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Lost Profits or Reasonable Royalties?
Engagement
In a case involving the alleged infringement of three patents covering a dozen products in the construction equipment industry, Gleason & Associates was retained by counsel for the defendant to analyze the plaintiff's claims for lost profits and/or reasonable royalties.
Gleason's Role
The plaintiff's claim for lost profits included a claim for revenue generated from all of the defendant's sales of the products in question. In defense, Gleason & Associates identified four major factors that undermined the plaintiff's lost profits claim:
- The plaintiff didn't manufacture all of the same products the defendant sold, so it couldn't logically claim lost profits on products it didn't sell. Likewise, it didn't market its products overseas, which represented a significant share of the defendant's sales. The plaintiff's sales prices for similar products were higher than the defendant's selling prices, casting doubt on the plaintiff's ability to win the same level of business.
- Because there were many substitute products on the market, there was no guarantee that buyers would have purchased from the plaintiff had the alleged infringement not occurred.
Similarly, the plaintiff's reasonable royalty calculation
also came up short when Gleason & Associates analyzed the claim using
the 15 Georgia Pacific factors used to determine reasonable royalty claims.
Result
Should liability be established, the plaintiff's damages will be a fraction
of those asserted if Gleason & Associates' analysis is accepted by
the court.
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