Lockheed Martin v. United States (2000)

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Main Issue:

  • Funded research - rights


  • Taxpayer included fixed price contracts in which they did not have exclusive rights to what was developed
  • IRS argued that taxpayer did not have substantial rights


  • Court rejected the government’s position stating the contracts allowed the taxpayer to enter into commercial contracts with third parties for the sale of items containing technology developed under the current contracts therefore substantial rights test met

Take-Away Point:

  • Companies performing research on behalf of others need to retain substantial rights, but not exclusive rights

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