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IN THE UNITED STATES COURT OF FEDERAL CLAIMS
Nos. 06-245T, 06-246T, and 06-247T (Consolidated)

MURFAM FARMS, LLC, §
By and Through Wendell H. Murphy, Jr., §
a Partner Other Than Tax Matters Partner, §

PSM FARMS, LLC, §
By and Through Stratton K. Murphy, §
§
a Partner Other Than Tax Matters Parter, §

§

MURPHY PORK PARTNERS, LLC §
By and Through Wendell H. Murphy, Jr. §
a Partner Other Than Tax Matters Partner, §

v. §
Exhibit 1
Expert Report of

Plaintiffs, §
§ § §

§

UNITED STATES OF AMERICA, §

Defendant. §
APPENDIX
Melvin F. Jager, June 29, 2007.
Melvin Jager,

Pages 001-032 Pages 033-087

Exhibit 2

Deposition Transcript of

August 2, 2007.
Exhibit 3
Pages 51 through 53, deposition of

Gar Woods,

Pages 088-089

June 21, 2007.

Exhibit 4

Powerpoint presentation presented to Gar Woods.

Pages 090-104

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OCEAN TOMO
INTELLECTUAL CAPITAL EQUITY

MUAM FARS, LLC, §
By and Through Wendell H. Murphy Jr., §
a Parter Other Than Tax Matters Partner, §

§ PSM FARS, LLC, §

By and Through Stratton K. Murphy, §
§
MUHY PORK PARTNERS,

a Parter Other Than Tax Matters Partner, §

LLC, §

By and Through Wendell H. Murphy, Jr., § a Parter Other Than Tax Matters Partner,§

v. §

§ Plaintiffs, § § §
§

UNTED STATES OF AMRICA, §

Derendant §
EXPERT REPORT OF MELVI F. JAGER
June 29, 2007

f..~...f..'.:1J

;"--'::'.: - :..-;1

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Q INTELLECTAL CAITAL EQUIT

TABLE OF CONTENTS

I. FIRM BACKGROUND AND QUALIFICA TIONS.........................I...............................,...............................1
2. ASSIGNMENT ................ ......... ........................................................................ ......................~...........3

3. SUMMAR Y OF 0 PI N IONS. ............................ .......... .................................................................4

4. INVESTMENT AND TAX STRATEGY OVERVIEW ...........................................................................5
5. INTELLECTUAL PR OPE R TY .......... ........ ..... ............ ...... .:... ......................................... ...................5
5.1 OVEVIEW ..................................................................................................................................................5
5 .2 PATENTS............. ............ ..... ........ ........... ..................................................................... ...... ........... ...............5

5.3 TRAEMAR............................................................................................................................................6 5.4 COPYRIGI-S ............................... ...... ....... .................. .......... ..... ........ .......................... ............ ........ .......... 6
5.5 TRADE SECRETS......................... ........... ....... ......... ..... ........ ........................... ................ ..... .............. .......... 7

6. TRADE SECRET CONSIDERA TIONS ....................................:...............................................................9
6. 1 NOVELTY... .... ..... ...... ..... ............. ................... ..... ... ....................................... ..... ............ ..... ..... '" ... ..... ........ 9
6.2 SECRECY.. ........ .............. .... .............. ................... ..... ................... .................... ........ ...... ..... ..... ................. 1 0 6.3 SECURITY. ...... ..... .......... ............ ......................... .... .... ................................... ............. ... ................... ........11 6.4 VALUE. .......... ..... ...... ...... ......................................... ...................................... ........... ................................12

7. COMPENSA TION FOR USE OF TRADE SECRETS....................................................................14
7.1 INVSTMENT AND TAX STRATEGY COMPENSATION STRUCTURE............................................................14

7.2 TH 25% RULE OF THMB........................................................................................................................14
7 .3 PUBLICLY A V AILABLE TRDE SECRE LICENSING ..................................................................................15 7.4 TRADE SECRET LICENSING AS A REULT OF LITGATION .......................................................................... 16

8. CON CL USI ON .... ............ ..... ......... .... .................................................................... ............ ..........................19
9. S I G NATURE... ............................... ...... .................... ............................................. ............. ............................20

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1. FIRM BACKGROUND AND QUALIFICA nONS
My name is Melvin F. Jager. i am of Counsel for Ocean Torno, an integrated intellectual capital merchant banc providing expert services, valuation services, aset management, M&A advisory, and risk management services. Ocean Torno assists clients - corporations, law firms, governents, and institutional investors - in maximizing their Intellectual Capital EquityTM value. Ocean Torno seeks to
maximize the value and benefits inherent within the rapid growt of intellectal proper as an asset class.

Prior to joining Ocean Torno I engaged for 42 year in the private practice of intellectl propert law in
Washington, D.C. and Chicago, Ilinois. The majority of ofthe Chicago-based intellectul propert firm of

my time practicing was as a parner/shareholder Brinks Hofer Gilson and Lione and its predecessors.
intellectul propert issues. I have

During this time I advised and consulted with clients on a full range of

engaged extensively in thè preparaton and prosecution of patent applicaions before the U.S. Patent and Trademark Office. I also have been engaged as an attorney in a variety of patent infrngement suits as the attorney for the plaintiff to enforce patents, and as an attorny for the defendant to defend against
allegations of

patent infringement.

My practice of intellectual propert law also included advising, consulting and litigation in related legal
areas involving trde secrets, trdemars, copyrights and unfair competition. I also regularly have

engaged thoughout my practice in all aspects of the licensing of intellectual propert, including the negotiation and drafing of license agreements, the analysis of existing licenses, the enforcement of licenses and consultation with clients on matters related to licensing. 1 have also served as an expert witness in patent and trade secret litigation, and have been an arbitrator in an international licensing dispute.
I have been active in teaching intellectual propert courses throughout my career. From i 992 to 2004 I Law at the University of Ilinois in Champaign, Ilinois, where I have taught courses in Patent Law and Patent Litigation. Before that I taught Trade Secrets Law in the Masters Level Progra at The John Marshall Law School in Chicago, Ilinois. I also taught Patent Law at the Northern Ilinois (Lwis) College of Law. I have lectured on Patents, Trade Secrets and Licensing as a visiting adjunct professor and guest lectuer at the University of
held the position of an adjunct professor of law in the College of Victoria College of Law in Victoria, B.C., and at St. Peter's College of

Law, Oxford University, in

Oxford, U.K.

I have written aricles and treatises on intellectul propert law topics. I am the autor of a thee volume
treatise, TRE SECRETS LAW, published by West Group Publishing in New York. 1 am also the

author of an anual LICENSING LA W HANDBOOK and the editor of a thee volume treatise TRE SECRETS THROUGHOUT THE WORLD, both of which are also published by West Group Publishing. I furter have authored or edited aricles on intellectul propert law and licensing which have been
published in Les Nouvelle, the scholarly publication of the Licensing Executives Society, in American Bar Association Monographs, in Developments in InteIJectual Prpert, published by The John MarshaIJ Law

School and in books on intellectual proper published by the Prcticing Law Institute.
Throughout my careèr I also have been an active paricipat in the educational and professional activities
of

professional associations relating to intellectual propert and licensing. In 2002-2003, I was President

ofthe Licensing Executives Society International, a professional association of 12,000 members in 30 countries who ar engaged in the creation, protction and trnsfer of technology on a worldwide basis. As the president and a member ofLESI, I lectred on patent, trade secret and licensing issues in many countries, including the United States, Japan, Europe, China, Korea, Austrlia, South Afrca and Mexico.
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In i 994 I held the position of

President of the Licensing Executive Society US and Canada, the largest
the Licensing Executive Society Foundation, a not-for-

society within LESI, and was a regular lecer at the association's anual Technology Transfer Institute.
I am a founding member and Past President of

profit foundation dedicated to educational and outreach progr relating to intellectu propert

creation, licensing and technology tranfer.
I have also been active in the more traditional professional associations concerned with intellectual the Intellectual Propert Law Association of Chicago, and formerly was the Intellectual Properties Litigation Committee of the American Bar Association Litigation Chair of Section, and Chair of the Ilinois Bar Association Patent Trademark and Copyrght Council. As an active member of these and other professional associations I have given speeches and made presentations on a variety of topics relating to intellectal propert procurment, protection, enforcement and licensing. I further presented speeches and papers on licensing in the new global economy and on using patent licensing to manage patent litigation risks at the 2004 and 2005 Annual Meetings of the Japan Institute for Invention & Innovation in Tokyo, Japan.
propert. I am pat president of I am a graduate of the University of

Ilinois, with a B.S. degree in General Mechanical Engineering. I
Law from the College of Law at the University of

also hold a degre as a Juris Doctor of

Ilinois.

I have included a copy of my CV along with this report.
Ocea Torno is presently being compensated for my work in this matter at a rate of$595 per hour. Other

Ocean Torno consultants are assisting me in this engagement and are being compensated at various rates
under $595. No par of my compensation depends upon the outcome of

this litigation.

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2. ASSIGNMENT
Ocean Torno was retained by counsel for the plaintiffs, Mudam Farms, LLC, PSM Farms, LLC, and Murphy Pork Parers, LLC (hereafter referred to as "the Murphys"), in connection with this matter. I
was asked to provide analysis and possible testimony regarding the intellectual propert value of certain
investment trsactions (the "Investent and Tax Strategy") associated with this

cas. Specifically, my

report discusses (i) whether the Investent and Tax Strategy can be categorized as intellectual propert, intellectual propert is a percent of the and (2) whether an appropriate compensation strcture for use of potential benefit it enables.
A detailed listing of documents reviewed by Ocean Torno in connection with this litigation to date is attached as Exhibit B.

The following report and accompanying analyses summanze my current opinions whether the Investment
and Tax Strategy ca be categorized as intellectu propert, and whether an appropriate compensation
structue for us of such intellectl propert is a percent of the benefit enabled by the intellectual

propert. The information in this report is based upon discovery to date and other currently available information. Accordingly, my opinions described herein should be considered preliminar and subject to change based on any new documents, as well as future discovery, the testimony of other expert, and other case developments. In addition to this report I may rely on excerpts taken from video taped depositions and/or demonstrative exhibits that ilustrte the concepts and conclusions contained in this report.

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3. SUMMARY OF OPINIONS
I have reviewed Professor Gruner's expert report and am in agreement with his conclusions regarding the Investment and Tax Strategy's trade secret characteristics. At trial, I wil offer my opinion that the
Investment and Tax Strategy had the chaacteristcs of a trade secret at the time the stategy was

implemented. Also, I will offer my opinion that compensation in the form of a percentage of the potential benefits, such as cost savings, enabled by intellectual propert is a common strture in intellectual
propert licensing.
My opinion is based on my understading of the facts and circumstaces of

this case and my review of

the produced documentation, testimony, and third par information available to date. The analyses and

opinions described herein are subject to change based upon additional discovery or other developments.

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4. INVESTMENT AND TAX STRATEGY OVERVIEW
I understad this case primarly involves a dispute with the Investment and Tax Strtegy over the validity
of

the investor's treatment ofa short option for ta purposes. I have not formed an opinion on this issue,

and I was asked to assume by counsel that the plaintiff entered into an Investment and Tax Strategy
similar to the one described by counsel in a lettr dated March 19,2007 and in the COBRA Slideshow. i
This Investment and Tax Strtegy was known as "COBRA" - Currency Options Bring

Reward

Alternatives.
I assume the anticipated benefits of implementation of

the Investment and Tax Strategy are comprised of

two components; investment returns and ta savings, It is my understanding that one potential benefit

was that the investor reaped ta benefits by using a loss generated with this InveStent and Tax Strategy
to offset income reported on his tax return and another benefit was the potential investment retrns on the invested monies.

5: INTELLECTUAL PROPERTY
5.1 Overview
The term intellectual property refers to patents, trademarks, copyrights, and trade secrets or know-how. Intellectual propert is a special classification of intagible propert and is unique because the owner of
intellectul propert is protected by law frm unauthorized exploitation of it by others. Merriam-

Webser's dictionar defines intellectual propert as "propert (as an idea, invention, or process) that derives from the work ofthe mind or intellect; also: an application, right, or registration relating to this.,,2 The intellectual propert owner can either internally us its benefits, or transfer interests in the intellectual
propert to others who may exploit it.
An overview of

the main clases ofintellecal propert is provided in the following sections, as well as discussion on the applicabilty of each to this case.

5.2 Patents

A patent is the legal process whereby technology, ideas, or proprieta methods may be tued into propert with defined rights associated with ownership. In the U.S., a patent is the grant of a propert right by the U.S. government to the inventor (or assignee) by action oftÍie Patent and Trademark Offce.
According to 35 U.S.C. § 154 (Contents and Ter of

Patent), patent rights provide the owner with the

right to exclude others from manufactuing, using, or sellng the invention. For patents fied on or after

June 8, 1995, these rights extend for twenty year from the date of patent fiing. Compeitors legally
caot, without license, commercially employ the patented elements of a product or process. The patent

i COBRA Slideshow, DOJ007654 et seq. 2 htto://www.men.iam-webster.com/dictionarv/intellectual%20property .
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owner enjoys commercial and competitive advantages by making, marketing, or licensing the patented
invention for the useful life of

the patent

5.2.1 Patentability of

Tax Strategies

As stated by James Toupin, General Counsel for the V.S. Patent and Trademark Offce before the House Committee on Ways and Means "The curent Act that detals the standards of patentabilty, the Patent Act
of 1952, specifies four basic statutory requirements that must be met to obtan a patent: (1) the claimed

invention must define eligible subject matter and have utilty, (2) it mus be novel, (3) it must not have been obvious to a person having ordinar skil in the ar at the time the invention was made, and (4) it the patent application to show must be fully and unambiguously disclosed in the text (specification) of that the inventor has possession of the claimed invention upon filing and that the skiled practitioner would be able to practice the claimed invention without undue experimentation."i
Furtermore, Mr. Toupin indicates that a new subclass has ben dedicated to ta stries. "Recently,

subclas 36T in (patent) Class 705 has been established and dedicated to ta strategies. We have
identified 41 issued patents related to ta strtegy. Furer, 61 published applications, not yet examined,
relate to ta strategy.'''

Additionally, legal tax strategies need not be patented to insure protection; they could be kept as trade
secrets. For instance, as Mr. Toupin stated regaring ta strategies per se "An alterntive strtegy to

patenting is to keep (tax) strategies as trde secrets. Now those trade secrets may be known to some advisers and not other advisers. The existence of a patent - the trade-off for the existence of a patent is to
whether a parent would make a strtegy more or less the license that might be requesed outweighs the cost of each ta adviser inventing the same strategy for each client.',5
make it known to the world.. .So, in terms of trade-off available, it is a bit of between whether the cost of

I am not aware of patents associated with the Investment and Tax Strtegy.

5.3 Trademarks
According to 15 V.S.C. § i 127, a trademark is any word, nae, symbol, or device, or any combination thereof-rused by a person) to identify and distinguish his or her goods, including a unique product, from
those manufuctured or sold by others and to indicate the source of

that source is the goods, even if unknown. A trademark also serves as an assurance of quality - the consumer comes to associate a level of quality with the goods and services being given a trademark.
I am not aware of

trademarks associated with the Investment and Tax Strategy.

5.4 Copyrights
Title 17 of the V.S. Code, a copyright is defied as follows: copyright protection According to § 102 of subsist, in accordance with ths title, in original works of authorship fixed in any tagible medium of

3 EX000035. 4 EX 00036-037. 5 EX000080-08 i. .
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expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.

The Investment and Tax Strtegy idea per se would not be copyrightable; however, documents memorializing the idea may be copynghtable. I am not aware of registered copyrights assocated with the Irivestment and Tax Strategy.
5.5 Trade Secrets
Trade secrets have been defined in several ways:6

· ''Trade secret" means information, including a formula, pattern, compilation, program, device,
method, technique, or process, that: (i) denves independent economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper mean, by other

persons who can obtan economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. (Section 1(4) of the Uniform Trade Secrets Actf
· A trde secr is any informtion that can be used in the operation of a business or other

advantage over others. (New Restatement of

enterprise and that is suffciently valuable and secret to afford an actuàl or potential economic the Law Third, Unfair Competition, § 39)

· A trde secret may consist Ç)fany formula, pattern, device or compilation of

information which is used in one's business, and which gives him an opportnity to obtan an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufactung, treating or preserving material, a patern for a machine or other device, or a list
Tort, §757 (1939))

of customers. (Restatement of

These sources, as welJ as judicial decisions, suggest a number of factors to be considered in assessing wheter the requisite elements are present to classify something as a trade secret. From this aray of information, it is possible to synthesize some fundamental concepts. A trade secret has four aspects:8

· It must consist of qualifying information; that is, one must be able (at leat in general terms) to
ariculate what it is in such a way that it may be distinguished from general knowledge and skil;

· It must be secret, in the sense that it is not well known or easy to compile;

· The owner must have made reasonable efforts to preserve secrecy; and
· The secret must have value as reflecte in some competitive advantage that it gives to the'

owner.

Said differently, the key elements ofa trde secret include that it: (1) is novel in the sense of not being generally known in the indus, (2) is suffciently secret and is not readily ascertable by proper mean

(e.g., reverse engineering), (3) is subject to reasonable security meaures and (4) has economic value.
Trade secrets are different from the other forms of intellectual propert in that the protection of

trde

secrets requirs appropnate secrecy and maintenance.. Trade secrets require a continuous effort to

6 htt://my.execc.coml-mhallgnltradesec.htmL.
7 Most states have modified their laws to conform to the provisions of

8 Pooley, James. §4.01 (11, Trade Secrets, 4-3. Law Journal Press, 1997.

the Uniform Trade Secre Act.

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maintain secrecy in order to allow defense by lawsuits against misappropriators at a later time, rather than a single application and grant by a government agency (e.g., the U.S. Patent and Trademark Offce).
Yet trade secre protection offers much broader scope than other intellectl propert such as patents.

Although some trade secrets are patentable, they are often not patented in order to avoid making them public and to avoid limiting their rights to the statutory life of a patent. Trade secret rights can exist as long as the information is maintained secret.
To determne whether the Investment and Tax Strategy had the chaacteristics of a trde secret at the time the four fudamenta elements ofa trade secret in the following of implementation, I discuss each of

secton.

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6. TRADE SECRET CONSIDERATIONS
As stated previously, the key characteristics of a trde secret are:
· Novelty ~the information is novel in the sense of

not being generally known in the industr;

· Secrecy - the information is suffciently secret and is not

readily ascertinable by proper means;
the information.

Security - the information is subject to reasonable security measurs; and
· Value - the information provides value or potential value to the user of

Based on my analysis presented in this section and my understading the facts and circumstances of this
cas, I concluded that, at the time the Investment and Tax Strategy was implemented, it had the essential

characteristics of a trade secret.
6.1 Novelty

In order to be patentable, an invention must be "novel"; that is, in relation to allthat is known in the the technology, it must be seen as new. This novelty requirement is not applicable to trade secrets. Most judicial opinions do not even mention it as an element. Trade secret protection does require, however, that the matter not be generally known. Thus, there must be something at least modestly "special" about the inormation-the law wil not intervene to protect matter that is only
relevant field of

9
trivially different from the known art.

Based on the information reviewed, it appears the paes involved believed the Investment and Tax
Strategy was not generally known in the financial and ta services industr. This is evidenced by the

following:
· Advisor Conf'identia/ity Agreements. Before a presentaion about the Investment and Tax
Strategy, it was the stadard practice of

Ernst & Young to require its advisors 19 sign a

confidentiality agreement. 10

.

Clear Statement That Information Is Confential From Ernt & Young. Example language in the Ernst & Young engagement lettr is "All advice and other services pursuant to this arangement ar intended solely for your beefit and that of the Parerhip and ar not for the benefit of anyone else. Accordingly, our advice may not be relied upon by any other person or persons,
used in connection with any other trsaction, or used for any other purpse without our prior

written consent. Furermore, the content of any ora or written communications made by us. in

connection with this engagement shall not be communicated to the public or otherwise publicized

in any manner without our prior wrtten consent. "11 .

.

Enhancements Were

Added By Ernst & Young. An Ernst & Young email states, "Our fee is far (sic) based on the consultation. the enhancements we have made to the strtegy to give more

business purse to the paership and economics... (sic)"12

9 Pooley, James. §4.03 (1), Trade Secrets, 4-19. Law Journal Press, 1997. 10 2003EY00OO - template agreement used by Ernst & Young for marketing.
II 00J040280, DOJ040265, 00J049822, OOJ0498

12 00J005334.

I

6, DOJ049807, DOJ049813, DOJ0498lO, DOJ049819.

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Ernst & Young Was The Only Company Providing The COBRA Investment and Tax Strategy.
am not aware of any other pnmar service providers other than E& Y who were offering the specific COBRA Investment and TaX Strategy, although I am awae that other service providers is based on my review of the available may have been offering similar strategies. This belief

documentation and my discussions with counseL.
· Ernst & Young and Jenkens & Gilchrist Entered Into a Non-Disclosure Agreement. Sample

language from an agrement states that "Undersigned agrees tht all Confidential Information is, and shall remain, proprietar to J&G, and that Undersigned wil disclose such information only to
such of its internal personnel to whom such disclosure is necessar to evaluate the (financial)
Strctues." 13

6.2 Secrecy
An importt characteristic of a trde secret is that it is, in fact, secret. The secrecy element of

trade secret law is not just a requirement that the subject matter not be generally known. It also reflects the
assumption that anything suffciently important to tae to court should already have ben the subject of
14
adequate attention and care by its owner.

The examination of secrecy involves a dual path. One path is concerned with the extent to which the secret is known (i.e., relative secrecy), and the second path is the extent to which the secret could be
known with but a modicum of effort (Le., ready ascertnabilty). Establishing that something is not

generally known and that it has been guarded aids in convincing a trier of fact that the trde secret is
valuable.

IS

My opinion, based on the information reviewed, is that the Investment and Tax Strtegy was adequately

maintained as secret. This is evidenced by the following (and discussed in the following sections):
· Advisor Confidentiality Agreements. Before a presentation about the Investment and Tax
Strategy, it was the stadad practice of

Ernst & Young to require its advisors to sign a

confidentiality agreement. 16

· Clear Statement That Information Is Confidential From Ernt & Young. Example language in the

Ernst & Young engagement lettr is "All advice and other serices puruant to this arrgement
are intended solely for your benefit and that of the Partership and are not for the benefit on

anyone else. Accordingly, our advice may not be relied upon by any other person or persons,
uSd in connection with any other trnsaction, or used for any other purpose without our prior . written consent. Furtermore, any content of any oral or written communications made by us in

connection with ths engagement shall not be communicated to the public or otherwise publicized in any maner without our prior writtn consent.,,17
· Investment and Tax Strategy Not Publicly Available. Based on the information reviewed, the

specific Investment and Tax Strategy was not publicly acessible or well-known in the financial

13 CANC01623 - CANC01625
14 Pooley, James. §4.04 (1), Trade Secrets, 4-24. Law Joural Press, 1997. IS Pooley, James. §4.04 (1), Trade Secrets, 4-24 and 4-25. Law Journal Press, 1997.
16 2003EY00009 - template agrement used by Ernst & Young for marketing.
17 ooJ040280, 00J040265, 001049822, 001049816, 00J049807, 00J0498 1

3, 00J049810, 001049819.

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and tax services industr. In fact Ernst & Young only implemented the COBRA Investment and
Tax Strategy 16 times. is

The Trade Secret Remains A Trade Secret Even If Disclosed To The IRS. According to 26 U.S.C § 6103, tapayer information remains confidential. I understand this confidentiality protects
tapayer retu information from disclosure, including requests fied under the Freedom of

Information Act. 19 Also it should be noted that information provided to other governmenta

agencies may be kept confidentiaL. For instance, patent applications filed at the U.S. Patent and Trademak Offce are not published for 18 months.20 This gives the fier the abilty to abandon a . patent application for his invention while simultaeously maintaning trde secret status for this same invention within this i 8 month window.

6.2.1 Degree of

Secrecy Required

The only perfect secret is tht which is known to but one person. However, trade secret law was developed to accommodate the realities of the industrial and information ages. Thus the concept of "relative secrecy": a secret remains protectable even when it is shared so long as it has not escaped into
the mainstream of public knowledge or commonly known to people in the relevant industr. As a result,

it is well settled that a trade secret owner may without fear oflosing its rights reveal trade secrets to employees and others in a similar confidential relationship. Secrets may also be shared with vendors and other business parners with a ci;mmon interest in the matter, who either by contract or implicaton wil be held to a standard of trust. i understand the correct rule is that a secret can be reaonably shared with
anyone who has a need to know it and who knows it is confidentiai.21
6.2.2 Ready Ascertainabilty

to protect it. It is clear tht a formula or process that canot be revealed by examination of

Ready ascertainabilty depends on the nature of the matter to be protected, rather than the owner's efforts the end
information becomes qualified as-a trade secret.22

product may be an impenetrable secret. However, a seret less tha impenetrable may yet be exceedingly

diffcult and time consuming to "reverse engineer". As the diffculty of ascertinment increases, the
That something is not readily ascertinable can be proved by circumstantial evidence. The precautions
taen by the trde secret owner to protect the information are relevant to the issue. The apparent inabilty of potential competitors to duplicate the information as well as the willngness of others to pay for it may
be considered?3

6.3 Security

18 Robert Hanson Deposition, 5l24/2007, pp. 7.
1926 U.S.C § 6103.

20 htto:l/wViW.Usoto.gov/web/offces/com/soeeches!OO-72.htm 21 Pooley, James. §4.04 (2)(a), Trae Secrets 4-25 and 4-26. Law Journal Press, 1997.
22 Pooley, James. §4.04 (4), Trade Secrets, 4-40 to 4-43. Law Journal Press, 1997. 23 Pooley, James. §4.04 (4), Trade Secrets, 4-44. Law Journal Press, 1997.

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Under the Uniform Trade Secrets Act, the plaintiff must prove that "reasonable efforts" were taen to

protect against loss.
My opinion, based on the information reviewed, is that adequate security was in-place for the Investment and Tax Strtegy. This is evidenced by the same reasons as discussed in Section 6.2.

The standard of reasonable efforts is flexible, and in considering what ar "effort that are reasonable
under the circumstances", one mus focus on the paricular facts at hand.24 The guiding principles seem to

i. f~

boil down to what is reasonable and practical under the circumstaces. Within a very broad band of
discretion, the trade secret owner is to consider the value of the secret, the natue of the that to

disclosur, and the cost and practicality of any paricular security mechanism. It is recognized that no security system is perfect, and the people who put it to use certinly are not perfect; therefore, some mistakes are permitted.

Nondisclosure agreements ("NDAs") are a common trade secret practice. They fudamentaly define the the information as valuable, and the relationship as a trst. While not many court wil say that nature of nondisclosure agreements is alone suffcient to meet the reasonable efforts requirement, many the use of secrecy. wil see it as probative evidence of
Cour cases have established the importnce of adequate security preautions as an element of proof in a

trade secret case. Based on the information reviewed in this case (e.g., the engagement letter, the service provider's business, it is my curent opinion that confidentiality agreement) and nature of
adequate secunty measures were in-place to protect the Investment and Tax Strategy.
Please refer to section 6.2 for a list of the security measures taen to insure the secrecy of

the Investment

and Tax Strtegy. Given these measures, it is apparent that the Investment and Tax Strtegy generally exhibited the characteristics of a trade secret at the time of the Investment and Tax Strategy's implementation.

6.4 Value
As far as the law is concerned, secrets are protectble if

they have some actual or potential commercial value. A fundamental element of trade secrecy is that the information be shown to provide some advantage over the competition. The Uniform Trade Secrets Act requires tht a plaintiff prove the claimed secret "derives independent economic value, actal or potential, from not being generally known." In order for information to qualify, its secrecy must provide some rea advantae over what is generally known. Slight varations on similar processes used thoughout an industr may not suffice. It is also not enough that the secret is merely different, "unique" or "uortodox". However, the incremental value of the secret need not be great, just not trvial.2s

My opinion is that, at the time the Investment and Tax Strategy was implemented, it had suffcient value to meet the value-related characteristic of a trade secret. This is evidenced by the fact that clients paid to their overall loss as fees to Ernst & use the Investment and Tax Strategy. The Murphys paid a percent of Murphys, Ernst & Young agreed to represent them in front of Y aung. It should also be noted tht for the the IRS, should the need arise.26 This valuable serice is directly related to the Investment and Tax

24 Pooley, James. §4.04 (2J(b), Trade Secrets 4-27 and 4-28. Law Joural Pres, i 997.

zs Pooley, James. §4.05 (I), Trae Secrets, 4-45 to 4-47. Law Joural Press, 1997.
Z6 DOJ040280, DOJ040265, DOJ049822, DOJ049816, DOJ049807, DOJ049813, DOJ049810, DOJ049819

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the benefits. The Murphys agreed to an Strtegy and is included in the fee structure as a percent of estimated fee of2.0% ofthe total tax loss prior to implementation ofthe Investment and Tax Strtegy. As shown in the following table provided by counsel, the actual fees for the Murphys were 2.2 1 % of the loss.

Fee Paid as a Percentage of

Tax Savings

Ordi Loss/Short Term Capita Loss

$ $ $

Long Term Capital Loss

13,919,961 86,074,896

¡

Total Loss Amount
Erst and Young Fee - 2.0% of Loss

99,994,857
1,999,897

Flat Fee Paid to Proskauer Rose
Total Actual Fee Paid

$ $

200,00
2,206,000
5,512,304 17,214,979

$.
$

STCL Tax Savigs

L TCL Tax Savis
Combined Anticipated Tax Savigs
Fees Paid as a Percentage of

$ $

22,727,284

Tax Savings

9.71%
~7

For the Miiphys the total losses were nearly $ i 00 milion, and ths translates to approximately $22.7
millon in anticipated tax savings. Given that anticipated ta savings were one of from the us of as a fee for use of the Investment and Tax Strategy, it is useful to determine the percent of the Investment and Tax Strategy, as opposed to a percent of

the benefits derived

the benefits paid
the total losses. In the cae

of the Murphys 9.7 1 % of the ta benefits were paid to utilze the Investent and Tax Strategy. It should
be noted that the performance of the underlying investments are not included as an aspect of

this

calculation.

7: EXOOl47
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7. COMPENSATION FOR USE OF TRAE SECRETS
The second part of my assignment is to opine on whether it is common to provide compensation for the
use of intellectual propert, including trade secrets, in the form ofa percent of

the benefit or potential

benefit. such as cost savings, provided by using the intellectual propert.

Based on my licensing and intellectal propert experience, analysis presented in this section, and my understading of the mcts and circumstaces of this case, I conclude that the aforementioned compensation arangement is commonplace for the use of intellectu propert, including trde secret.
7.1 Investment and Tax Strateg Compensation Structure

As has been previously discussed, the users of

the Investent and Tax Strategy paid a percent of

their

overall loss to utilize the trde secret. That is, the users implicitly paid some porton (Le., a royalty rate)
of the expected benefits of the transaction to the providers and implementors of

the trade secret.

A concept generally accepted by intellectual propert practitioners is that the owner of propert should the potential benefits (e.g., an allocation of receive some portion of the profits, revenue, cost savings) enabled by the intellectual propert they have created and given someone else the right to use. This concept is clearly stated in the well-known "25% rule of thumb", which is discussed in the following section.
7.2 The 25% Rule of

Thumb

The need to split or share the anticipated benefits "pool" between an intellectual propert owner/Iicensor and the user/Icensee of intellectual propert has been recognized and endorsed by licensing practitioners,
Tax Court case law,28.29,3o and Internal Revenue Service regulations.3! Several methodologies have been

these approaches, ultimately, attempt to accomplish the same result: a division of anticipated benefits that is commensurate with the natue of the intellectual propert and the functions performed and risks assumed by each part to the trnsaction.
used or suggested for achieving an appropriate split, and most of

subjective methods. A common rule of

Within the aforementioned cases and regulations, profits have been apportioned using both objective and thumb is referred to as the 25% Rule.

The so-called "25% rule of thumb" suggests a licensee might regard one-fourt of its expected profits
that propert. The theoretical foundation of share in the profitabilty of

from products incorporating a given intellectal propert as a staing point in negotiating a license for "this rule of thumb is that the licensor and licensee should

product embodying the patented technolog (or other type ofintellectual
the profits

propert). The a priori assumption is that the licensee should retain a majority (i.e., 75%) of

because it has undertken substatial development, opetional and commercialization risks, contrbuted
other technology/IP and/or brought to bea its own development. operational and commercialization

28 Ciba-Geigy v. Comm'r, 85 T.C. in, 229 (fax Court, 1985).

29 Bausch & Lomb v. Comm'r, 92 T.C. 525, 608, aftd 91-1 USTC 50, 244 (Tax Court 1989).

30 Hospila/ Corporation of America v. Comm'r, 81 T.C. 520, 601 (Tax Court, 1983).
31 Secion 482 of

the Internal Revenue Code (§482).
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contributions."n
This "rule of thumb" has been frequently discussed and debated in licensing publications, paricularly with respect to detennning how widely. it is usd or reflected in acal licensing practice and the most the most prolific proponents appropriate metod for its application. Robert Goldscheider has been one of
of the "rule of

thumb". He ha acknowledged that it is a "rough tool" to be used in conjunction with other

methods of analyses. In addition, Goldscheider et aL. note, "IP is often priced based on the enhanced revenues and/or reduced costs that it generates versus the next best alternative. The extent ofthat excess
(or incrementa value), holding all else constat, may form the upper bound for the appropriate price."

thumb," a rational licensee wil typically the "rule of the royalty implied by application of Regardless of consider the net return anticipated from employment of the patent and the net cost of implementing the next best alternative to the patent as highly informative of a reasonable royalty.
The "rule of thumb" is not a rigid "rule oflaw" or a precise term of ar?3 Use of the "rue of thumb"

necessarily implies the intellectual propert in question makes some quatifiable contribution to the realization of profits, which is not always the case. However, it is not the only method used to detennine one of many tools. Ultimate royalty a reasonable royalty. As Goldsheider et al. observe, "The Rule.. .is rates often are higher or lower than 25 per cent of profits, depending on a host of quantitative and
qualitative factors that can and should afect a negotiation (or litigation).',34 Said another way, the "rule
of

thumb" is one potential staing point only, and furter analysis should then be performed.

7.3 Publicly Available Trade Secret Licensing

In addition to considering trade secret compensation in litigation that is discussed in a subsequent section,
I have also considered publicly available licensing data. In that regard, I have reviewed summares of20

publicly available license agreements that I obtained from Royalty Source, a company that maintains an intellectual propert license database. In five ofthe licenses, patents compried a significant portion of
the licensed propert. In an effort to focus on trade secret licensing, I chose to exclude these five

agreements. Ultimately, I summarized fifteen license agreement summaries in the following table; these
demonsate that trade secrets are commonly licensed by sharing a portion of

the benefits.

32 Goldscheider, R. Jarosz, J., Mulher, C., "Use Of

The 25 Per Cent Rule in Valuing IP," les Nouelles, Deceber

2002. I wil refer to this arcle hereaftr as "te Goldscheider et ai. aricle." 33 Razgatis, R., Valuation and Pricing of Technology-ba Intellectual Prpert, 2003.
34 Georgia Pacifc'V. United States Plywoo

Corp., 318 F. Supp. ii16 (S.D.N.Y. 1970) modified and affrmed,.446
the product utilizing the subjec technology, the utility

F.2d (2d Cir. 1971) This case list 15 factors which should be considered in deterining a reasonable royalty. These between the licensor and licesee, rates paid in factors include, but are not limited to the commeral relationship.
compable market transaon, the commercial success of

and advantages of the invention, the benefits of the invention conveyed to the licens, the probable extent of use of

the invention by the licensee, and the amount that a wiling buyer and a willng seller would agree to in a
hypthetical negotiation.

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T,.lI Scel Uctl
UeeliWN

Licellan
Bi P.. Ltd.

D..

LiCM Proøenv

Au P- Mb l.
Chwi IIl
Cni Barr Sytc Inc

./9/5/3/198

Bi ,.,.., '1l-

~
I..,.
3.00.

Nol..a

O.LW.

Roy.b,. Bue: Audd eø Rt_
Upfømt For; SSOO,o. l.h, B_ Net Seli,

Il..AB
BelCo_imii eo".

s-.. ... ai .&__ -ihn'l-'
Ð-melh rdti ID Dui iyslc

Prer, M uI Rlleh 520~

./1/20

"_~lnu.
Y-.tknw

tn.,k .Cna Ð-rl"¡ wew

'fninii e-i "od si.o~ Min_

ROM Bue B.ncr FceiiIO.o.OO .hRlot

lop1iy le of is.o -i Muii_ of 110,00
1.10.1. Roel., Bax Ncl Jncom

DP l!tiil.c.

Foc'lklu.loi

G.I~ V..

T.J.....ln_tiia

1/13/1991

n. wni of.. i pceai "N_Cud

IOpi-cL--.b:..

51"J1""

s.""

Roy.i., Baic: Oro. Sii. AclDo i% ioplij

l-ib.e ffitllt Ire ol2S of ri pIfi
In(oC..i Coip

r.. Oft Gio.. s.. .,.. ---,~i (HI

løfoCu ll) Li1e

2/14/2D

K-w-bcwielilD tp.ii.rr pouÎi. vid_ ~ ca"'r. kkwodø. ui

0.50

Ro.il) Ba: L,"im; lJl Fee: si,o

di""e ~¡.& tehn...

IQNtlCorp.

VldTel.ImLic_
5chol.iilm:
V.no_

2/ZI/1PH

MctJctri-.
Metr Coc,. Lid. NalsRi in

\9'
12/17/'J

i.....~..
Mar meid moho

$o/tw_

2O.OC)l. &,.it,. Bale: Net Sil.

11...
t5.00Y-

Royal) Due OroN s. 1ñ. l ..ri..

nlph,..... raliorn 10%10 15%.
RDyÜt øue: .ss

Ed Eaicnt Gioup I~.
Side:iho Lhmot Serwei In.

4/lnr3
3/t/I99.

.....

&Ri mciel.probi" irfoaniio...

1..
Q.1SY.

cc_iipnfcrrcdib_.

Roya Base: N~i JlIlDB; 150,D 0.. 1\

Sodn AIh SA
Stauc Cøip.

M..I~t kt_ho.
MIIa¡nt bo-how

Rø,..lt a..., G~o" l~~
Ro,.it Ð-: G... l."..ia SO/. io)'.il) nlr on
pais s.i. or ptorictacy biKoclÎ

Hoie InkmstÌaal Inc

t"/191
3/31/199

2._

SJAv..n-e

RIKtK"Ine

Trduunl"-l .. knw-h
M.....t \øItw..d In....

,...""

Ro,. ø. Gro.. S'l. 11~.. qri"
royaty lItc nnl &0.. 2% to 5%

T ~.port Coiii
Group Inc.

CUÛ_......

'm/im

Ro,. Bø: CoLeiM Re...._

So_ RoyaltySr.uce In.lIl- Pni n,lIlo.. ..~.. _ ApñlI.2i (.. "B M-ilod-.

As evidenced from the above table, which also appears in Exhibit C, in real-world arms-length licensing situations the royalty base is commonly some measure of the potential benefits enabled by the trade secret. Additionally, some pecentage of this beefit, however the specific paries choose to measure it, is allocate between the licensor and the licensee though use of a royalty rate. In much the same way the COBRA Investment and Tax Strategy allocates the benefits between the owner
and those utilzing the stratgy.

7.4 Trade Secret Licensing as a Result of

Litigation

thumb" and publicly available trade secret licenses, i next looked at the methodologies employed by the Cours in caes involving the misapproprition of trade secrets. While I understad this case does not involve the misappropriation of any trade secret, the following information indicates the Court oftn emulat what is seen in real world licensing scenarios in assessing
Aftr investigating the "25% rule of trade secret damages - an allocation of

the beefits enabled by the asset between the licensor and

¡.

the benefits, such as cost saving, realized by utilzing a trade secret is an appropriate and widespread licensing technque.
licensee. This reinforces, once again, that a percent of

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By

at least 1978, 80% to 94% of

technology licenses utilze a rug royalty rate to compensate the

licensor.35 Additionally, the majority oftechnology that is transferr within the U.S. is not patented.
Such unpatented technology is defined and States. The value of protected by the trade secret laws of

trade secret protection was summard by Judge Posner of

the 50 states in the Unite the Seventh Circuit

Court of Appeals in Rockwell Graphic Systems Inc. v. Dev. Indus. Inc. He discussed trade secrets and intellectual propert, a form of propert that is a growing importnce to the competitiveness of American Industr .,,36
stated: "It is an importnt case because tre secret protection is an importt par of

An excerpt from the 1985 Amendments to the Uniform Trade Secrets Act discuses damages

quantification using royalty rates:37 .
unauthorized disclosure or use of a trade secret.

In lieu of damages measured by any other methods, the damages caused be misappropriation may
be measured by imposition ofliabilty for a reasonable royal for a misappropritor's

Furtermore, it is clear that case law agres that "damages recoverable in action for misappropriation of trade secrets may be measured either by plaintiffs losses or by profits unjusy received by defendant.',)! This sentiment is reiterated in many cases, including:
· University Computing Company v. Lykes-Youngstown Corporation;39

· "Generally, proper measure of damges in case of a trade secret appropriation is to be determined by reference to analogous line of cases involving patent infringement, just as patent infringement cases are used by analogy to determine
damges for copyright infringement."

· "If defendant enjoyed actu profits from misappropriation of trade secret, a type of
restituionar remedy can be afforded plaintiff, either recovering the full tota of defendant's profits or some apportoned amount designed to correspond to the

actual contribution plaintiffs tre secret made to defendant's commerial
success."
· Vermont Microsystems, lnc v. Autodesk, Inc.;4o

· "To approximate the paries agrement, had they bargained in good faith at the time of the misppropriation, the trier of fact should consider such factors as the resulting and foreseeable changes in the paries' competitive posture; the prices
past purhasers or licensees may have paid; the total value of the secret to the
plaintiff, including the plaintiffs development costs and the importce of secret to the plaintiffs business; the natu and extent of

the the use the defendat

intended for th secret; and fially whatever other unique factors in the paricular

case which might have åffected the paries' ageement, such as the reay

availabilty ofaltemative processes."

35 Finnegan, Marus B., Mintz Herber H., "Determination of a Renable Royalty in Negotiating a License
Agreement: Practical Pricing for Successful Technology Transfer" Licensing La and Business Report, June-July
1978. 36 Jager, M., Licensing Law Handbook, 2006-2007 Editon, 41-42.
37 Secion 3(a) of

the 1985 Amendments to Uniform Trade Secrets Act.

38 A.FA. Tours Inc. v. Whitchurch; 937 F.2d 82. (C.A.2 (N.Y.), 1991).

39 University Computing Co. v. Lylcs-Youngstown Corp.; 504 F.2d518. (C.A.Ga.,1974).
40 Vermont Microsystems, Inc v. Autodesk, Inc.; 88 F.3d 142. (CA.2 (Vt.), 1996).

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· Linkeo, Inc. v. Fujitsu, Ltd;4l
"There are two obvious ways to calculate plaintiffs damages. First, damages may be measured according to any losses plaintiff suffered... Second, damages may be measured by the defendant's unjust enrichment as a result of the misappropriation.
Unjus enrichment is measurd by the profits the defendant obtained from using the

trade secret."

· "A reasonable royalty may be computed in various ways, including a lump sum royalty based on expected sales or a running royalty based on a percentage of
actul sales."

· Soflel, Inc. v. Dragon Medical and Scientifc Communications Ltd.;42

· "Both plaintiff and defendants suggest in their pre-trail briefs that a 'reasonable royalty' or license fee determination might be an appropriate measure of damages."
The cases above ilustrate that reasonable royalties are regularly utilized in legal settings. Additionally, it is clear that a portion ofthe expected or realized benefits is frquently used to value trade secrets. It should come as no surprise that this method is conceptually similar to the benefit allocation described by the 25% rule, and to the benefit allocation through use of a royalty rate as seen previously abve in the publicly available trade secret licenses.

41 Linkeo, inc. v. Fujits, Lid; 232 F.Supp.2d 182. (S.D.N.Y., 2002). 42 Softel, inc. v. Dragon Medical and Scientifc Communications Ltd; 89 i F .Supp 935. (S.D N.Y., 1995).
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8. CONCLUSION
It is my opinion, based on the information reviewed to date, that the Investment and Tax Strategy implemented on behalf of the Murphys had the characristics of a trade secret at the time the strategy was
implemented. The COBRA transacon was apparently not generally known in the financial and ta
services industr and it was apparntly suffciently secret as evidenced by the confidentiality statements.

Furter, reasonable security measur appeared to be in place, and the Investment and Tax Strategy had

not only potential value, but real value, as ilustrted by the Murphys' wilingnss to pay for the invention.
Additionally, it is evident from the preceding discussions of arms-length trde secret licensing agreements, that apportioning a percent of

the 25% Rule, trde secret litigation, and

the benefits enabled by trde

secrets between a licensee and a licensor is a common formula utilized in trade secret licenses.
The 25% Rule is one of

the most commonly used tecliiques in licensing. While it is frequently usd as a staring point to determine royalty rates for patent licensing, it is also applicable to trade secrets.

Furermre, the benefits allocation concept embedded in the "25% Rule" is actually practiced in real

world arm-lengt transactions. The trade secret licensing examples from the Royalty Source database unequivocally demonstrate that licensors and licensees regularly enter into trade secret licensing that the benefits. Lastly, it is insctive to look to the Cours utlize a royalty rate that represents a portion of to determine a value asessment methodology. Research indicates that the Court have regularly looked to resolve misappropriation disputes by allocating a portion ofthe benefits to the owner of the trade
secret.

From the preceding analysis and based on the information reviewed, my opinion is the Investment and
Tax Strategy had the characteristics of a trde secret at the time the stategy was used. Moreover,

assuming the Investment and Tax Strategy was believed to provide real or potential benefits, an appropriate way to compensate for use of the tax aspect of the Investment and Tax Strategy would have
been to chare a percent of the realized or potential ta benefits in the fonn of a royalty rate applied to a

royalty base.

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9. SIGNATURE
I declare under penalty of perjury that the foregoing is tre and correct
Respectfully submitted,

Melvin F. J

~~

b/;7~/(/?
Date

OCEAN TOMO
INTELI.I:cAI, c,\pn,\L ~:QUIT

n ~

200 West Madison, 37111 Floor

Chicago, Ilinois 60606
(312) 327-4400 Ph (312) 327-4401 Fx www.oceantomo.com

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i. 2.-=~

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Q INTCTIAL CAITAL EQUITY

Exhibit A

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MELVIN F. JAGER CURRICULUM VITAE
January 1, 2007

Melvin F. Jager is a praicing intellectual propert lawyer, consultat and expert witness. He is th pa
president of

The Licensing Executives Society International; the Licensing Executives Society US and

. ¡.

Canada; and the LES (US and Canada) Licensing Foundation. In 2004-2005 he was a Managing Directr of Ocea Torno LLC, an Intellectual Capital Merchant Bank and Finacial Consulting firm. From 1%5 through 2004 he was engaged in the private practce ofintellectual propert law for 35 years as a senior member of the finn of Brinks Hofer Gilson and Lione in Chicago, Ilinois, where he was chair of the Licensing Practce Group. His law practice concentrted in IP litigation, patent prosecution, licensing and
gener IP counseling. He has participated in litigation and licensing activities throughout the United States

and in other countres. He also continues to act as an expert witness in patent and trde secret lawsuits, and
as an arbitrator in international

licensing disputes.

Mr. Jager is the author of a leading three~volume treatise on Trade Secrets La which has been published annuaily by West Publishing of New York since 1981. He is also an author and editor of the three-volume treatise entitled Trade Secrets Throughout the World This international treatise involves contributing authors from 36 countries and was introduced by West Publishing in 2005. He is furter the author of the
Licensing Law Handbook published by West in 2Ò05. Each of

the treatises and texts are updated annually.

Mr. Jager has written other numerous additional articles on patents, tre secre and licensing; He also has

presented speeches on IP and licensing in many countries throughout the world, including presentations and aricles for The Licensing Executives Society, the Practicing Law Institute, the John Marshall Intellectual Proper Law Institute, the LES Technology Trasfer Institute, and the Japan Institute for Invention and Innovation. Mr. Jager was an adjunct professor of Patent Law and Litigation in the College of Law at the Ilinois at Urbana-Champaign, and fonnerly taught Trade Sec Law in the Masers Level University of
Program at The John Marshall Law School in Chicago. He also has bee an adjunct professor and guest
lecturer in patets, trade secrets and licensing at the Law School at the University of B.C. and at St Peters College of

Victoria, in Victoria

Law at Oxford Universit in Oxford, UK.

Ilinois Trade Secrets Act and an advisor for the Resttement of codifying the modern common law of

In his positions in the Ilinois Bar and the American Law Institute he was the major proponent of the the Law of Unfair Competion (1995)
trade secets.

Prior to becoming active in The Licensing Executives Society, Mr. Jager was chair of Committee for the Litigation Section of the American Bar Association, chair of

the IP Litigation

the Patent Trademar and. Copyright Secton of the Ilinois Bar Association and president of the Intellectual Propert Law
Association of Chicago. He is also a member of

the American Law Institute.

EDUCA nON

B.S. in Mechanical Engineering, University of

Ilinois Urbana-Champaign,

1960
University of Ilinois College of

Law, JD in Law, 1962

EXPERIENCE

Managing Director, IIClMIB Oce Torno, 2004 -2005

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Parner/Shareholder, Brinks Hofer Gilson and Lione, Chicago, Ilinois, 19651980 and 1985 to 2004.
Parer, Niro, Jager and Scavone, Chicago, Ilinois, 1984-1985.

Partner, Lee, Smith and Jager, Chicago, Ilinois, 1981-1984.
Assciate, Irons, Birch Swindler and McKie, Washington D.C., 1962-1965

Member, Ilinois and District of Columbia Bars; admitted to practice beore the United Staes Supreme Court the Court of Appeals for the Fedral Circuit and other Distrct and Appellate Cour, and the United States Patet an Trademark Offce.

TEACHING POSITIONS

Adjunct Professor of Law, University of Ilinois College of Law, Champaign Urbana, Ilinois (Patent Law and Patent Litigation) 1992 to 2004.

Adjunct Profesr, The John Marshall Law School, Chicago, Ilinois (Maser
Level Trado Secrets Law) 1991-1992.
. Adjunct Professor of Law, Nortern Ilinois (Lewis) College of

Law (Patent

Law),1978-1979.
Visiting Adjunct Professor of Law, University of Victoria College of

Law

(Trade Secrets and Licensing Law), 2003.
Visiting Adjunct Professor of Law, St. Peter's College of

Law, Oxford

University (Patent, Trade Secret and Licensing Law), 2003.

PROFESSIONAL ACTIVITIES

Licensing Executives Society International, Past President 2003-2004,

President 2002-2003; Preident Elec 2001-2002; Treaurer 1998-2001, International Delegate 1988-1998; Co-Chair, Inteational Activities Committee
(LESIA C), 1994- 1 998; Co-Chair Endowment Committee 2oo4-present; speer

on Patent and Trade Secret Licensing at LESI International Confereces or meeings in the Unite States, Jap, Korea, Gerany, Austlia, Hong Kong, Singapore, South Africa and Mexico.
Licensing Executives Society US and Canada, Pas President 1994-1995;
Prident 1993- 1994; Preident Elect 1992-1993; Vice Presidet, Centr

Region 1990-1992; Trust 1988-89; Chair, Annual LES Meeng in Hawaii on
Technology Protection and Transfer in the Pacific Rim, 1989; Workshops Chair, LES Annual Meetng in Los Angeles, 1986; Co-Chair, LES Regional Meeing

1982; Lectrer on Patent and Trae Sec Licensing at LES Tecnology
Trasfer Institue, 1986-1995;

I:'

Licensing Executives Society Fonndation, Founding member and President, 2000 to 2004.

American Bar Association Litigation Section, Chair ofIntellectual Properies
Litigation Committee, 1985-1989; Chair and Moderator of seminar on tral

2

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procedures and demonstrations in patent, trade secret and copyright trials and
the examination of expert witnesss; lecturer, Computer Law Seminar.

American Bar Association Intellectual Propert Law Section, Chair, Tax and Envirnmental Law Committees, Chair and Modera for Seminar on Jury Selection in Patent Cases; Annual Meeng Speaker on The Proteion of
Confidential Information between Employers and Employee.

American Bar Association Fellow

Patent Trademark and Copyright Council, 1983-1984; Chair, Trade Secrets Law Committee, 1984-1985; Chair of Committee to Revise and Propose the Ilinois Uniform Trade Secre Act, 1987lUinois Bar Association, Chair of

1988.
American Intellectual Propert Law Association, Speaker at AIPLA

Computer Law Institute, 1992 and Mid-Winte Meetings, 1989 and 1991.
Intellectual Property Law Association or Chicago, President, 1997-1998;
President Elect 1996- I 997; member of Chair, IPLAC Annual Dinner in Honor of

the Board of Governors 1995-1997;

the Federal Judges.

Practicing Law Institute, Chair, Trade Secrets Law Symposium, 1987-1989;
Speaker, Technology Licensing Symposium, 1987-1990; Membe

of PLI

Intellectual Propert Law Advisory Boar.

The Southwest Legal Foundation, Speaker on Trade Seres Law Update,
1982-1983.

The John Marshall Intellectual Property Law Institute, Speaker on Review
of

Trade Secrets Law, 1984, 1987, 1990 and 1998.

AmerIcan Law Institute, Consultat on the Restatent (Third) of

the Law of

Unfar Competition restating Tra Secret Common Law, 1995.
Japan Institute for Invention and Innovation, speer on Patents and

Licensing, 2003-2004

PUBLICATIONS

M. Jager, TRDE SECRETS LAW, the volume trtise published by West
Publishing, Inc. of

New York.

M. Jager, TRADE SECRETS THROUGHOUT THE WORLD, thee
volume treatise published by West Publishing, Inc. of New York

M