Avoided costs = Acceptable damages

Tow v. Organo Gold Int’l presented a challenge, in a trade-secrets case, to a damages model based on “avoided costs” rather than “lost profits.” Specifically: “Weingust [Plaintiff’s expert] concluded that the distributor network was worth approximately $3.451 million based on the following two methodologies: the cost approach showed AmeriSciences had incurred about $6.2 million over five years to develop the distributor network, attract new distributors, and retain existing ones. The income approach considers how long income is expected from the asset and the amount of income each year. Weingust concluded the income approach dictated the network would generate $700,327 over ten years. Weingust testified that neither valuation method was better than the other, so he averaged the two to conclude the value of the distributor network was $3.451 million.” This model was consistent with – indeed, expressly allowed by –  GlobeRanger Corp. v. Software AG, 836 F.3d 477, 499 (5th Cir. 2016). No. 18-20394 (July 11, 2019).