tool & Die Manufacturing Co. v. Commissioner, 74
T.C. 441, 452 (1980).
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