Profit on lost sales (2009-2012) = 5% 25,391,780.00 = 1,269,589.

00

Analysis:
1. "% Patent is calculated by the proportion of the company's total sales that is
attributed to cell phones using the InfiniCharge technology.
The total sales of Mycro 1, 2 and 3 is totaled $ 12,230,513.00 for 2009-2012.
The total sales of Initech for all the models totaled $ 25,391,780.00.
% sales of Mycro line = 12,230,513.00 / 25,391,780.00 = 0.4817 = 48.17%

2. The royalty (percentage of revenue paid as patent fee) that has to be paid to
Intertrode has an association with the "% Patent". Hence, from the given information
of U.S. Anuual Sales Data and the above calculation, we obtianed the following
table:
Cyberdyn
Company Rekall Tyrell Sirius Nakatomi Initech
e
Average %
51.7% 100% 22.8% 70.85% 15% 48.17%
Patent
Royalty
5% 7% 2% 3% 1% 5%
Payment %
a) Tyrell, Cyberdyne, and Nakatomi has a lower than usual Royalty Payment %
due to the following reasons:
i. These three companies have a stronger bargaining power, which means
that they have a stronger relative ability to exert influence over Intertrode.
Hence, Intertrode may make a concession to reach the agreement of
offering lower % royalty payment.
ii. Tyrell was required a lower % royalty payment due to its 100%
incorporation of Infinicharge into its product. The action shows a strong
favor of the technology, thus receiving discount on royalty from
Intertrode.
iii. Cyberdyne and Nakatomi received discount on the royalty payment
because both companies has an outstanding performance on sales. Hence,
because of their extraordinary market performance, Intertrode offered a
discount for the royalty payment.
iv. Because Intertrode is filing a suit against Initech, it is not reasonable for
Intertrode to offer a discount or make a concession due to their bargaining
power. Hence, Intertrode only needs to consider the association between
royalty and % patent.

3. In the electronic field, the typical range of patent fee ranges from 1% to 7% of the
sales revenue. Hence, our claim of a 5% royalty from Initech lies in the reasonable
range.