III - Corporative Intertwinings
The Religious Technology Center (RTC) is the owner of certain trademarks and service marks. These marks and its related intellectual property form the so-called "Dianetics® spiritual healing technology" and the "Scientology® applied religious technology" [Exh. No. 20]. Scientology organizations, like "Churches," "Celebrity Centers" or "Missions," derive their income from the worldwide sale of this "technology" in form of courses, books, etc. to their members or to the general public. The organizations receive the right to sell the "technology" through license agreements with RTC as license holder and/or the Church of Scientology International (CSI) as a sub-licensor. RTC and CSI in return derive their corporative income by the license fees obtained through those agreements. The licensing and its related actions is the major corporate activity between the various Scientology-organizations.
Shortly after its inception on January 1st, 1982, RTC received on May 16th 1982 "the ownership, supervision and control" of the trademarks and service marks identifying "Scientology applied religious philosophy" and "Dianetics spiritual healing technology" by the originator and founder of Scientology, Lafayette Ronald Hubbard through a so-called "assignment agreement" [Exh. No. 21]. This agreement was subject to an additional "option agreement" between Hubbard, RTC and another Scientology corporation, the "Church of Spiritual Technology" (CST). CST was incorporated on May 27th, 1982 [Exh. No. 22] by today's official agent, Sherman D. Lenske [Exh. No. 23]. Even before its official incorporation, Hubbard granted CST the right to purchase the to be transferred "Marks" and all the rights to those from RTC for the sum of $ 100 at any time on May 10th 1982 [Exh. No. 24]. Parallel and similar sounding agreements between Hubbard, RTC and CST were arranged during that period concerning the so-called "Advanced Technology," which consists of unpublished derivates of Scientology's confidential "Advanced technology" [Exh. No. 25].
Under these agreements RTC is forced to turn over 90 % of its net income to CST. This position which was said still to be the case during the time of Scientology's tax-exempt application in 1993 [Exh. No. 26].
RTC and CSI entered a license agreement on May 18th, 1982, granting CSI, the new "Mother Church of Scientology," the right to use and sub-license certain of the trademarks and service marks, for which RTC had been made the new owner 2 days earlier [Exh. No. 27]. In return for the grant of the marks, the agreement gave RTC practically an unlimited control not only over the activities of CSI but also over every organization that is a sub-licensee of CSI. In particular the agreement stated:
"... d) RTC shall have the right to monitor all operations of CSI and its related organizations, inspect all books, records and facilities, pertaining to use of the Marks and receive sample specimens and summaries of literature, publications and products using the marks, ... e) RTC may, if it ever deems it necessary or advisable, send a corrective mission to any organization authorized the Marks to correct any deviation from the standards, specifications or guidelines of this Agreement, ... "
Additionally RTC and CSI signed on January 1st, 1982 an "Organizational Covenant" granting CSI the right to deliver the "Advanced Technology" to its staff members [Exh. No. 28].
RTC and CSWUS entered on May 23rd, 1985 such an organizational covenant granting CSWUS the right to sell and deliver the "Advanced Technology" to its public members while guaranteeing weekly payments of 6 % of the monetary value of the "Advanced Technology"-services that are being delivered to the public from CSWUS towards RTC [Exh. No. 29].
On January 1st, 1982 RTC and FSO signed an organizational covenant with the same contents as the covenant between RTC and CSWUS [Exh. No. 30].
RTC has entered over the years similar organizational covenants/license agreements with all the other "Advanced Organizations" (AOs) within the Scientology network. As all the AO's are integrated within a corporation, these agreements are formulated between RTC and these corporations, such as "Church of Scientology Flag Ship Service Organization, Inc." from Clearwater, the "Church of Scientology Religious Education College, Inc." from East Grinstead, England, the "Church of Scientology, Inc." from Sidney, Australia and with "Church of Scientology Advanced Organization Saint Hill Europe & Africa" (AOSH EU). All of the agreements were signed on December 1st, 1988. For the purpose of this affidavit I have only attached the covenant between RTC and AOSH EU as an exhibit [Exh. No. 31].
RTC has registered its service marks and trademarks in various countries all over the world. Due to certain legal restrictions in different countries for religious corporations, RTC founded the corporation "Inspector General Network, Inc." (IGN) on June 7th, 1985 [Exh. No. 32], which functions as a "secular" representative for RTC in those countries.
CSI presents itself as the "mother church" of the "Scientology religion." In its function as such it exercises through various agreements with its subordinate organizations worldwide ultimate corporative control over those organizations and their activities.
In particular, CSI has entered the following types of agreements with other organizations:
a) License Agreements that regulate the use of the service marks and trademarks in a similar way as between RTC and the AOs;
b) Service Agreements regulate the training of the organizations employees by CSI in its headquarters and the monetary compensation by the organizations;
c) "Ecclesiastical Support Agreements," which acknowledge CSI's dominant role and control over all the functions and activities of the subordinate organizations and which guarantee a steady, weekly payment of 12.5 % of the organizations' net income towards CSI;
d) "Contracts Respecting Certain Religious Documents." These contracts regulate the use of files that the organizations has on their members and their staff. Ultimately it gives CSI the authority to control the use of them;
e) "Motion Picture Exhibition Agreements" guarantee CSI the weekly payment of 11 % of the revenue by the individual organizations for their use of Scientology training courses. It also forces the organizations to use certain equipment, like tape recorders, which CSI provides for the same use.
Additionally, whithin the hierarchical structure of CSI, a different corporation, "Scientology Missions International" (SMI) was created on December 22nd, 1981 [Exh. No. 33]. As seen in the document, SMI has the function to act as the mother church for the smaller Scientology organizations, called "Missions." Consequently CSI entered a separate license agreement with SMI on May 19th, 1982 [Exh. No. 34] that enabled SMI to act as a sub licensor with respect to the "Missions." Nevertheless SMI itself is fully integrated within the CSI structure, as in particular, it is solely composed of CSI-employees and its headquarters are situated in the same building complex that CSI uses for its operations [Exh. No. 35].
While there are other management entities and corporations within the organizational structure of CSI, as f. e. "World Institute of Scientology Enterprises" (WISE), "Celebrity Centre International" or "Applied Scholastics International," these have no significance for this affidavit and I therefore omit detailing them and their activities.
The Church of Scientology has a couple of hundred different organizations all over the world that act as "Churches" or "Missions" and are contracted through the agreements described above. For the purpose of the affidavit I will only point out a few of them, which are either important to mention for understanding the above arrangements or which have significance with regards to the latter described events in Chapter VII:
- A license agreement signed on June 15th, 1982 between CSI and the "Church of Scientology of San Diego [Exh. No. 36], which was later re-incorporated as "Church of Scientology Western United States" (CSWUS) [Exh. No. 12];
- A license agreement signed on May 26th, 1982 between CSI and the FSO [Exh. No. 37];
- An ecclesiastical support agreement signed on April 29th, 1992 between CSI and CSWUS [Exh. No. 38];
- An ecclesiastical support agreement signed on April 29th, 1992 between CSI and the FSO [Exh. No. 39];
- A motion picture exhibition agreement signed on August 2nd, 1991 between CSI and CSWUS [Exh. No. 40];
- A motion picture exhibition agreement signed on November 25th, 1991 between CSI and the FSO [Exh. No. 41];
- A license agreement signed on February 2nd, 1991 between SMI and the "Applied Philosophy Center of Greece," a Greek Scientology "Mission" in Athens [Exh. No. 42].
In its application from August 18th, 1993 for tax-exemption CSI stated that CSI/SMI have "entered into agreements" with "the CSFSO," "each Advanced Organization," "with the Class V Churches" and with "Missions" "with respect to the orthodox use of the Scientology religious marks, the care of confidential information by parishioners in the ministration of religious services, and the provision of ecclesiastical management services [Exh. No. 43]." It therefore can be assumed that CSI has signed similar agreements like the above mentioned with every Scientology organization worldwide, whether "Church, "Mission," "Advanced Organization" or "Celebrity Centre," guaranteeing CSI's complete corporative control over its Scientology network.
In one of the documents provided to the IRS by CSI in 1993 it can be seen that the great majority of revenue CSI receives from the other Scientology organizations derives from such agreements, regulating "management services" provided by CSI and the use of "Scientology religious marks" by the individual organizations [Exh. No. 26, Excerpt].
In the same statement to the IRS, CSI listed the distribution of revenue and expenses of the other Scientology organizations, including the percentage of "management and license fees" paid to CSI and "Advance Tech License Fees" paid to RTC. [Exh. No. 44, Excerpt].