Judgment Case 6-7

Read the following Judgement Case prompt: Assume that Pfizer, a large research-based pharmaceutical company, enters into a contract with a start-up biotechnology company called HealthPro and promises to:

1. Grant HealthPro the exclusive rights to use Pfizers Technology A for the life of its patent. The license gives HealthPro the exclusive right to market, distribute, and manufacture Drug B as developed using Technology A. Pfizer views the patent as functional intellectual property.

2. Assign four full-time equivalent employees to perform research and development services for HealthPro in a specially designated Pfizer lab facility. The primary objective of these services is to receive regulatory approval to market and distribute Drug B using Technology A. HealthPro is required to use Pfizers lab to perform the research and development services necessary to develop Drug B using Technology A, because the expertise related to Technology A is proprietary to Pfizer and not available elsewhere.

Required: Are the license and R&D development services separate performance obligations? Indicate yes or no and explain your reasoning.