593 F. App'x 506
6th Cir.2014Background
- ASK Chemicals (assignee of Japanese Patent No. 3,278,168) sued Computer Packaging, Inc. (CPI) for breach of contract after CPI failed to pay a required Japanese fee, causing the patent to lapse in 2010.
- Ashland originally obtained the patent and had retained CPI to pay annual Japanese maintenance fees; CPI continued that role after assignment to ASK. CPI admitted failure to pay the ninth fee and that the patent lapsed.
- ASK had limited activity/sales in Japan: an earlier market entry was lost after a 2003 factory fire and, at lapse time, ASK had no sustained Japanese sales history. ASK resumed some re-entry efforts beginning in 2008 but had minimal Japanese revenue.
- ASK offered one expert, Brian Russell, whose lost-profits opinion relied on ASK’s historic 1998–2003 marketing plan, a 2011 global-market analysis lacking Japan-specific data, and ASK’s internal projections; the district court excluded the report under Rule 702/Daubert/Kumho.
- The district court then granted CPI summary judgment, concluding that without Russell’s report ASK had not proved lost-profits damages with the reasonable certainty required under Ohio law. ASK appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of expert (Russell) | Russell was qualified and his reliance on ASK materials and market reports was a permissible basis for opinion testimony estimating lost profits. | Russell’s methods were unreliable: he relied on stale plans, non–Japan-specific data, and ASK’s unverified projections, creating an analytical gap. | Affirmed exclusion: expert was qualified but his methods/data were unreliable and created too great an analytical leap. |
| Sufficiency of evidence for lost-profits damages (summary judgment) | Even without Russell, ASK’s record (market surveys, past plans, licenses, projections, re-entry efforts) created disputed facts for a jury on lost profits. | ASK lacked basic objective Japan-specific data (market size, ASK sales/penetration, direct costs); without expert support, lost-profits amount is speculative under Ohio law. | Affirmed summary judgment for CPI: ASK failed to prove lost profits with the reasonable certainty required; no genuine issue for jury on amount. |
Key Cases Cited
- Daubert v. Merrell Dow Pharms., 509 U.S. 579 (gatekeeping test for expert admissibility)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (gatekeeping applies to non-scientific expert testimony)
- Gen. Elec. Co. v. Joiner, 522 U.S. 136 (standard for reviewing exclusion of expert testimony)
- Nelson v. Tenn. Gas Pipeline Co., 243 F.3d 244 (6th Cir.) (excluding expert for analytical gap between data and opinion)
- City of Gahanna v. Eastgate Props., Inc., 36 Ohio St.3d 65 (Ohio) (elements for recovering lost profits in contract cases)
- AGF, Inc. v. Great Lakes Heat Treating Co., 51 Ohio St.3d 177 (Ohio) (new businesses may use circumstantial evidence and expert analysis to prove lost profits)
- Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100 (use of market-comparison evidence to prove lost profits)
- Charles R. Combs Trucking, Inc. v. Int’l Harvester Co., 12 Ohio St.3d 241 (Ohio) (lost-profits proof must be reasonable, not precise)