Apple Fails in Last-Ditch Effort
On the weekend prior to the retrial on damages, Apple sought to increase the number of patents for which it could claim lost profits with a sketchy theory that ran counter to the damages model its own experts had constructed earlier. In an emergency motion, Samsung asked the court to preclude Apple’s alternative lost profits theory. Sidestepping its own experts. In 2012, a jury awarded Apple over $1 billion in damages, finding that Samsung had infringed critical components of Apple’s iPhone and iPad. Damages included infringer’s profits, lost profits, and reasonable royalties. Subsequently, the district court (N.D. Cal.) agreed with…
Divorce Court Wrestles with ‘Vague and Conflicting’ Goodwill Testimony
Goodwill in a professional partnership poses unique challenges for valuators and courts, especially in a divorce setting. In a recent Texas case dense with valuation issues, it came down to corporate goodwill. “Logic tells me there is some,” the trial court said, “but it’s probably impossible to quantify.” The finding triggered an appeal. Case Summary: The husband was a principal at KPMG, one of the Big Four accounting firms. A partnership agreement provided that a principal’s sole interest in the firm was his required contribution to a capital account. In case of “separation,” by which the agreement meant death, withdrawal,…
Business Valuation in Litigation – Hints for the Attorney
1. Keeping in mind the big picture. In business valuation, it’s important to keep the big picture in mind and not get lost in complexities. Additional information will be continually introduced throughout the process, and updating figures repeatedly can be costly and time consuming. 2. Close collaboration among the attorney, expert, and the client is key to the process. Inform yourself about the main issues that may figure into the valuation. This will allow you to knowledgeably debate important assumptions. 3. Know your weaknesses. Preparing your expert for deposition and trial is crucial. A deposition serves to gather facts and…
Shareholder Loans & Business Valuation
Very often during the valuation process you’ll come across a shareholder loan recorded on the books of the subject business. Your first impulse will be to determine its fair market value, but wait a minute. The question must be asked: “Is this a bona fide loan or is it really equity?” The trouble is, there is no straightforward answer; and yet a reclassification of debt to capital could have a multi-million-dollar impact on total value. Nebulous guidance: A bright-line test for debt versus equity simply does not currently exist, according to Christine Baker (Meyers, Harrison & Pia LLC). Speaking at…
Plan Confirmation Hinges on Property Valuation
In re Civic Partners Sioux City, LLC, 2013 Bankr. LEXIS 4225 (Oct. 7, 2013) After declaring Chapter 11 bankruptcy, the debtor, a developer, asked the Bankruptcy Court to confirm the latest version of its reorganization plan in a “cram down” proceeding. Two key creditors objected, arguing that the plan rested on an improperly low valuation of the building complex that represented most of the collateral securing the claim. To resolve the issue, the court considered expert testimony on the value of the property. Road to bankruptcy. In the early 2000s, Sioux City, one of the creditors involved in the case,…
Taxing System
After just finishing my Nth (too many to count) tax season, its time to sit back and hear the predictable chorus of how unfair our taxing regime is and how it punishes successful people and the middle class while rewarding the wealthy. In fact, a recent study of International tax systems by German economists rated the U.S. 94th out of 100. At least we beat Venezuela! While most reasonable people will agree that some form of tax system is essential to modern society, that’s about where the commonality ends. There are those who feel that a flat tax system, or…