Brown v. The Queen, 2001 DTC 1094 (TCC), aff'd supra 2003 DTC 5298 (FCA) -- summary under Other

In determining the principles to be applied in determining the fair market value of "game engines" acquired by a partnership (i.e., the cores of computer games that when a graphic element was added thereto would be functional computer games), Rip T.C.J. indicated that: the fact that the vendor ("ASC") granted to developers of the engines the right to use elements of the source code of the engines on a royalty-free basis was not a detraction from the value of the engines because such licence-back agreements would not cause the engines to produce more revenues; that in the absence of evidence as to the value of each specific engine purchased, it would be necessary to assess what average game sales would be; that in determining average game sale the unsuccessful track record of ASC to date should be taken into account; that in determining such average it would not be appropriate to take into account the possibility of one or more of the eleven engines being a "hit" given that valuation should be performed on a conservative basis; and that the expected decline in the market for engines using 16-bit platforms should be also taken into account; and that the calculations should find after-tax values.