Lost Profits/Damages Articles of Interest

The following are recommended articles that we have published in recent newsletters. Each discusses important issues in valuation.

Trade secrets - An economic damages case - A recent circuit court case, Carbo Ceramics Inc. v. Keefe, provides a framework for developing economic damage theories in trade secret misappropriation cases. The case suggests the reasonable royalty method is the preferred approach when trade secret misappropriation is imminent but no actual damages have occurred.

Whodunit — and how much is at stake? - When a company is a victim of a civil wrongdoing — such as breach of contract, negligence or patent infringement — profits frequently suffer. Courts may award monetary damages to make the injured party “whole” again.

Black and Blue, Inc. - Impaired businesses need a thorough assessment of economic damages - From breach of contract and patent infringement to outright negligence, commercial torts often give rise to economic damages. In these cases, it’s critical to put a precise dollar amount on how much business the company stands to lose. And many factors go into this assessment.

Estimating lost profits for new businesses - Historic financial statements provide a logical starting point for estimating lost profits. But how does an appraiser estimate lost profits for startups or early-stage businesses without historic data? A recent case, Parlour Enterprises Inc. v. Kirin Group Inc., outlines factors to consider when calculating damages for un-established businesses.