CFL Damages Calculation & Economic Analysis 2 — Questions and Answers
Question 1: In patent infringement damages, a 'reasonable royalty' is most commonly calculated using the framework established in:
- Georgia-Pacific Corp. v. U.S. Plywood Corp. (Correct answer)
- Panduit Corp. v. Stahlin Bros. Fibre Works
- Rite-Hite Corp. v. Kelley Co.
- Lucent Technologies v. Gateway
Correct answer: Georgia-Pacific Corp. v. U.S. Plywood Corp.
Georgia-Pacific sets out 15 factors for determining a reasonable royalty rate through a hypothetical negotiation between willing parties.
Question 2: When calculating economic damages, the difference between 'general damages' and 'special damages' (consequential damages) is that general damages:
- Flow naturally from the wrong and need not be specifically pleaded (Correct answer)
- Require expert testimony to establish causation
- Must be foreseeable to the defendant at contract formation
- Are limited to out-of-pocket losses only
Correct answer: Flow naturally from the wrong and need not be specifically pleaded
General damages naturally and necessarily flow from the breach, while special damages require specific pleading because they arise from particular circumstances of the plaintiff.
Question 3: The 'event study' methodology in securities damages analysis isolates the price impact of alleged fraud by:
- Separating stock price movements attributable to the fraud from market and industry-wide movements (Correct answer)
- Tracking all trades by insiders during the class period
- Comparing the defendant's stock price to the S&P 500 on the day of disclosure
- Measuring trading volume anomalies during the alleged fraud period
Correct answer: Separating stock price movements attributable to the fraud from market and industry-wide movements
An event study uses regression analysis to strip out market and industry effects, leaving only the stock price change attributable to the company-specific event.
Question 4: In commercial litigation, 'expectation damages' aim to put the non-breaching party in the position they would have been in if:
- The contract had been fully performed (Correct answer)
- The contract had never been entered into
- The breaching party had paid a reasonable penalty
- The parties had renegotiated the contract at current market rates
Correct answer: The contract had been fully performed
Expectation damages give the non-breaching party the benefit of the bargain—the economic position they would have achieved with full performance.
Question 5: In a trade secret misappropriation case, which damages theory would be most appropriate when the defendant's unjust enrichment exceeds the plaintiff's provable lost profits?
- Disgorgement of the defendant's profits attributable to the trade secret use (Correct answer)
- A reasonable royalty based on the trade secret's fair market value
- The cost to develop the trade secret independently
- Statutory damages under the Defend Trade Secrets Act
Correct answer: Disgorgement of the defendant's profits attributable to the trade secret use
When unjust enrichment exceeds provable lost profits, courts may award the defendant's profits attributable to the misappropriation under DTSA and the Uniform Trade Secrets Act.
Question 6: The 'before and after' method for calculating lost profits compares the plaintiff's financial performance:
- During the wrongful conduct period versus pre- and post-wrong periods (Correct answer)
- To the defendant's profits during the same period
- Before and after the plaintiff filed the lawsuit
- Before and after implementation of the remedial measures
Correct answer: During the wrongful conduct period versus pre- and post-wrong periods
The before-and-after method uses the plaintiff's own historical and post-harm performance as benchmarks to estimate damages caused by the defendant's conduct.
CFL Damages Calculation & Economic Analysis 2
In patent infringement damages, a 'reasonable royalty' is most commonly calculated using the framework established in: