Case Study - Business Nego

Claire BODEL

Business Negotiation class

Professor Hun-Joon Park

2016/05/17

Case study C.K. Claridge, Inc.

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

First and foremost, they are 3 main players in this case concerning the Varacil market :

• Tolemite which had been awarded a patent for synthesizing Varacil. Tolemite was not an user and producer of Varacil, and then decided to offer the use of the patent --manufacturing process - under license to BARD, principal Varacil producer in the U.S.

Hence that BARD is under license, it has to pay Tolemite a 4% royalty on all revenues.

→ Tolemite’s best interest is to obtain 10% or more (the highest possible) royalty payments on past and future sales of synthetic Varacil until the life of the patent.

• BARD, involved in the production of Varacil, is the industry leader of the synthetic Varacil market. Thus the company tooks roughly 66% of the market share.
  Moreover, BARD can sublicense to other Varacil producers who became interested in the process.

→  BARD can benefit from 2 situations if Tolemite and CKC will go on a trial.

If CKC will have to pay 10% royalty payments or more to Tolemite on past and future sales. As the industry leader, BARD will no longer be affected by this court decision.

Futhermore, if CKC wins the trial, founding the patent to be invalid, BARD’s royalty payments would desappear and then CKC’s competitive advantage will immediatly decrease if BARD decides to lower their prices. Lower prices also means that BARD will obtain more market share in the industry and then bring CKC down of the market.

         BARD will be the largest beneficiary in case of a lawsuit.

• CKC is a commercial outlet which prosper as an Arnoux subsidiary. This company is the second largest in the Varacil market and holds 11% of the market share.

The major concern is that CKC produces Varacil as well as BARD but they do not give any royalty fees to Tolemite which holds the Varacil patent.
Currently, CKC enjoys a competitive advantage over BARD because its pays a 4% royalty to Tolemite while CKC do not.

      →  Find a litigation alternative would be more interesting for CKC than going on court against Tolemite because costs of attorneys and the possible chance of losing is to take into account. In the case that both will go on trial, CKC’s best interest is to obtain the least costly ending for the lawsuit. The firm has to considerate the effects of the different outcomes regarding profits and market shares in the Varacil industry.

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