In Uncategorized on 01/11/2021 at 15:31

Edward J. Tangel and Beatrice C. Tangel, et al., 2021 T. C. Memo. 1, filed 1/11/21, are back again. They seem to have straightened out whatever protective order they were seeking in my blogpost “Settle (Protective) Order on Notice,” 9/30/20, but it doesn’t help, as the $900K of Section 41 research credits they got from their Sub S bites the dust.

The Tangels were hired hands. So the Tangels and their Sub S lose the John 10:12 gambit.

Judge Albert G (“Scholar Al”) Lauber notes that when the Tangels’ Sub S agreed to design and build turbine covers, they gave up all substantial interests in the products of their research. In their contract (apparently the standard form of the turbinator who engaged the Tangels’ Sub S), the turbinator (“Buyer”) tied up whatever technical information (“Information”) they gave to Tangels’ Sub S (“Seller”) to develop the turbine covers (“Articles”).

Tangels’ Sub S “…agrees that it will not use, or assist others in using, such Information, design funding or tooling to develop or sell such Articles (or similar interchangeable or substitute Articles, or parts thereof) to anyone other than Buyer, either as production, spare or repaired Articles, without Buyer’s prior written consent. Seller shall not use or disclose such Information except in the performance of Orders for Buyer, and, upon Buyer’s request, such Information and all copies thereof shall be returned to Buyer. If Seller develops, sells the Articles hereunder, or assists others in doing so, (or similar interchangeable or substitute Articles, or parts thereof) to anyone other than Buyer, the burden shall be on Seller to establish that Buyer’s Information, funding or tooling was not used.” 2021 T. C. Memo. 1, at pp. 4-5.

The agreement also states that whatever Seller produces is work for hire per Copyright Laws, and if a court ever decides it isn’t, Seller assigns it to Buyer in advance. That means it’s the Buyer’s.

Of course, Seller can use the info if Buyer consents, but there’s no limit on Buyer’s discretion.

Reg. Section 1.41-4A(d)(3)(i) says that the researcher gets the credit only if it retains substantial interests in the research. Seller can’t even keep any of the Information if Buyer wants it back.

Summary J for IRS.


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