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Cascade's expert witness also made certain conclusions
regarding the value of the 776 patent and the 750 technology,
which were based on an analysis of the cost savings provided by
each of their technologies. Petitioner's expert estimated that
for the years 1983 through 1996, Cascade's use of both
technologies saved direct costs of at least $4.1 million, and the
combined direct and indirect cost savings may have been as great
as $14.4 million.
Petitioner's expert concluded that comparative industry
returns, cost of equity calculations, and an analysis of the
guideline transactions indicate that the 1982 agreement was
reasonable.
Respondent's expert witness did not consider whether a
normal and reasonable rate of payment for the patents was 5
percent of the gross selling price of the covered products during
the life of the patent. Respondent's expert witness considered
only whether the 776 patent and the 750 technology provided value
to Cascade and would support a purchase price of $10 million less
the earned but unpaid amounts under the 1979 sales agreement.
In his report, respondent's expert valued the 750 technology
at no more than $900,000; however, at trial, he adjusted his
analysis and concluded the value was $1.4 million. Respondent's
witness did not analyze the value of the 776 patent, because it
was not quantified in petitioner's report separate from the 750
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