-4-
in Europe, and conducted research and development.
II. The Cost-Sharing Agreement
On April 2, 1995, petitioner and XI entered into a
Technology Cost and Risk Sharing Agreement (cost-sharing
agreement). The cost-sharing agreement provided that all “New
Technology” developed by either petitioner or XI would be jointly
owned. New Technology was defined as technology developed by
petitioner, XI, or petitioner’s consolidated subsidiaries, on or
after the execution date of the cost-sharing agreement. Each
party was required to pay a percentage of the total research and
development costs based on the respective anticipated benefits
from New Technology. The cost-sharing agreement further provided
that each year the parties would review and, when appropriate,
adjust such percentages to ensure that costs continued to be
based on the anticipated benefits to each party.
Petitioner and XI were required to share direct costs,
indirect costs, and acquired intellectual property rights costs.
Direct costs were defined in the agreement as those costs
directly related to the research and development of New
Technology including, but not limited to, salaries, bonuses, and
other payroll costs and benefits. Indirect costs were defined as
those costs, incurred by other departments, that generally
benefit all research and development including, but not limited
to, administrative, legal, accounting, and insurance costs.
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