| Quantify
Damages Using Scientifically Supported Evidence
In cases where significant
financial losses are at stake for your client, to ensure that
the full extent of those losses are recouped or defended against
at trial, or in settlement, it is imperative that such losses
be calculable and that the calculation be backed by credible data
to support their existence.
Without credible data
to support the loss calculation, judgment as to the amount of
such losses may be grossly understated, or overstated. Such inaccuracy
may be detrimental to both claimants and defendants.
Whether making a claim
of financial loss, or defending against one, your case can benefit
from scientific evidence; estimating damages using scientific
methods, as employed by Behavioural
Research Group.
Behavioural Research
Group (BRG) is a full service research firm specialized in assessing
consumer attitudes, and understanding consumer decision making
behaviour, using both qualitative and quantitative research methods.
Intellectual
Property, Trade Marks, Copy Rights, Patents, Contracts and Torts.
BRG can quantify damages
using Discrete Choice Analysis, developed by Nobel Prize winning
economist, Dr. Daniel McFadden. This analysis can be used to decompose
decision making behaviour. Knowing the extent to which particular
factors influence decision making behaviour allows one to quantify
the changes in sales, profits, and market share, in cases where
such changes are linked to damage claims.
Here are some examples
(note that these examples are fictitious and used for illustration
purposes only) :
Contract Law:
A well known popstar
has agreed to perform at a large outdoor concert, along with other
well-known performers, however, before the concert date he informs
the organizers he is not going to attend. The organizers of the
concert sue Mick Jagger. What will the damages, if any, be?
The actual
damages derive from a seemingly simple calculation: the difference
between the additional tickets that would have been sold if popstar had performed and the ticket sales that did occur. The
amount of tickets sold is obviously known, but what must be determined
is what the ticket sales would have been if popstar had fulfilled
his contract. How can this determination be made and how accurate
will its estimation be?
The professionals
at BRG can accurately determine what, if any, ticket sales were
lost and therefore the potential damages, using Discrete Choice
Analysis.
Patent Infringement:
A motorcycle company secures a patent on the sound of their
motorcycle (something they actually attempted to do). A newly
released motorcycle sounds exactly the same as the motorcycle with the patent. A lawsuit results. Research is conducted to determinehow many motorcycles would have been sold if
the sound of their motorcycle did not infringe upon the competition. The difference between the actual sales and
those sales that would have resulted if the patent was not infringed,
reveals the exposure to potential damages relating to the
patent infringement.
Using
Discrete Choice Analysis, BRG can determine the amount of those
sales, and therefore the amount of potential damages, to assist
parties in either defending against or launching similar claims.
Intellectual
Property:
An online auction site has
a patent on the auction software used to buy and sell products
online. A competitor introduces a similar auction website. As
a result some customers are lost to the competition and thus a suit is enacted to recover damages. The damages: the difference between how many customers
switched and how many would have switched if the apparent software
infringement did not occur, quantified in terms of sales, market
share and profits, can be determined by BRG, using Discrete Choice
Analysis.
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How Damages
are Quantified:
A
random sample of individuals is selected, and participants are
subjected to an experiment. Each participant is asked to answer
a series of carefully crafted questions aimed at quantifying each
aspect of their decision making process. Each question is used
to understand all the factors affecting an individual's choice.
Once these factors, and their effect on individual decision making
are statistically modeled, "What if" questions can be
answered. For example, how would people have acted if the situation
had not changed, or had changed in a particular way? Answering
these questions is tantamount to knowing what would have happened,
for example, if an infringement had not taken place, or if a contract
had not been broken. Such information is necessary to accurately
quantify a loss in these situations.
To further illustrate, using patent infringement as an example,
research can reveal whether the infringing company's incremental
sales, those sales derived by a product deemed to have infringed
on a patent, resulted solely from the patent infringement. That
is, if the patent was not infringed, would the product have sold
at all? Research may reveal that even if the patent infringement
did not take place, the infringing aspect of the product is not
responsible for losses in sales of the "damaged" party.
Quantify
Damages using Scientific Evidence
Research can provide valuable evidence of how
consumers have reacted as a result of an alleged infringement,
and how they would have reacted if an infringement did not take
place. The ability to quantify those reactions allows lawyers
to provide scientific data to bolster their case. In addition
to large scale studies, small scale focus groups may also be conducted
to determine consumer purchasing behaviour. These small scale
studies can provide early insight into the potential success or
failure of your client's case.
Pilot
Study - Quantifying Damages:
Before conducting a full-scale discrete
choice experiment, smaller scale pilot studies can be conducted
to give some insight into the amount of damages expected, which
can effect early settlement, or project the likelihood of success
at trial.
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