Page 74 - Acertaining Economic Damages Calculation

Paragon’s August 1997 Mid-Term Plan projections for its 1998 and 1999 net infant care product
sales were reasonable estimates at the time of what Paragon’s infant care product sales would
have been in those years if no injunction had issued against its Ultra diaper and if none of the re-
sulting bankruptcy disruptions had occurred. fn 9

The court looked, in part, to Paragon’s performance in the post-damage period following the bankruptcy
plan confirmation. This period reflected two price increases of 3.5% and 5.0%, increases that were not in
the 1997 mid-term plan projections, which also supported the reasonableness of relying on the mid-term
plan’s lower estimates.

Weyerhaeuser asserted that Paragon’s lost profits were overstated given the failure of its expert to con-
sider and segregate declines in sales due to factors not tied to its breach, six of which were identified in
Paragon’s Form 10-K. The court found that at least three of six factors identified in the Form 10-K were
unrelated to the breach, and that an adjustment needed to be made for these factors. Except for this ad-
justment, however, Paragon’s but-for sales were based on the contemporaneous projections reflected in
the August 1997 mid-term plan.

The judgment was subsequently overturned for reasons unrelated to the calculation of damages.

Mosaid Techs. Inc. v. LSI Corp., 2014 WL 807877 (D. Del. Feb. 28, 2014)

This dispute arose out of Mosaid’s acquisition of patents acquired from Agere (which later merged with
LSI, the defendant), in a highly competitive bidding process. Agere assigned the acquired patents to Mo-
said under the terms of an agreement, which contained a non-exhaustive list of entities that did not have
a license agreement with Agere for the same patents. The entities on this list represented potential li-
censing opportunities to Mosaid. Lenovo, which was incorrectly included on this list of unlicensed enti-
ties, was subsequently found to be licensed at the time of the agreement. Mosaid’s expert opined that,
but for Agere’s misrepresentation, Mosaid would have entered into a licensing agreement with Lenovo
and that Mosaid suffered lost profits in the form of a lost royalty stream.

Support for the expert’s opinion primarily came from a Mosaid document entitled the "Final Business
Case," which Mosaid asserted was "an unbiased assessment that was prepared without the contemplation
of litigation and is the best evidence to determine Mosaid’s state of mind and investment requirements"
at the time the parties entered the agreement. This document was the basis for the expert’s analysis and
testimony, although assumptions contained in the "Final Business Case" were not independently verified
by the expert. When asked whether he verified an assumption that 20% of Lenovo’s sales contained the
patented technology, Mosaid’s expert responded that the actual percentage "could be much lower, much
higher, or even zero."

In this case, the court concluded that the pre-litigation projections and analysis contained in the "Final
Business Case" were not the best evidence due in large part to the expert’s lack of knowledge and due
diligence regarding the projections, which resulted in the exclusion of the expert’s opinion:

"The core" of [Expert’s] testimony on damages is based upon a business plan, namely the Final
Business Case. It does not appear that [Expert] was a member of the team that developed the Fi-
nal Business Case, so he has no personal knowledge of the assumptions that were made or the

fn 9 Lambert, 324 B.R. at 856.

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