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Olson v. Nieman's5/28/1998
. Damages are denied where the evidence is speculative and uncertain whether damages have been sustained. Id. But " the uncertainty lies only in the amount of damages, recovery may be had if there is proof of a reasonable basis from which the amount can be inferred or approximated." Id.
Thus, some speculation is acceptable. On this point, we have noted that " hile it may be hard to ascertain . . . a loss with preciseness and certainty, the wronged party should not be penalized because of that difficulty." Bangert v. Osceola County, 456 N.W.2d 183, 190 (Iowa 1990). In addition, if an expert makes some flawed assumptions in testifying, that fact goes to the weight to be given the opinion, not to its admissibility. Preferred Mktg. Assocs. v. Hawkeye Nat'l Life Ins. Co., 452 N.W.2d 389, 393 (Iowa 1990). On the other hand, overly speculative damages cannot be recovered. Jamison v. Knosby, 423 N.W.2d 2, 6 (Iowa 1988).
Courts and commentators have noted that trade secret valuation is particularly difficult:
lthough the burden to prove damages is upon the plaintiff, where there are damages which cannot be ascertained with reasonable certainty under the standard formulas for measure of damages, establishing a rule of damages for the case rests in the sound discretion of the trier of fact, based upon the best evidence available.
12A Roger M. Milgrim, Business Organizations: Milgrim on Trade Secrets § 7.08 , at 7-247 (1984) [hereinafter Milgrim]. This court has previously allowed damages for lost profits based on a market analysis in a common-law trade secret misappropriation case. Basic Chems. Inc. v. Benson, 251 N.W.2d 220, 233 (Iowa 1977). The court noted that the process the district court used was a "reasonable basis from which the amount of damages can be inferred or approximated." Id.
Given the difficulty of assessing damages in trade secret cases, courts have frequently analogized damages in a trade secret action to those measures of damages usually employed in patent infringement cases:
Despite the fact that patent infringement and trade secret misappropriation are distinct wrongs, the courts tend to apply what is essentially a patent standard of damages, referring to either defendant's profits or plaintiff's losses. Occasionally courts grant as damages "reasonable royalties," another patent-tied measure. It has been suggested that reasonable royalty is a measure suitable only to cases where defendant has made no profit and plaintiff is unable to establish a loss. Reasonable royalties need not be limited to rate of any royalty; a forfeitary royalty could be established by the trier of fact on the basis of the value of the wrongfully appropriated subject matter. Of course in some cases the defendant may not have realized a profit; in such event, defendant's revenues and plaintiff's probable profits on such revenues might be the measure.
Milgrim § 7.08 , at 7-235 to 7-239.
Reasonable royalty, as presently understood in patent cases, is "simply that amount which the trier of facts estimates a person desiring to use a patent right would be willing to pay for its use and a patent owner desiring to license the patent would be willing to accept." University Computing Co. v. Lykes-Young Corp., 504 F.2d 518, 537 n.31 (5th Cir. 1974). Thus, if the plaintiff cannot show an established rate of royalty, the plaintiff may
permissibl show the value of what has been taken by the infringement by proving what would have been a reasonable royalty, considering the nature of the invention, its utility and advantages, and the extent of the use involved. What is a reasonable royalty is a question of fact. . . . The pr
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