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technology. Respondent's expert opined that the 1979 sales
agreement established the value of the patents at $300,000, and
that the only difference between the 1979 sales agreement and the
1982 agreement was the "addition of the '776 patent and '750
application." Accordingly, respondent's expert concluded that
"The valuation of the patent and patent application portfolio at
December 31, 1982 would, therefore, have differed from the
$300,000 valuation under the 1979 Agreement only by the passage
of time", and that the value of the patents and patent
applications transferred in the 1982 agreement was between
$300,000 and $2 million.
We do not find respondent's expert witness' rebuttal
persuasive. Respondent's expert relied heavily on a 1983
appraisal of Cascade's stock value to determine the value of the
patents. This appraisal was commissioned by Cascade and
performed by Management Advisory Services. The appraisal valued
Cascade's stock at $2,450,000, including a control premium.
Respondent's expert, therefore, concluded the maximum value of
the patents and patent applications sold by Lea to Cascade is $2
million; the value "established for the entire company, including
all of its technology, patents and applications", less the
control premium. Respondent's expert did not consider that the
appraised value of the stock was based in part on Cascade's
estimated net earnings: its earnings minus the patent payments.
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