C.K. Claridge, Inc.

Negotiation Assignment:

C.K. Claridge, Inc.

1) What are the interests in this case of the various players in the Varacil market?

        They are various players in the Varacil market and each of these players has a different interest in this case. First of all, the three main players are: BARD, Tolemite and CKC.  

        BARD has an industry leader position in the Varacil market. In order to use Tolemite’s technique, BARD has paid them 4% of royalty fees. Moreover, if there is a future lawsuit between Tolemite and Varacil, BARD would benefit from it, either CKC wins or loses against Tolemite. Indeed if CKC wins, BARD will not have to pay the 4% royalty fees to Tolemite anymore and could perhaps also get the money they have already paid before. In the case that CKC loses, it would be even better for BARD since they would benefit from the 10% with Tolemite, and also because the other competitors which include Varacil will have to pay the royalty fees to Tolemite too. Therefore, it means that they would lose their price competitiveness and it would be even easier for BARD to stay the market leader and even have a monopole on the Varacil market. Furthermore, if the court recognises the patent, BARD could use their right to sublicense in order to get more revenues from the other Varacil’s producers.

Tolemite generates revenue thanks to royalty fees through the use of their patent over the Varacil chemical component. For Tolemite as the patent owner, the purpose of the lawsuit is to earn even more revenue into receiving royalty fees not just from BARD, but also CKC and the other little companies. This applies for both past and future sales of the synthetic Varacil and during lifetime of the patent. But if Tolemite loses which will occur if the court doesn’t recognise the patent, they would lose everything. They would undoubtedly no longer be able to make any revenue from the Varacil market.

        CKC is a large company in the Varacil market that produces synthetic Varacil without paying any royalty fees to Tolemite on the contrary of BARD. This last point gives CKC a competitive advantage over BARD, the market leader. The main goal of CKC is to try to resolve the problem as soon as possible and minimise all the potential costs that could occur in the future. They are several options that are to be considered by CKC. Firstly, they can win the case and continue their business with any problem. This scenario will also benefit BARD that will not have to pay the royalty fees to Tolemite anymore. Secondly, in the losing case, CKC will have to pay 10% of royalty fees to Tolemite and might lose their competitive advantage among the Varacil market. Then, if this last case occur, they could still appeal, but it’s important to highlight the fact that going to court and appealing have significant costs. Finally, they can settle an agreement with Tolemite and try to find a R% that would fit both parties and above all avoid going on trial and spend a tremendous amount of money on attorneys and so on...

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