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product used to lubricate and separate tissues in ophthalmic
surgical procedures. MedChem U.S.A. decided in 1987 to diversify
its operations by acquiring the Avitene business from Alcon P.R.,
which at the time was Avitene’s manufacturer and seller. MedChem
U.S.A.’s decision was based in part on the fact that it was being
sued for patent infringement as to Amvisc. The plaintiffs in
that lawsuit had commenced the lawsuit in 1984 and were seeking
an injunction and treble damages.
On December 18, 1987, petitioners entered into a series of
agreements with Alcon P.R., Alcon Pharmaceuticals, Ltd. (Alcon
Pharmaceuticals), and Alcon Laboratories, Inc. (Alcon Labs)
(these three Alcon entities are collectively referred to as the
Alcon Entities), to purchase the Avitene business for
approximately $31 million. The agreements included three asset
purchase agreements, three noncompetition agreements, a guaranty,
and a processing agreement. All of the Alcon Entities were
related, and none of the Alcon Entities was related to either
petitioner.
The assets sold under the asset purchase agreements
generally included all Avitene inventories, all tangible assets
used to manufacture Avitene, and all Avitene-related intangible
assets such as receivables, contract rights, and intellectual
property. Under the first agreement, Alcon Labs sold to MedChem
U.S.A. receivables valued at $1,085,000, a non-competition
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