- 419 -
realistic prospect that it would do so. It was decided that IRC
failed to meet both of these tests. Significant was the fact
that the taxpayers had not established that IRC had obtained any
ownership rights in any technology to be developed by Newport
because Sloan-Kettering was not a party to and had not consented
to the licensing agreement (as required in the 1978 sale by
Sloan-Kettering to Newport). Moreover, the license agreement
between Newport and IRC expressly provided that no ownership
rights in the technology to be developed by Newport would inure
to IRC to the extent that such technology or rights envisioned by
the agreement came within the definition of "Patent Rights" as
reserved by Sloan-Kettering in the 1978 sale to Newport.
This Court held in Estate of Cook that the reservation in
the agreement between IRC and Newport, taken together with the
broad definition of "Patent Rights" in the agreement between
Newport and Sloan-Kettering, left very little, if anything, to be
acquired by IRC in the 1979 licensing agreement between Newport
and IRC. The Court stated: "In light of this definition, it is
hard to visualize that [IRC] obtained ownership of anything that
could be commercially exploited in a trade or business." The
Court surmised that virtually anything Newport developed would
constitute a "Patent Right", and, if so, the ownership of such
improvement or technology would not belong to IRC.
Page: Previous 409 410 411 412 413 414 415 416 417 418 419 420 421 422 423 424 425 426 427 428 NextLast modified: May 25, 2011