Page 56 - Economic Damages Calculation

A. I think ... [the reports are] sufficiently of value that [their use] should have led to higher prof-
its.

Q. So you can't say [whether the alleged infringement] actually in [the Defendant’s] case led to
higher profits?

A. I can't, no. fn 60

The court expressed its concern that while some of the defendant’s profits should relate to its reliance on
the plaintiff’s reports (stating that it should be assumed that the defendant’s brokers relied upon the re-
ports, as testified to by a broker who acknowledged relying on the reports), the nearly $2 billion in gross
revenues earned by its entire securities brokerage business could not plausibly be attributed to the al-
leged infringement. In particular, the court wrote as follows:

Even if some employees made some money for [the Defendant] some of the time from action
they took based in some part on what they had read in infringing copies of the Reports, [the
Plaintiff] does not pretend that its publications always analyzed the stock market correctly. Ac-
cordingly, it is not evident that those same employees or others always made money based on
what they had read in the Reports. Moreover, no [the Defendant] brokers have testified that any
of their investment decisions relied exclusively on information gleaned from infringing copies of
the Reports. fn 61

In this way, the court appeared to set forth its expectation that the plaintiff should have attempted to re-
fine the gross revenue calculation to address these considerations. By including all of the defendant’s
revenue in its damage calculation and failing to apportion those amounts directly caused by the alleged
infringement, the court denied this method of establishing lost profits, citing to Mackie v. Rieser, 296
F.3d 909,915 (9th Cir. 2002), which opined that, "The burden of apportionment shifts to the infringer,
however, only if the copyright owner establishes a causal nexus between the infringing conduct and the
infringer's gross revenue."

Mapinfo Corp. v. Spatial Re-Eng'g Consultants

The plaintiff alleged that the defendant, its former partner, made disparaging statements to its customers
and resellers, which purportedly resulted in its loss of customers and potential customers, damage to its
reputation and the reputation of its products and lost dealings. fn 62 In its pleadings, the plaintiff identi-
fied 22 specific customers that were purportedly influenced by the alleged disparagement. The plaintiff’s
damages expert was proffered to address both damages and causation, opining that the plaintiff suffered
damages of approximately $15.4 million as a result of the alleged disparagement.

In response to the plaintiff’s allegations, the defendant offered declarations from 32 of the plaintiff’s
customers and resellers that they either never heard of the alleged statements or were not influenced by

fn 60 Id. at 752.

fn 61 Id. (emphasis in original). The court’s emphasis on each of these variables is consistent with the stacking of inferences concept
and the number of difficult to quantify risks highlighted in figure 2.

fn 62 Mapinfo Corp. v. Spatial Re-Eng'g Consultants, 2006 U.S. Dist. LEXIS 70408 (N.D.N.Y. Sept. 28, 2006).

54 © 2020, Association of International Certified Professional Accountants