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Calculating and Proving Damages - Product Image

Calculating and Proving Damages

  • ID: 2126937
  • October 2014
  • Region: United States
  • 568 Pages
  • ALM Media, LLC

Find out how commercial damages can be calculated and supported with evidence! Covering everything from back-of-the envelope estimates to the use of complex financial models, this guide will help counsel for both plaintiffs and defendants calculate and prove damages in various types of business litigation.

While methods for calculating damages contain some common elements, these methods can differ according to the area of substantive law involved. The authors of Calculating and Proving Damages draw on their experience and specialized knowledge to explain and clarify the techniques needed in virtually any damages situation you are likely to encounter.

Topics covered include: determining the types of damages available; models for computing damages; evidence-gathering techniques; damages in tort, contract, intellectual property, antitrust, securities and other types of cases; how to make complex models comprehensible to judges and juries; use of experts; and more.

Throughout, the authors focus on the practical as well as the legal. With this book in hand, all parties will find it easier to estimate damages and formulate the best strategy for trying or settling a case.

CHAPTER 1
Introduction
- 1.01 Historical Developments Relating to Damages
- 1.02 Steps in Calculating and Proving Damages
- 1.03 Investigating the Nature and Extent of Injury
- 1.04 Determining the Types of Recoverable Damages
[1] Compensatory Damages
[2] Punitive Damages
[3] Prejudgment Interest
[4] Fees and Costs
[5] Reductions to Damages
- 1.05 Marshalling Evidentiary Support
- 1.06 Constructing the Damages Model
- 1.07 Proving or Rebutting Damages
- 1.08 Presenting the Damages Case

CHAPTER 2
Litigant Damage Expectations
- 2.01 The Litigant's Perspective
[1] Variations in Perspectives
[2] Financial Objectives
[3] Strategic Importance Regarding Core Business and Future Products
[4] Non-Recoverable Litigation Costs
- 2.02 Why Damage Calculations May Not Be Seen as a Priority
[1] Challenges to Lawyers
[2] Compartmentalization of Damages
- 2.03 Why Calculation of Litigation Damages Is Important
[1] Noteworthy Cases
[2] Strategic Importance
- 2.04 Best Practices for the Calculation of Damages in Litigation

CHAPTER 3
Looking at Damages: Common Damage Frameworks and Components
- 3.01 Introduction
- 3.02 Lost Profits
[1] Lost Sales
[2] Impaired Sales
[3] Incremental Costs Associated with Incremental Sales
- 3.03 Rent and Royalties: Using Georgia-Pacific as a Useful Analytical Framework
- 3.04 Unjust Enrichment and Disgorgement of Profits
- 3.05 Diminution in Value
- 3.06 Interest and Discounting
[1] Adjusting for the Time Value of Money
[2] Interest as Damages
[3] Discounting for Risk
- 3.07 Business Interruption Claims
- 3.08 Mitigation

CHAPTER 4
Damages Discovery
- 4.01 Introduction
- 4.02 The Unique Nature of Damages Discovery
- 4.03 The Growth of Electronically Stored Information (ESI) and Related E-Discovery
[1] Locating Key Information in Electronic Sources
[2] E-Discovery Rules
[3] Practical Effect of the New Rules
- 4.04 Preservation/Retention of Sources
[1] Preservation Triggers
[2] Preservation Challenges of Damages-Related ESI
- 4.05 Damages-Focused Discovery Planning
[1] Essentials
[2] Early Conferences with Opponents

CHAPTER 5
Proving Damages
- 5.01 Complexity vs. Understandability
- 5.02 The Courts' Charge Under Certain Evidentiary Standards
[1] The Frye Standard
[2] Rules 702 and 703 of the Federal Rules of Evidence: Testimony by Experts
[3] The Daubert Trilogy: Daubert, Joiner, and Kumho
[4] Jurisdictional Differences
- 5.03 Historic Sales and Profitability
[1] Financial Reporting and Sources of Financial Information
[2] Revenue
[3] Expenses and Incremental Product Costs
[4] Profitability
- 5.04 Unjust Enrichment
[1] Remedies Calling for Disgorgement of Profits
[2] Burden of Proof
- 5.05 Estimated Lost Profits
[1] Overview and Application
[2] Lost Sales
- 5.06 Diminution in Value
[1] Date of Valuation
[2] Key Factors in Defining a Valuation Assignment
[3] Historical Valuation (Actual Business)
[4] Hypothetical Valuation
- 5.07 Interest on Damages Awards
- 5.08 Conclusion

CHAPTER 6
Patent Infringement Damages: Royalties and Lost Profits
- 6.01 Introduction
- 6.02 Injunctive or Coercive Remedies
- 6.03 The Damages Period
[1] Beginning of the Damages Period
[2] End of the Damages Period
- 6.04 Products Affected
[1] Infringing Products
[2] Patent Owner Products
- 6.05 A Reasonable Royalty
[1] The Federal Statute
[2] Multiple Patents and the Apportionment of Damages
[3] “Reasonable Royalties” and Court Precedents
- 6.06 Georgia-Pacific Corp. v. U.S. Plywood Corp.
[1] Factor 1: The Royalties Received by the Patentee for the Licensing of the Patent in Suit, Proving or Tending to Prove an Established Royalty
[2] Factor 2: The Rates Paid by the Licensee for the Use of Other Patents Comparable to the Patent in Suit
[3] Factor 3: The Nature and Scope of the License, as Exclusive or Nonexclusive, or as Restricted or Nonrestricted in Terms of Territory or with Respect to Whom the Manufactured Product May Be Sold
[4] Factor 4: The Licensor's Established Policy and Marketing Program to Maintain Its Patent Monopoly by Not Licensing Others to Use the Invention or by Granting Licenses Under Special Conditions Designed to Preserve That Monopoly
[5] Factor 5: The Commercial Relationship Between the Licensor and Licensee, Such as, Whether They Are Competitors in the Same Territory in the Same Line of Business; or Whether They Are Inventor and Promoter
[6] Factor 6: The Effect of Selling the Patented Specialty in Promoting Sales of Other Products of the Licensee; the Existing Value of the Invention to the Licensor as a Generator of Sales of His Nonpatented Items; and the Extent of Such Derivative or Convoyed Sales
[7] Factor 7: The Duration of the Patent and the Term of the License
[8] Factor 8: The Established Profitability of the Product Made Under the Patent, Its Commercial Success, and Its Current Popularity
[9] Factor 9: The Utility and Advantages of the Patent Property Over the Old Modes or Devices, if Any, That Had Been Used for Working Out Similar Results
[10] Factor 10: The Nature of the Patented Invention; the Character of the Commercial Embodiment of It as Owned and Produced by the Licensor; and the Benefits to Those Who Have Used the Invention
[11] Factor 11: The Extent to Which the Infringer Has Made Use of the Invention and Any Evidence Probative of the Value of That Use
[12] Factor 12: The Portion of Profit of the Selling Price That May Be Customary in the Particular Business or in Comparable Businesses to Allow for the Use of the Invention or Analogous Inventions
[13] Factor 13: The Portion of the Realizable Profit That Should Be Credited to the Invention as Distinguished from Nonpatented Elements, the Manufacturing Process, Business Risks, or Significant Features or Improvements Added by the Infringer
[14] Factor 14: The Opinion Testimony of Qualified Experts
[15] Factor 15: The Amount That a Licensor and Licensee Would Have Agreed Upon (at the Time the Infringement Began) if Both Had Been Reasonably and Voluntarily Trying to Reach an Agreement
- 6.07 Beyond the Use of the Georgia-Pacific Factors
[1] Possible Data Sources
[2] Design Arounds
[3] Established Royalty Rate and Panduit Kicker
[4] Rules of Thumb
- 6.08 Lost Profits
[1] Demand for the Patented Product
[2] Absence of Acceptable Non-Infringing Substitutes
[3] The Patent Holder's Manufacturing and Marketing Capability to Exploit the Demand
[4] How Much Profit the Patent Holder Would Have Made
[5] Key Elements and Factors
[6] Lost Profits Beyond Lost Sales of the Patented Product
- 6.09 Enhancement of Damages
[1] Prejudgment Interest
[2] Postjudgment Interest
[3] Willful Infringement
- 6.10 Special Damages Cases
[1] Design Patents
[2] Infringement Claims Against the United States

CHAPTER 7
Trademark, False Advertising, and Unfair Competition Cases: The Lanham Act and Beyond
- 7.01 Overview of Violations and Remedies
- 7.02 Monetary Relief Under Lanham Act Section 35(a)
- 7.03 Defendant's Profits
[1] Potential Prerequisites to Disgorgement
[2] Calculating Defendant's Profits
[3] Deciding the Issue of Disgorgement
- 7.04 Plaintiff's Compensatory Damages
[1] Potential Prerequisites to Awarding Plaintiff's Damages
[2] Types of Plaintiff's Damages
- 7.05 Monetary Relief from Likelihood of Post-Purchase or Initial Interest Confusion
- 7.06 Remedies for Use of a Counterfeit Mark
[1] Enhanced Damages and Attorney's Fees
[2] Statutory Damages
- 7.07 Statutory Damages for Cybersquatting and Cyberpiracy
- 7.08 Enhanced Damages Generally
- 7.09 Monetary Relief for Violations of Rights of Publicity
- 7.10 Punitive Damages
- 7.11 Costs of Suit
- 7.12 Interest on Monetary Awards
- 7.13 Attorney's Fees in “Exceptional” Cases Under Lanham Act Section 35

CHAPTER 8
Copyright Damages
- 8.01 Relief Available: Overview
[1] Damages
[2] Costs and Attorney's Fees
[3] Impoundment and Destruction
[4] VARA Actions
[5] DMCA Actions
[6] Traditional Equitable Relief
- 8.02 Advantages of Registration Generally
[1] Precondition to Legal Action
[2] Statutory Damages
[3] Attorney's Fees
- 8.03 Copyright Registration as a Precondition to Filing Suit
[1] Registration vs. Pending Application
[2] Validity Considerations
- 8.04 Obtaining Statutory Damages
[1] Assessed by Jury Trial
[2] Effective Date of Copyright Registrations (Section 410(d))
[3] Registration Obtained Prior to Infringement, Pre-Suit
[4] Special Handling
[5] Registration Obtained Post-Infringement, Pre-Suit
[6] When to Elect Statutory Damages
- 8.05 Computing Statutory Damages
[1] Statutory Damages Amounts
[2] Court's Discretion as to Amount
[3] Methods of Computing
- 8.06 Proof of Actual Damages and Profits
[1] Actual Damages
[2] Profits of Infringer
- 8.07 Reasonable Attorney's Fees
[1] When Plaintiff Is the Prevailing Party
[2] When Defendant Is the Prevailing Party
[3] Factors Considered by the Court
[4] Articulating the Rationale
[5] Costs

CHAPTER 9
Trade Secret Damages
- 9.01 Introduction
- 9.02 Definition of Trade Secret
[1] Uniform Trade Secrets Act
[2] Restatement of Torts
[3] State Law Differences
- 9.03 Establishing a Protectable Trade Secret
[1] Examples of Trade Secrets
[2] Secrecy
[3] State Law Procedural Differences
- 9.04 Misappropriation of Trade Secrets
[1] Proof of Misappropriation
[2] Inevitable Disclosure Doctrine
- 9.05 Injunctive Relief
- 9.06 Measures of Damages for Misappropriation
- 9.07 Establishing Damages
[1] Lost Profits
[2] Unjust Enrichment
[3] Reasonable Royalty
[4] Defensive Responses and Techniques
- 9.08 Duration of Damages
- 9.09 Lost Profits
[1] Definition of Lost Profits
[2] Calculating Pro Forma Profits
[3] Price Erosion
[4] Development Costs
[5] Patent Law Analogies
- 9.10 Unjust Enrichment
[1] Definition
[2] Defendant's Profits
[3] Sample Unjust Enrichment Calculations
[4] Defendant's Cost Savings
- 9.11 Reasonable Royalties
- 9.12 Alternative Measures of Damages for Trade Secret Misappropriation
- 9.13 Apportionment of Damages Among Different Trade Secrets
- 9.14 Punitive Damages and Attorneys' Fees

CHAPTER 10
Antitrust Damages
- 10.01 Critical Principles of Antitrust Damages Calculations
[1] Comparing the Actual, Anticompetitive World to a Hypothetical, Competitive World
[2] Differentiating Among Kinds of Injuries
[3] The Plaintiff's Burden of Proof
[4] Standards and Speculative Calculations
- 10.02 Calculating Antitrust Damages: Modeling the But-For World
- 10.03 How to Calculate an Antitrust Overcharge
[1] Benchmark Analyses
[2] Yardstick Models
[3] Econometrics: The Role of Regression Analysis
[4] Discovery: What Types of Information Are Useful
- 10.04 The Economics of Lost Profit Damages
[1] Basics of a Lost Profit Case: Section 2 Monopolization Claims
[2] Benchmarks and Yardsticks, Again
[3] Defining Relevant Antitrust Markets
[4] Causality
- 10.05 Conclusion

CHAPTER 11
Securities Damages
- 11.01 Legal Background
[1] Foundations
[2] Reforms
[3] Significant Cases
- 11.02 Role of the Expert
[1] Estimating Per Share Inflation
[2] Calculation of Damages
- 11.03 Conclusion

CHAPTER 12
Personal Injury and Wrongful Death Damages
- 12.01 Introduction
- 12.02 Damage Components
[1] Economic Damages
[2] Noneconomic Damages
[3] Punitive Damages
- 12.03 Experts
[1] Economic Damages Experts
[2] Medical Experts
[3] Life Care Planning Experts
[4] Vocational Experts
[5] Education Experts
- 12.04 Calculating Economic Damages
[1] Period of Loss
[2] Actuarial Tables
[3] Lost Earnings and Lost Earning Capacity
[4] Lost Fringe Benefits
[5] Taxes
[6] Lost Household Services
[7] Personal Maintenance
[8] Medical Expenses and Life Care Costs
[9] Discounting to Present Value
[10] Prejudgment Interest
- 12.05 Discovery
[1] Basic Information
[2] Employer Records
[3] Business Records
[4] Tax Records
[5] Collective Bargaining Documents
[6] Social Security
[7] Medical Records
[8] Fact Witness Testimony
[9] Other Records
- 12.06 Conclusion
CHAPTER 13
The Effects of Daubert on Damages
- 13.01 Background
[1] The Frye Standard
[2] Daubert, Kumho Tire, and FRE 702
[3] Cases Refining Daubert
[4] State Courts
- 13.02 Challenges to Damages Expert Testimony
- 13.03 Preparation by Experts and Practitioners
- 13.04 Using an Expert Who Has Been Successfully Challenged

Table of Abbreviations
Index

Kristopher A. Boushie



Kristopher A. Boushie CPA/ABV/CFF, CVA (Co-editor and Co-author of Chapters 1, 2, 3, 6, and 13) is the President of Quantus Consulting LLC of Jericho, Vermont. Mr. Boushie is a Certified Valuation Analyst and a Certified Public Accountant, Accredited in Business Valuation and Certified in Financial Forensics. Mr. Boushie has over twenty-seven years of experience in financial and litigation consulting, working on a variety of forensic valuation issues. For the past twenty years, much of Mr. Boushie's practice has focused on intellectual property matters.

Christopher H. Spadea



Christopher H. Spadea AVA, CFFA (Co-editor and Co-author of Chapters 1, 2, 3, 6, 9, and 13) is Senior Director of Developing Markets at Intellectual Ventures. Mr. Spadea is an Accredited Valuation Analyst and a Certified Forensic Financial Analyst. Mr. Spadea has seventeen years experience providing expert economic business valuation, litigation damages, and IP transaction services. He has assisted counsel and clients in valuing complex business events and assets through detailed forensic and prospective analysis, and has experience in assessing the appropriate economic measure of damages in many areas.

Martin F. Cunniff



Martin F. Cunniff (Co-editor and Co-author of Chapters 1, 2, and 6) is a partner in the Washington, D.C. office of Arent Fox LLP. His practice focuses on high-exposure business litigation for leading corporations. Mr. Cunniff has represented a number of corporations located outside the United States and is familiar with the jurisdictional and logistical issues faced by such clients. His practice encompasses litigation of all types of complex commercial disputes including antitrust, securities fraud, breach of contract, business torts, fraud, intellectual property, trade secrets, and other commercial issues. Mr. Cunniff has been involved in numerous class actions and has handled the damages case in dozens of matters exceeding damages of $100 million.

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