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Olson v. Nieman's5/28/1998
he thought would be the price increase from November 1992, when Nieman first priced the device, until trial in 1996.
Newkirk reduced to present worth the royalty income in all four models, using a 19.4% discount rate. He testified that the normal rate of return for publicly held corporations was 14.4%. He added an additional 5% to reflect the market risk for the device. The calculations produced damages of $672,270 for Model I, $1,344,540 for Model II, $934,085 for Model III, and $1,868,171 for Model IV.
Apparently, the jury found Model I the most reliable because it returned a verdict of $650,000, which is closest to the $672,270 proposed in Model I. Thus, the jury awarded $22,000 less than the damages proposed in Model I, the most conservative of the four models. Model I projects a smaller increase in sales and uses a 5% royalty rate.
Although Model I is somewhat speculative, it is not overly so. Our discussion of Newkirk's testimony amply demonstrates a reasonable basis in the record for the damages awarded. Although Newkirk made assumptions about (1) the relevant market, (2) the initial sale to 10% of the market, and (3) a steady increase in sales over the life of the would-be patent, he relied on recreational vehicle industry reports for those assumptions. Nieman exploited any uncertainty about these assumptions by vigorous cross-examination. Any such uncertainty went to the weight of Newkirk's testimony, not to its admissibility.
Given the fact that Olson's trade secret was destroyed before anyone could ever realize any profit on it, his damages were not susceptible to an exact mathematical formula. Olson presented the best evidence available on damages, and the jury in its discretion returned a verdict within the parameters of that evidence.
We note that the damages evidence here was no more speculative than that in a case we recently decided involving retaliatory discharge. See Smith v. Smithway Motor Xpress, Inc., 464 N.W.2d 682, 688 (Iowa 1990). In Smith we reversed a trial court's refusal to submit future damages. Id. at 687-88. We recognized that such damages in an at-will employment are somewhat speculative because "it is often difficult, if not impossible, to know how long the employee would have continued to work for the employer." Id. at 688. Nevertheless, we remanded on the question of lost future wages. Id. We held that the plaintiff would be entitled to such damages "if the jury concludes from the evidence [the plaintiff] would have been employed by [the defendant] subsequent to the date of trial had it not been for the workers' compensation claim." Id. We then went on to say " he jury must then determine the likely duration of [the plaintiff's] employment [with the defendant]." Id. The difference between the plaintiff's wages with the defendant-employer and the present employer reduced to present value would be the amount of the award. Id.
We allowed the plaintiff considerable leeway on the question of speculation because preclusion of future damages would allow the defendant-employer's liability for its unlawful action to end at the time of judgment. Id. As mentioned, courts likewise allow considerable leeway on speculation involving damages in trade secret misappropriation cases to prevent unfair competitors from profiting by their wrong-doing. The legislature has implicitly approved such leeway by allowing use of a reasonable royalty measure of damages " n lieu of damages measured by any other methods." Iowa Code ยง 550.4(1).
We conclude the district court did not abuse its discretion in allowing Newkirk's testimony on damages.
A. Sufficiency of the evidence: misappropriation of a trade secr
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