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Date
Rule
801.10
Staff
Michael Verne
Response/Comments
NO to both. MB, KW & RJ concur.

Question

From: Verne, B. Michael
Sent: Friday, February 03,20123:13 PM
To: Walsh,Kathryn
Cc: Jones,Robert L.
Subject: Patent question

A controls LLC B. A andseveral other persons each own an undivided interest in a number of patentsused by B in its business. All of the interest holders in the patents have theunfettered right to license the patents to other persons.

C is now going to acquire100% of the interests in B. It is also going to acquire the interests in thepatents from A and the other interest holders.

Question1 - Is the amount paid by C to the other interest holders in the patentsincluded in the size of transaction for the acquisition of C and the A patentinterests? I think the answer is no.

Question2 - Is the amount paid to A for its interest in the patents included?

Three arguments: Thatamount would not be included, because all that is being acquired from A is itsnon-exclusive rights to the patent, or

That amount would beincluded because the acquisition of an undivided interest in an asset is anacquisition of an asset and it is irrelevant that the undivided interest is innon-exclusive rights to patents, or

That amount would beincluded because at the end of the transaction C will have the exclusive rightsto the patents, even though that is being accomplished through multipleacquisitions from different acquired persons. Thoughts?

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