Page 64 - Intellectual Property Disputes

In contrast, the court in Polaroid Corp. v. Eastman Kodak Co. rejected an account analysis in favor of a
regression analysis. fn 137 The court found that the account analysis relied too heavily on the subjective
assessments of the parties and was subject to undue bias. fn 138 The court also rejected the account
analysis because it lacked supporting documentation, including an absence of working papers, notes, or
the names of personnel contacted. fn 139 Additionally, the court found problematic that the account
analysis was performed for only one year, although the infringement had occurred over multiple years.

In addition to the analyses discussed previously, the expert should also consider the following factors
depending on the facts and circumstances of the case:

• When looking at costs of sales and individual line items over time as compared with unit
production, care should be taken in analyzing the basis for inventory costing. That is, first-in,
first-out; last-in, first-out; or average inventory costing may yield dramatically different results.

• Cost studies, which provide information about what costs are specifically associated with the
production or sale of units, should be considered.

• Contracts can clarify what the commissions are on incremental unit sales or what the costs of
materials are at various material purchase levels (for example, considering quantity discounts).

Invoices showing purchases of inventories or materials, including those reflecting price increases, may
help the expert ascertain what portion of cost increases were driven by changes in unit production or
sales, as compared to other causes.

Future Lost Profits

In Shockley v. Arcan, Inc., fn 140 the Federal Circuit overturned a jury award for future lost profits.
Despite overturning, the court acknowledged "that a patentee may be able to produce sufficient evidence
to recover projected future losses" in cases "where the patentee has presented reliable economic
evidence of ‘but-for’ causation." According to the court, however, "[a]lthough future lost profit
calculations necessarily contain some speculative elements, a patentee may supply adequate evidence to
enable the fact-finder to responsibly estimate future losses based on sound economic models and
evidence, not pure guesswork." fn 141

In this case, Excalibur’s (the co-plaintiff) expert testified that he had based his estimate of future lost
sales volumes on what Excalibur told him to assume. The court determined this to be "a benchmark
without any basis in economic reality." As a result, the court decided "[b]ecause the jury’s $3,000,000

fn 137 Polaroid, 16 U.S.P.Q.2d at 1481.

fn 138 Id. at 1526.

fn 139 Id. at 1527.

fn 140 Shockley v. Arcan, Inc., 248 F.3d 1349 (Fed. Cir. 2001).

fn 141 Id. (citing Oiness v. Walgreen Co., 88 F.3d 1031 [Fed. Cir. 1996]).

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