- 17 - and white box products from masters petitioner supplied. Microsoft Japan, Microsoft Taiwan, and Microsoft Korea used subcontractors to duplicate and distribute both retail and white box products. The CFC agreements with Microsoft Taiwan, Microsoft Korea, and Microsoft Japan imposed a mandatory trademark branding requirement on the CFC’s. The CFC agreements with Microsoft Ireland included an express trademark license. Petitioner generally sent the master diskettes to the CFC’s containing object code for the licensed retail products. Similar to the OEM agreements, the CFC agreements imposed obligations on the CFC’s to maintain in confidence all trade secret information petitioner provided. Pursuant to the CFC agreements, petitioner ultimately received royalties from the CFC’s. MS-FSC reported the royalties on its returns as FTGRs from transactions in qualifying export property. The royalties in dispute are those received from Microsoft Japan, Microsoft Korea, Microsoft Ireland, and Microsoft Taiwan in 1990 and 1991, paid pursuant to the CFC agreements. During the years in issue, Microsoft Ireland accounted for approximately 85 percent of petitioner’s royalty accruals from the CFC’s. Petitioner did not allocate or apportion the royalty stream from the CFC’s and OEM’s among intellectual property rights. Respondent determined that the royalties petitioner accrued from its export licensing transactions were not FTGR’s on the basis that thePage: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
Last modified: May 25, 2011