Planned Parenthood Federation of America, Inc. - Page 19




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          property to obtain a royalty, renders the payment for the use of            
          that right UBTI and not a royalty."  Sierra Club, Inc. v.                   
          Commissioner, 86 F.3d at 1536.  Accordingly, in the instant case,           
          we carefully scrutinize the activities of each of the parties               
          compensated in the list rental transaction to ascertain whether             
          they are undertaken to exploit or protect petitioner's list.                
          Hereinafter, we refer to activities which are undertaken to                 
          exploit or protect the list as royalty-related activities.                  
               The List Manager                                                       
               In a list rental transaction, the list manager's activities            
          include:  (1) Promoting list rental transactions involving                  
          petitioner's rental list via advertising, distribution of data              
          cards, solicitations, and personal sales calls directed at list             
          brokers and potential customers; (2) forwarding the list rental             
          order to CMS for approval; (3) arranging with Triplex to fill the           
          order; (4) billing the mailer or the mailer's list broker; (5)              
          paying Triplex the amounts it is owed; and (6) remitting payment            
          to CMS.                                                                     
               In the context of the list rental transaction, a list owner            
          has certain intangible information regarding the individuals and            
          entities whose names and addresses appear on its list.                      
          Specifically, the list owner knows that such individuals and                
          entities are responsive to direct mail and willing to support               
          certain tax-exempt organizations.  To exploit that knowledge, the           
          list owner must first let others know that the list is available.           



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Last modified: May 25, 2011