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was entered into in 1990 but had retroactive application to 1987,
the year during which Burton took sole control of ERG. The
amounts that ERG transferred to NPI were not regular. As the
arbitrators found, the pattern of payment demonstrates that
Burton was merely funneling ERG’s profits to NPI. There is no
evidence of a business purpose why ERG would “sell” its valuable
patent rights to NPI and simultaneously license them back.
Furthermore, there is no evidence whether ERG received the
consideration contemplated by the agreement for “selling” those
rights. The agreement states that ERG is entitled to, inter
alia, 50 percent of the moneys NPI receives from licensing the
patent rights. ERG ostensibly was “licensing” those patent
rights under the agreement and paying NPI hundreds of thousands
of dollars for such rights. However, the record shows only the
unidirectional flow of money from ERG to NPI.
ERG transferred millions of dollars to NPI for payment of
supposed “engineering services”. However, there is no evidence
of what services Burton performed on behalf of NPI other than his
testimony that he provided ERG with engineering “know how”. No
third party testified as to what Burton specifically did. There
is no evidence of how much time he devoted to this endeavor and
whether the amounts charged were reasonable and customary. In
fact, we infer from the evidence that in conjunction with the
exclusive licensing agreement, the label “engineering services”
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