-400-
Newport. Sloan-Kettering was not a party to the agreement, did
not sign the agreement, and there is no evidence that
Sloan-Kettering ever acquiesced in the agreement. Newport and
IRC were cognizant of Sloan-Kettering’s patent reservation
rights, and, accordingly, the licensing agreement between IRC and
Newport was structured or attempted to be structured in such
fashion that the exploitation of the subject compound by IRC or
its licensees would not violate Sloan-Kettering’s rights. With
that end in mind, the research agreement between IRC and Newport
contained the following provision:
2. Ownership of Project Results.
Any and all products, processes, compounds, inventions,
ideas, patents, patent rights, technical information, data
and other proprietary know-how resulting or deriving from
the Project, including all improvements thereto, and any
other rights to commercially exploit the Project and the
products and results thereof, including but not limited to,
licensing and distribution rights, shall be the sole and
exclusive property of the corporation [i.e., IRC]; provided,
however, the Corporation shall have no ownership rights or
rights which may be deemed to be a sub-license to the extent
that any of the foregoing constitutes a "Patent Right" or an
invention or improvement covered thereby as defined in the
agreement dated March 28, 1978 between Newport and Sloan-
Kettering Institute * * *. [Emphasis added.]
Pursuant to this licensing agreement, IRC paid Newport,
during 1979, $980,000 for Newport’s services for the research,
experimentation, and further development of the compound NPT-
15392. On their 1979 Federal income tax return, as noted
earlier, the Kanters claimed a deduction for their portion of
this $980,000 research and experimentation expense, which
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