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Olson v. Nieman's5/28/1998
itt. L. Rev. 247, 264 (1986).
Newkirk assumed the relevant or likely market was recreational vehicles. He testified this was a conservative approach because besides the recreational vehicle market, Nieman sold its breakaway kits in a variety of trailer markets. The evidence shows that Nieman chose the recreational vehicle market as the relevant one when it decided to market the model Sloan developed from Olson's schematic drawing at the November 1992 recreational vehicle trade show.
For his opinions, Newkirk relied in part on reports prepared by the Recreational Vehicle Industry Association. The reports were based on sales data for the industry going back ten years. Based on these reports, Newkirk first projected estimated sales of towable recreational vehicle units over the seventeen-year life of the would-be patent. He testified experts rely on these kinds of sources in valuating intellectual property. See Iowa R. Evid. 703 (providing that data an expert uses in forming opinion need not be admissible in evidence " f of a type reasonably relied upon by experts in the particular field").
The different models assume a different number of devices sold, beginning with 10% of breakaway brake units sold. The models also assume an increase in sales at 5% per year.
Newkirk premised the 5% yearly increase in sales on (1) a 7% average annual increase in sales of towed vehicles over the past ten years in the recreational vehicle industry, (2) his belief that consumers would see the value of Olson's device in terms of safety, and (3) the "baby boomer" generation reaching retirement during the next fifteen years. As for the "baby boomers," Newkirk pointed out that
ne of the major factors in this market, of course, is that we are now just reaching the point when the first year of baby boomers has reached the age of fifty and the prime market for recreational vehicles is for persons between forty-five and fifty-six and so every year for the next fifteen years we're going to have an increase in the number of persons who would be eligible customers for recreational vehicles and so the recreational vehicle market is looking forward with great optimism in terms of these kinds of numbers. When asked how he derived this information, Newkirk responded: Well, the information, of course, is not only referred to in terms of documents of recreational vehicles but the fact of the increase in the population as this group of persons beginning in 1945 and ending in 1958 moved through the-moved through the distribution of the population just as they have. For example, in the case of colleges where back in the 1960s and 1970s where you could hardly get into schools, today, of course, it's just the reverse. So you have the age population moving through and so the same thing is going to happen in terms of recreational vehicle industry and other industries as people who are-represent a consumer household, mainly two people working in the house are going to be candidates for purchases of recreational vehicles and so this will continue until this particular age group moves through the entire sequence of the population over the next fifteen years.
The models assume a 5% or 10% royalty rate on a patent. Newkirk testified that a 5% royalty is within the bounds of negotiated royalties in cases similar to this one. He also testified 5% was the rate Olson indicated he was willing to accept when he was negotiating with Nieman.
Newkirk used a selling price of $20 per device in all four models. He based that on Nieman's own pricing of the device at $18.68 at the November 1992 recreational vehicle trade show. Newkirk testified the $1.32 difference in price reflected what
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