Patent and Trademark Infringement Damages Calculations, Appraisal Actions and Denial of Suit Seeking a Purchase Price Adjustment Reviewed by Momizat on . Case Law Four cases are presented in this article that provide valuation, litigation support professionals, and M&A advisors insight regarding how courts ar Case Law Four cases are presented in this article that provide valuation, litigation support professionals, and M&A advisors insight regarding how courts ar Rating: 0
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Patent and Trademark Infringement Damages Calculations, Appraisal Actions and Denial of Suit Seeking a Purchase Price Adjustment

Case Law

Four cases are presented in this article that provide valuation, litigation support professionals, and M&A advisors insight regarding how courts are addressing damages claims, challenges to experts, appraisal action challenges, and claims of fraud and breach of contract in connection with M&A transactions. Although the cases are from Delaware and California, they provide insight for readers to use in their practices.

[su_pullquote align=”right”]Resources:

Current Update in Valuations

Trademark and Copyright Damages

Calculation of Economic Damages in Patent Litigation Matters

Commercial Damages and Lost Profits


Kahn v. Stern, C.A. No. 12498-VCG (Del. Ch. Aug. 28, 2017)

Review Standard Used to Assess Claims Brought Against Independent and Disinterested Board Members in Connection with a Merger


This action arises from the sale of a small N.J. aerospace manufacturing company incorporated in Delaware.  The company, Kreisler Manufacturing Corp, traded in the pink sheets and had been largely controlled by the Stern family since 1918.  Sometime between October and December 2015, the company began a process to explore a sale of the company.  Expressions of interest came from seven parties and the choice narrowed to a buyer that offered $18.75/share, subject to adjustments.

A fairness opinion was secured and a special committee formed to assess sale.  The majority of this special committee was comprised of independent board members, who subsequently approved the sale for $18.00/share.  Since more than 50 percent of the shareholders approved the sale, no stockholder vote was taken.  Instead, the shareholders were sent a memorandum and advised of their right to an appraisal.

The president of the company executed an employment agreement with the buyer and was paid a retention bonus.  Plaintiff alleged that this was a side deal, which resulted in a downward adjustment in the share purchase price.

The problem in this case involves the complaint and allegations made.  The issue before the court was to ascertain whether the case should be dismissed based on the allegations.

Issue Before the Court

Whether plaintiff’s complaint should be dismissed for failure to state a claim upon which relief can be granted under Del Rules of Civil Procedure 12(b)(6).


Motion to dismiss granted.


In this case, plaintiff sought to paint three of the board members as interested.  While this was true for two, the facts provided failed to support the allegation that the third was an insider and interested.  This was an important point in the analysis.

The court held in part that:

The defendants observe that the complaint and briefing are devoid of any allegations supporting a reasonable inference that directors (independent directors) were involved in the side deals or engaged in bad faith conduct themselves.  The defendants contend, correctly, that to withstand their motion, the complaint must allege that the board’s approval of the merger, in the face of the side deals, was so far beyond the bounds of reasonable business judgment that it is inexplicable on the grounds other than bad faith; otherwise, the process allegations must be dismissed.

This is a high standard indeed.

At the pleading stage, I must determine whether the complaint contains sufficient allegations that could reasonably lead to an inference that the decision of the board is inexplicable absent bad faith.  The plaintiff points to the initial offer of “$18.75, subject to adjustments,” the final sales price of $18.00, and relies on an inference that some of this reduction resulted from the side deals.  Such an inference alone is unavailing; it must be reasonably conceivable that such portion of reduction allocable to the side deals, if any, makes board approval inexplicable absent bad faith.  Here, the complaint falls short.

The complaint contains a single relevant section, titled “Arlington Lowers its Bid as a Result of the Side Deals.”  That portion of the complaint provides in pertinent part, however, simply that:

[t]he Information Statement does not disclose how Arlington’s bid of ‘$18.75 per share, subject to adjustments’ was changed into a Merger Agreement at $18 per share, though it appears that the adjustment from $18.75 to $18 was made in part due to costs associated with the side deals for [the Stern Defendants] (the sale bonuses alone cost $0.11 per share).

To the extent I can consider the merger-reduction facts laid out above as nonconclusory allegations, the plaintiff’s complaint still does not plead facts creating a reasonable inference of bad faith, because the amount of the reduction actually arising from the side deals, and hence its materiality, is never pled; more importantly, pleadings to negate the good faith of the independent directors approving the merger in light of the side deals are absent.

The court also resisted plaintiff’s argument that Alidina provided guidance and a basis for denying the motion.  The court responded, noting that:

The plaintiff asserts that the cases he cites “build on the Supreme Court decision in Parnes [v. Bally Entertainment Corporation]” which stands for the proposition that, in certain circumstances, even in the absence of a controller, a majority disinterested board can breach the duty of loyalty when it approves an unfairly negotiated transaction that benefits an insider at the expense of other stockholders, and that is inexplicable in reference to business judgment.  This proposition is true enough; it is the well-pled facts supporting such a conclusion that are absent here.

The standard for overcoming the presumption of loyalty, supporting an inference of bad faith, is necessarily high.  The cases the plaintiff relies on make this clear.  For example, Alidina explains that the bad faith theory the plaintiff seeks to invoke here is really a “narrow escape hatch” to be employed “in those rare cases where the decision under attack is so far beyond the bounds of reasonable judgment that it seems essentially inexplicable on any ground other than bad faith.”  The Alidina Court then highlights that to meet this standard, “[t]he decision must be egregious, lack any rational business purpose, constitute a gross abuse of discretion, or be so thoroughly defective that it carries a badge of fraud.”

Alidina involved alleged actions by the interested party that constituted conduct “so egregious” that the independent board “likely could not have approved the transactions in good faith.”  Specifically, the complaint in Alidina alleged that the board “knew” that the interested party sought out the merger partner, “dictated the terms of the transaction, secured a valuable asset of the company at a grossly unfair price, and diverted funds away from the company to himself.”  The valuable asset secured by the insider, and acquiesced to by the board, was the sale of a subsidiary of the target to the CEO of the target who was also a member of the target’s board and a 26% stockholder.  This side deal to the insider was “demanded” in exchange for his approval of the overarching merger and it was alleged with particularity that the side deal diverted substantial funds away from the company to the insider.

The case underscores the value and importance of an independent and disinterested board and sheds light on what parties in Delaware, and arguably in other jurisdictions, must plead to avoid having their complaint dismissed.  Business consultants involved in transaction advisory services will want to read this decision more fully to better identify risks.

DFC Global Corporation v. Muirfield Value Partners, L.P. (Del. Aug. 1, 2017)

Delaware Supreme Court Declines to Adopt Presumption in an Appraisal Action of Deal Price as Fair Value in a Robust, Market Driven Sales Process


DFC Global Corporation (DFC) provides alternative consumer financial services, predominately payday loans.  The 2014 transaction giving rise to this appraisal action resulted in DFC being taken private by Lone Star, a private equity firm.  The firm grew by acquiring other entities and expanding overseas.

DFC’s shares were traded on the NASDAQ exchange from 2005 until the merger.  Throughout its history as a public company, the record suggests DFC never had a controlling stockholder, it had a deep public float of 39.6 million shares, and, it had an average daily trading volume just short of one million shares.  DFC’s share price moved sharply in reaction to information about the company’s performance, the industry, and the overall economy.  Ensuing regulatory changes in the area of lending, in the U.S., Canada, and U.K., impacted its operations.

DFC engaged Houlihan Lokey Capital Inc., in the spring of 2012, to look into selling the company.  Houlihan contacted six private equity sponsors and eventually had discussions with J.C. Flowers & Co. LLC and another sponsor, as well as an interested third party that Houlihan had not contacted.  These three potential buyers conducted due diligence, but in August, one of the three lost interest, and, in October, J.C. Flowers and the other potential buyer also lost interest.  Over the next year, Houlihan reached out to thirty-five more financial sponsors and three strategic buyers.

In autumn 2013, DFC attempted to refinance roughly $600 million in Senior Notes.  But, the offering was terminated because of insufficient investor interest.  If DFC had wanted to go ahead with the refinancing, it would have needed to increase the bonds’ coupon rate.  Analysts pointed to the S&P credit rating agency’s downgrade of DFC from B+ to B after the refinancing was announced and “market uncertainty around payday lending” as two factors that contributed to the termination.  To be clearer about what this means, despite the lucrative fees that investment bankers make from refinancing a large tranche of public company debt and syndicating a new issue, Wall Street could not do that for DFC unless DFC was going to compensate new debtholders with a higher interest rate reflecting DFC’s uncertain financial condition.

In September 2013, DFC renewed discussions with J.C. Flowers and began discussions with Crestview Partners about a joint transaction.  In October, Lone Star expressed interest in DFC.  In November, DFC gave the three interested parties financial projections prepared by DFC’s management that estimated fiscal year 2014 adjusted EBITDA to be $219.3 million.  On December 12, DFC learned that Crestview was no longer interested in pursuing a transaction.  On the same day, Lone Star made a non-binding indication of interest in acquiring DFC for $12.16 per share.  On December 17, J.C. Flowers made a non-binding indication of interest at $13.50 per share.

On February 14, 2014, DFC’s board approved revised management projections, which were shared with J.C. Flowers and Lone Star.  These projections lowered DFC’s projected fiscal year 2014 adjusted EBITDA to $182.5 million, a 16.8% decrease from the November projections.  On February 28, Lone Star offered to buy DFC for $11.00 per share and requested a 45-day exclusivity period.

Lone Star’s offer was lower than its previous indication of interest because of U.K. regulatory changes, the threat of increased U.S. regulatory scrutiny, downward revisions in the company projections, reduced availability of acquisition financing, stock price volatility, and weak value in the Canadian dollar.  On March 3, J.C. Flowers informed DFC that it was no longer interested in pursuing a transaction because “it could not get comfortable with the company’s regulatory exposure in the U.K.”  On March 11, DFC entered into an exclusivity agreement with Lone Star.

On April 1, DFC’s board approved the merger at $9.50 per share.  The next day, DFC announced the merger and also cut its earnings outlook, reducing 2014 fiscal year adjusted EBITDA projections from $170–200 million to $151–156 million.  Within one week of the merger being announced, S&P placed DFC’s long term “B” rated debt on “CreditWatch with negative implications.”  The merger closed June 13, 2014.  As it turned out, DFC missed its fiscal year 2014 targets.

Dissenting shareholders (petitioners) dissented and sought an appraisal action.  The petitioners’ valuation expert determined DFC’s value only relying on a discounted cash flow model and used that to come to a fair value of DFC at $17.90 per share, 88% above the $9.50 per share deal price.  The trial court noted that there were substantial differences in how the DCF and eventual value was calculated; this decision goes into detail regarding the projections, treatment of WC, and the discount rates used by the parties.

The Chancery Court, having expressed doubts about each fair value input, concluded that “each of them still provides meaningful insight into DFC’s value, and all three of them fall within a reasonable range.  In light of the uncertainties and other considerations described above, I conclude that the proper valuation of DFC is to weight each of these three metrics equally.”

Thus, the Court of Chancery determined that the fair value of DFC was: $9.50 (deal price) + $8.07 (comparable companies analysis) + $13.07 discounted cash flow analysis ÷ 3 = $10.21 per share.  Subsequently, the parties reargued the case and the court adjusted the value to $10.31 per share.

DCF appealed.

Issues on Appeal

On appeal, the case has reflected an emphasis on one issue that was not presented fairly to the Court of Chancery.  Before us, DFC’s central argument is that a judicial presumption in favor of the deal price should be established in appraisal cases where the transaction was the product of certain market conditions.  DFC argues that those conditions pertain to this case and the Court of Chancery erred by not giving presumptive and exclusive weight to the deal price.

DFC’s overall argument raises another implied argument, which is that the Court of Chancery’s decision to afford equal weight to the deal price, its discounted cash flow model, and its comparable companies analysis was arbitrary and not based on any reasoned explanation of why that weighting was appropriate.

Petitioners also appealed the Chancery Court’s weighting and factors used to arrive at the fair value.


Reversed and remanded.


The court wrote in conclusion:

But, in keeping with our refusal to establish a “presumption” in favor of the deal price because of the statute’s broad mandate, we also conclude that the Court of Chancery must exercise its considerable discretion while also explaining, with reference to the economic facts before it and corporate finance principles, why it is according a certain weight to a certain indicator of value.  In some cases, it may be that a single valuation metric is the most reliable evidence of fair value and that giving weight to another factor will do nothing but distort that best estimate.  In other cases, it may be necessary to consider two or more factors.  As one appraisal treatise points out, “laying down in advance fixed rules that state how competing approaches are to be weighted is impossible.”  What is necessary in any particular case though is for the Court of Chancery to explain its weighting in a manner that is grounded in the record before it.  That did not happen here.  In this case, the decision to give one-third weight to each metric was unexplained and in tension with the Court of Chancery’s own findings about the robustness of the market check.

The court underscores here that while the deal price is a strong factor, courts—in Delaware—are free to consider other factors in appraisal action cases.  On remand, the Chancery Court has the unenviable task of explaining what approach(es) deserve the most weight and why.  The valuation profession does not, to this writer’s knowledge, teach that one approach deserves more weight than another.

Sparton Corporation v. O’Neil, C.A. No. 12403-VCMR (Del. Aug. 9, 2017)

Court Rejects Post-Closing Adjustments to Sales Price


This action involves a merger in which Sparton Corporation (Sparton), the purchaser, alleges that the merger agreement was fraudulently induced.  Sparton argues that Joseph F. O’Neil, the representative of the stockholders and option holders of Hunter Technology Corporation (Hunter), the seller, with the assistance of the other defendants, created and presented false financial statements during the negotiations.

Based on these fabricated financials, the parties agreed to a pre-closing estimate of Hunter’s working capital, an escrow amount, and a cap on the post-closing adjustment of working capital.  Prior to the closing, without Sparton’s knowledge, the defendants allegedly wrote down the accounts receivable, returning Hunter’s working capital to its correct lower value.  After the transaction, Sparton discovered that the working capital actually was much lower than originally thought, and the agreed-upon escrow amount was inadequate to cover the difference.  Sparton argues that the defendants’ fraudulent actions caused millions in damages.

As a result of the purported fraud and contractual breaches, Sparton alleges it has suffered: 1) $1,829,455.00 in damages representing the difference between the inflated working capital it paid for and the working capital that actually existed at closing; 2) unliquidated damages in the amount of fees and costs necessary to resolve the liabilities that O’Neil promised to resolve; and 3) $100,498.70 in damages for the invoices incurred by Hunter for which Sparton now is responsible.

The defendants move to dismiss all claims except the expenses claim.  The defendants argue that the merger agreement bars both breach of contract claims because the agreement provides exclusive remedies for the purported breaches.  Additionally, the defendants contend that Sparton has failed to state a claim for the specific indemnity claims.  As to the working capital claim, the agreement’s exclusive remedy provision provides a fraud exception; but, the defendants argue that: 1) the agreement contains an anti-reliance provision; 2) the defendants did not make any representations to Sparton in the contract regarding the veracity of the financial statements that could form the basis for the fraud claim; and 3) Sparton fails to meet the heightened pleading standard required to state a claim for fraud.

Issue Before the Court

Whether to adjust the purchase price based on the allegations of fraud or dismiss the complaint.


Defendant’s motion to dismiss is granted.


The court found that the agreement bars both breach of contract claims and that Sparton failed to state a claim for fraud.  Therefore, the motion to dismiss was granted in its entirety.

With regard to the contract claim, the court held:

In order to allege a breach of contract, a plaintiff must show the existence of a contract, a breach of the contractual obligations, and damages to the plaintiff as a result of the breach.  Sparton alleges that the defendants breached the contractual provisions relating to the Specific Indemnity Schedule and the working capital estimate.

Under the agreement, the sole and exclusive remedy for losses relating to the matters set forth in the Specific Indemnity Schedule are claims against the indemnity escrow fund; but that indemnification obligation ended on October 14, 2016, “regardless if any claims are still pending or the matters set forth on the Specific Indemnity Schedule remain pending and have not been settled or otherwise resolved…”  Additionally, a Specific Indemnity Escrow Claim does not arise until Sparton actually incurs out-of-pocket losses, a judgment is issued, or settlement is reached.  Sparton argues that it should be “excused from complying with the dispute procedures” set out in the agreement because “defendants’ conduct has made exact conformance to the merger agreement impossible.”  The sum total of Sparton’s allegations in the complaint are that O’Neil “failed to make commercially reasonable efforts” to resolve Hunter’s liabilities because they were not resolved by October 14, 2016, and “[a]s a result, Sparton remains liable for unresolved claims originally asserted against Hunter which Defendant O’Neil should have, and could have, resolved using commercially reasonable efforts.”  The complaint provides no details about how O’Neil did not meet this requirement or why “defendants’ conduct has made exact conformance to the merger agreement impossible.”  The conclusory allegation that O’Neil did not use commercially reasonable efforts to resolve the matters because the matters remain unresolved is not enough to state a claim under Rule 12(b)(6).  Therefore, this claim is dismissed.

With regard to the fraud claim, the court held:

In order to state a claim for fraud, a plaintiff must allege that: 1) the defendants made a false representation or omission of fact that they had a duty to disclose; 2) the defendants knew or believed that the representation was false or made the representation with reckless indifference to the truth; 3) the defendants intended to induce the plaintiff to act or refrain from acting; 4) the plaintiff acted or did not act in justifiable reliance on the representation; and 5) the plaintiff suffered damages as a result of the reliance.

Court of Chancery Rule 9(b) requires that “the circumstances constituting fraud shall be stated with particularity,” while “[m]alice, intent, knowledge and other condition of mind of a person may be averred generally.”  “To satisfy Rule 9(b), a complaint must allege: 1) the time, place, and contents of the false representation; 2) the identity of the person making the representation; and 3) what the person intended to gain by making the representations.”


Sparton’s allegations do not meet the heightened pleading standard required to show fraud.  Sparton alleges that O’Neil negotiated the agreement on behalf of the stockholders and option holders.  This included establishing the working capital estimate that was based on the inflated accounts receivable in the financial statements.  Sparton alleges that O’Neil “fraudulently overstated Hunter’s accounts receivable with assistance from Defendants Alessio, Nguyen, Edgmon, Evans, and others.”  This allegedly was done by making non-GAAP adjustments to the accounts receivable through the addition of amounts to invoices that were not owed to Hunter, including for work Hunter had not yet completed, for which Hunter had no expectation of payment, or for obsolete inventory.


Sparton does not plead any particularized facts about the defendants’ roles in the company or any of the defendants’ relationships with management, other than that they are stockholders and option holders and that O’Neil is the representative of the stockholders and option holders.  And Sparton fails to allege any other facts to show that any of the defendants had the authority to prepare either the invoices or the financial statements or that they would be in a position to know that these documents were falsely prepared.  Thus, the complaint does not allege that defendants knew that the invoices or financial statements were overstated or improperly recorded.  As a result, Sparton fails to allege a claim for fraud.

The decision sheds light on how particular the facts alleged must be to survive a motion to dismiss.  A highly detailed statement is needed and those professionals providing forensics services to clients and law firms will want to keep this case in mind, even if you are not based in Delaware.

Fitness Anywhere LLC v. Woss Enterprises, LLC, Case No. 5:14-cv-01725 (U.S. Dist. Ct. Northern CA March 22, 2017)

Daubert Motion to exclude Plaintiff’s Damages Expert Denied: Jury Awards Plaintiff $6.8 Million for Willful Patent and Trademark Infringement


If you regularly go to a gym to work out, or put yourself through cross training or yoga, you have seen and probably used the TRX bands.  Here, plaintiff’s alleged that Woss Enterprises, LLC willfully infringed the claims of U.S. Patent No. 7,044,896 (the ’896 patent), both directly and indirectly (through induced and contributory infringement).

Plaintiff’s trial brief further alleged that defendant engaging in misconduct beyond mere infringement is liable for willful patent infringement.  Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016).  To show willful patent infringement, TRX will prove that WOSS was aware of the ’896 patent before it began selling the accused products and that it continued to infringe even after TRX (i) notified WOSS that it was infringing the ’896 patent on March 21, 2014, and (ii) filed this lawsuit on April 14, 2014.  TRX will introduce the testimony of Mr. Storum and Mr. Ott (the founders of WOSS), who admit that they were aware of TRX’s products and the ’896 patent before they sold any of the accused products.  TRX will prove that WOSS has acted in bad faith, wantonly, maliciously, deliberately, consciously, wrongfully, flagrantly, or with reckless disregard of the asserted claims of the ’896 patent.  35 U.S.C. § 284; Halo, 136 S. Ct. at 1932.

Plaintiff also alleged trademark infringement, state and federal unfair competition, and tortious interference with prospective economic relationships.  Plaintiff relied on Kimberly Schenk, a Charles River Associate member, as the damages expert.  As more fully explained in the expert report of Kimberly Schenk, TRX seeks patent damages based on lost profits and a reasonable royalty for any infringing sales that are not subject to lost profits.

The trial brief also stated that TRX would also prove WOSS’s profits attributable to the infringement to the extent not included in the royalty or lost profits.  TRX contends treble damages are warranted due to WOSS’s willful infringement of the ’896 patent and WOSS’s intentional infringement of the TRX marks.  Ms. Schenk calculated that 57.5% of the accused units are subject to lost profits (totaling $7,336,427 through October 2016) and that the reasonable royalty damages on the remaining units not subject to the lost profits analysis total $192,875 through October 2016.

TRX’s damages expert conducted separate analyses for WOSS’s use of the mark SUSPENSION TRAINING / SUSPENSION TRAINER and SUSPENSION FITNESS.  TRX seeks the disgorgement of WOSS’s profits from the infringing uses.  TRX bears the burden only of establishing the amount of WOSS’s revenue; WOSS then must put forward evidence to prove any expenses that WOSS contends should be deducted.  Am. Honda Motor Co. v. Two Wheel Corp., 918 F.2d 1060, 1063 (2d Cir. 1990) (holding that a plaintiff is entitled to the amount of the defendant’s gross infringing sales unless the defendant adequately proves an amount of costs to be deducted therefrom).  TRX’s damages expert conservatively estimated WOSS’s total revenue for products sold using (i) the mark SUSPENSION TRAINER from 2011 to 2015 to total $832,576 and (ii) the mark SUSPENSION FITNESS to total $1,749,631.

Prior to trial, defendant filed Daubert motion to exclude the testimony of Ms. Schenk.  Significantly, defendant’s motion stated in part:

Ms. Schenk’s methodology is fatally flawed and is inconsistent with the legal requirements for opinion testimony about lost profits damages:

Under § 284, damages awarded for patent infringement “must reflect the value attributable to the infringing features of the product, and no more.”…This principle—apportionment—is “the governing rule” “where multi-component products are involved.”…Consequently, to be admissible, all expert damages opinions must separate the value of the allegedly infringing features from the value of all other features…  CSIRO v. Cisco Systems, 809 F.3d 1295, 1301 (Fed. Cir. 2015) [emphasis added].

Cognizant of the requirements for lost profits damages proof, a review of Ms. Schenk’s report reveals more flaws than can be catalogued in available space.  Ms. Schenk’s more egregious violations of the applicable rules include: (a) the ‘896 patent applies only to part of the anchor portion of the trainer products, but she nowhere allocates or separates the value of the part of anchor allegedly covered by the patent from the rest of the anchor or from the non-infringing rest of the product––she bases her “calculations” and opinion on the entire price of TRX products, assuming a profits calculation based on the profit margin on the entire product when in fact “all that is left” as a patented feature after the court’s summary judgment rulings is a very small part of only the anchor, which itself is a small part of the entire suspension trainer device; thus, her failure to allocate price/profit between allegedly infringing and non-patented features is fatal to her entire opinion because based on an erroneous methodology the law proscribes; (b) she assumes all three patents sued on are valid when this court has held one (‘814) is not; (c) she assumes all three patents sued on are infringed when this court has held one (‘814) invalid (thus not infringed); another (‘197) not infringed; and claims 12 and 21 of the ‘896 not infringed.

To recover lost profits for patent infringement, plaintiff must satisfy Northern District Patent Instruction 5.3.and the “4-factor” Panduit test.  Instruction 5.3 provides that plaintiff must prove:

…(2) that there were no acceptable non-infringing substitutes for the [product] [method] for which [patent holder] seeks lost profits, or, if there were, the number of sales made by [alleged infringer] that [patent holder] would have made despite the availability of any acceptable non-infringing substitutes…

The four-factor Panduit test requires a plaintiff to show: …2) absence of acceptable noninfringing substitutes; …and 4) the amount of profit that would have been made.  DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1329 (Fed. Cir. 2009) (citing Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 [6th Cir.1978]).

Ms. Schenk’s report runs aground on these shoals too.

(d) her assumption that “no non-infringing alternatives” are available to “TRX’s patented suspension trainers” is incompetent and false.

At trial, the jury returned a verdict in favor of the plaintiff, awarding $5,750,000 for patent damages, $191,156 in reasonable royalties, and $820,200 for trademark infringement.

Issues Before the Trial Court

Whether to grant defendant’s motion to exclude plaintiff’s damages expert, Ms. Schenk.

Closing Points:

Defendant has appealed the case.  QuickRead readers and professionals providing litigation support services will want to follow this decision since the appeal raises important issues regarding the calculation of damages.


As noted, the case is currently on appeal.  The expert’s damages report is available to QuickRead readers interested in reviewing the approach taken by Ms. Schenk and CRA.

Roberto H Castro, JD, MST, MBA, CVA, CPVA, CMEA, BCMHV, is an appraiser of closely held businesses, machinery and equipment and Managing Member of Central Washington Appraisal, Economics & Forensics, LLC. He is also an attorney with a focus on business and succession planning with offices in Wenatchee and Chelan, WA. In addition, Mr. Castro is the Technical Editor of QuickRead and writes case law columns for The Value Examiner.

Mr. Castro can be contacted at (509) 679-3668 or by e-mail to either or

The National Association of Certified Valuators and Analysts (NACVA) supports the users of business and intangible asset valuation services and financial forensic services, including damages determinations of all kinds and fraud detection and prevention, by training and certifying financial professionals in these disciplines.

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