Case Notes/Answers
C.K. Coolidge, Inc. (Abridged), By John Hammond
Discussion Questions:
1. What are the interests in this case of the various players in the Varacil market?
2. What should Mr. Purcell do? If you think he should propose a settlement, what amount do you
recommend, and how should it be communicated?
, May 8, 1995
C.K. Coolidge, Inc (A)
Teaching Note
C.K. Coolidge has been sued for patent infringement. They have been producing a chemical
called Varacil for many years believing, apparently, that it was their own invention. Tolemite
Corporation, the patent holder, is now suing for a royalty of 10% on all past sales and future sales
over the remaining lifetime of the patent (7 years).
A third interested party is BARD. They sell 65% of all Varacil on the market (to Coolidge's
second largest 11%). They have been paying a 4% royalty to Tolemite. They also have an agreement
that on any subsequent licensing agreements by Tolemite (of which Coolidge may soon be one),
BARD will receive any of the royalties in excess of 4%. In effect BARD pays a 4% royalty on any
Varacil made under license, but receives any excess royalty that it can negotiate.
So, of the 10% royalty that Coolidge is being asked to pay, 4% will go to Tolemite, 6% will go
to BARD.
The case analysis is quite complex, especially given all the discussion about appeals.
However, the case itself contains a thorough analysis and this permits the student to concentrate on
the path any settlement negotiations are likely to take. The analysis seems to show that a settlement
of 7% would be better than incurring the cost of a trial even if Coolidge felt confident of victory!
Assignment
1. What are the interests in this case of the various players in the Varacil market?
2. What should Mr. Purcell do? If you think he should propose a settlement, what
amount do you recommend, and how should it be communicated?
Analysis
It is useful to have a general discussion to be sure everyone understands the complex web of
relationships in this case. Even the minor players in the Varacil market (representing 100% - 65% -
1
C.K. Coolidge, Inc. (Abridged), By John Hammond
Discussion Questions:
1. What are the interests in this case of the various players in the Varacil market?
2. What should Mr. Purcell do? If you think he should propose a settlement, what amount do you
recommend, and how should it be communicated?
, May 8, 1995
C.K. Coolidge, Inc (A)
Teaching Note
C.K. Coolidge has been sued for patent infringement. They have been producing a chemical
called Varacil for many years believing, apparently, that it was their own invention. Tolemite
Corporation, the patent holder, is now suing for a royalty of 10% on all past sales and future sales
over the remaining lifetime of the patent (7 years).
A third interested party is BARD. They sell 65% of all Varacil on the market (to Coolidge's
second largest 11%). They have been paying a 4% royalty to Tolemite. They also have an agreement
that on any subsequent licensing agreements by Tolemite (of which Coolidge may soon be one),
BARD will receive any of the royalties in excess of 4%. In effect BARD pays a 4% royalty on any
Varacil made under license, but receives any excess royalty that it can negotiate.
So, of the 10% royalty that Coolidge is being asked to pay, 4% will go to Tolemite, 6% will go
to BARD.
The case analysis is quite complex, especially given all the discussion about appeals.
However, the case itself contains a thorough analysis and this permits the student to concentrate on
the path any settlement negotiations are likely to take. The analysis seems to show that a settlement
of 7% would be better than incurring the cost of a trial even if Coolidge felt confident of victory!
Assignment
1. What are the interests in this case of the various players in the Varacil market?
2. What should Mr. Purcell do? If you think he should propose a settlement, what
amount do you recommend, and how should it be communicated?
Analysis
It is useful to have a general discussion to be sure everyone understands the complex web of
relationships in this case. Even the minor players in the Varacil market (representing 100% - 65% -
1
