- 18 -
Royalty-Related Activity or Services
In the instant case, we must decide whether any part of the
mailing list rental payments constitutes compensation to
petitioner for goods or services.7 In each mailing list rental
transaction, the mailer's rental payment compensates petitioner
for the mailer's use of petitioner's list and, also, compensates
the list manager, CMS, Triplex, and the list brokers for their
participation in the transaction. Certain of these activities
exploit and protect the intangible (i.e., the list). We have
held that the owner of an intangible may engage in certain
activities to exploit and protect the intangible which do not
change the nature of the payment received. See Wm. J. Lemp
Brewing Co. v. Commissioner, 18 T.C. 586, 596 (1952) (payment to
the owner of the intangible was a royalty even though the owner
reserved the right to supervise the advertising, marketing, and
quality of the product which was to bear the trademarked name);
see also Mississippi State Univ. Alumni, Inc. v. Commissioner,
T.C. Memo. 1997-397 (review of marketing material and endorsement
of an affinity credit card program bearing the name of an exempt
organization were not services provided to the card issuing
company). To hold otherwise, it seems to us, "would require us
to hold that any activity on the part of the owner of intangible
7 This is the same issue that the parties settled in DAV II
and Sierra Club and that the courts therefore did not have before
them.
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011