Hole in One (HIO) owns marketing intangibles, including trademarks and trade names, associated with golfing products that are sold throughout the U.S., including Maryland. HIO licenses these intangibles to a related party, Double Bogey (Double) located outside Maryland. Double manufactures the golfing products and places HIO's intangibles on the product packaging. The products are then sold to retailers in Maryland.

HIO strictly controls the manner in which Double uses and displays its intangibles. Pursuant to the license agreement, HIO also provides Double with its merchandising skills and know-how.

Using the analysis applied in the Geoffrey decision, would HIO likely be deemed to have a substantial nexus under the Commerce Clause such that it could be subject to a net income tax in Maryland?

A. Yes. HIO has intangibles in Maryland from its licensing activities. Under Geoffrey, these are sufficient under the Commerce Clause to establish nexus.

B. No. Under Geoffrey, the Commerce Clause requires a physical presence to support the imposition of a net income tax.

C. Yes. The Due Process Clause does not require a physical presence to support the imposition of a net income tax.

D. No. P.L. 86-272 protects the licensing of intangible assets if the license agreement is executed outside the state.