Marketing Damages Models

The categories a court sees, and which one usually fits

Counsel deciding what to plead is choosing among a short list, and the choice determines which records matter.

• Lost profits. What the claimant would have earned but for the conduct. Requires a but-for construction and isolation of the defendant's contribution from every other cause, which is the hardest thing on this page.
• Reliance or out-of-pocket. Amounts paid in reliance on the conduct: fees paid to an agency, media spend wasted, remediation cost. This is the category most often available in a performance dispute, because it does not require proving what sales would otherwise have been.
• Disgorgement of the defendant's profits under the Lanham Act, 15 U.S.C. 1117(a).
• Corrective advertising — the cost of advertising to repair damage to a mark or a reputation.
• Statutory damages, which are available for counterfeiting under 1117(c) and cybersquatting under 1117(d) only. They are not available for ordinary false advertising or infringement, and a demand that assumes otherwise is answerable on the statute.
• Enhancement, costs and fees — the trebling provision and "exceptional case" fees.

Reliance damages are usually the best evidenced, because media spend, agency fees and remediation costs are documented contemporaneously in invoices and platform billing. Lost profits are the least well evidenced, because the record they need does not exist anywhere.

Section 35(a), and the burden allocation that makes disgorgement attractive

Section 35(a) of the Lanham Act, 15 U.S.C. 1117(a), entitles a successful plaintiff, "subject to the principles of equity," to recover "(1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action." The provision then does something unusual with the burden: "In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost or deduction claimed."

That single sentence explains why disgorgement is pleaded so often: the plaintiff's affirmative burden is the defendant's sales, not its margin. The court may also enter judgment for any sum above actual damages up to three times that amount, which the statute says "shall constitute compensation and not a penalty," and fees are available in exceptional cases.

The Ninth Circuit's Model Civil Jury Instruction 15.31 shows how this is actually put to a jury, and it adds the part that matters most to marketing evidence: the plaintiff must prove the defendant's gross sales with reasonable certainty, and the defendant must prove both its claimed costs and "any portion of the profits attributable to factors other than the infringement." Brand strength, price, distribution, unrelated advertising, product quality, retail placement, seasonality — those are marketing questions, and identifying and evidencing them is a well-defined defense-side assignment rather than an improvisation.

Romag, and the half of it that keeps getting dropped

Romag Fasteners, Inc. v. Fossil Group, Inc., 590 U.S. 212 (2020), decided 23 April 2020, held that a showing of willfulness is not an inflexible precondition to an award of the defendant's profits under section 1117(a) for a section 1125(a) violation. The reasoning is textual: the statute conditions a profits award on willfulness for dilution claims under 1125(c), and Congress imposed no such condition for 1125(a) claims. The judgment was unanimous.

What the decision did not do is make willfulness irrelevant or create an entitlement to profits, and that is where it is most often mis-described. The Court stated that "a defendant's mental state is relevant to assigning an appropriate remedy." Justice Alito's concurrence, joined by two others, called willfulness "a highly important consideration" though "not an absolute precondition," and Justice Sotomayor, concurring in the judgment, emphasized that awarding profits for innocent infringement would not sit comfortably with the principles of equity the section preserves. The Ninth Circuit's model instruction tracks that balance.

For an expert the consequence is a boundary rather than a method. Willfulness is a state-of-mind question. I can describe conduct from the record — that a keyword list was edited on a date, that a disclosure was moved below the fold, that a warning email was received and the configuration left unchanged. Characterizing that conduct as willful is the trier of fact's conclusion under a legal standard, and an expert who supplies it has traded a factual expertise for a legal one.

Corrective advertising, and the 25 percent that is not a rule

Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365 (10th Cir. 1977), is the origin of corrective advertising damages and of a number that has taken on a life of its own. A jury awarded $2.8 million on the theory that it would let the plaintiff run an equivalent volume of advertising to inform the public of the true facts. The Tenth Circuit held the award excessive and reduced it to $678,302, computed by taking 28 percent of the $9,690,029 the defendant spent on the offending campaign — the plaintiff had dealers in 14 of 50 states — and cutting that by 75 percent, because the Federal Trade Commission "generally orders businesses who engage in misleading advertising to spend approximately 25 percent of their advertising budget on corrective advertising."

That 25 percent is not a rule of damages law. It is a 1977 borrowing of an agency remedial practice, applied by analogy to a private award, with no statutory and no empirical basis. Two later decisions frame it. Adray v. Adry-Mart, Inc., 76 F.3d 984 (9th Cir. 1995), allowed prospective corrective advertising costs but capped them at the damage to the mark's value. And Zazu Designs v. L'Oreal, S.A., 979 F.2d 499 (7th Cir. 1992), is the leading criticism, Judge Easterbrook likening a repair cost above the asset's value to spending $10,000 to fix a $4,000 car and stating flatly: "Using a percentage of some number unrelated to the plaintiff's injury is an unacceptable way to estimate damages."

The but-for world, and the isolation requirement

The Reference Manual on Scientific Evidence, fourth edition (2025) frames damages as the difference between the actual world and the but-for world. Its Reference Guide on Estimation of Economic Damages calls for "a clear statement of what occurred in the actual world" together with "a description of the but-for world, including the defendant's proper actions in place of their unlawful actions," with the claimant's position assessed assuming the alleged harmful act had not occurred.

The operative sentence for this kind of case is the isolation requirement: the measurement must "isolate the change in the plaintiff's economic position caused by the harmful act and exclude any change ... arising from other causes." The Guide observes that disputes often arise over whether a model adequately controls for confounding factors.

That is where the marketing record earns its place in a damages model. The confounders in an advertising dispute are not abstract. They are a documented core update rolling out across three weeks, a price increase, a competitor's launch, a stockout, a tracking change, a cut in a different channel's budget. Whether a damages model has controlled for them is answerable from the marketing record, and it is answerable in both directions.

Apportionment is where a verdict comes apart

The Eleventh Circuit's decision in Deltona Transformer Corp. v. The NOCO Company (4 August 2026) is the clearest recent demonstration. A jury returned a $1.3 million lump sum spanning five theories. Three of them were eliminated on appeal — keyword bidding, a state statutory damages theory, and false advertising. The court remanded for a new trial on damages because it could not "determine the extent to which the $1.3 million damages award reflects liability for any of those claims or theories."

An undifferentiated damages opinion is vulnerable for exactly that reason. If one theory falls at summary judgment, on a directed verdict, or on appeal, a single number attached to all of them cannot be salvaged, and the parties retry the damages case.

The defense against it is structural rather than clever. Factual findings should be organized theory by theory from the start: which conduct, on which surfaces, over which period, reaching which volume. Where the same conduct supports two theories, the overlap should be identified rather than absorbed. That does not make the marketing expert the apportionment expert — apportionment of profit is a damages and accounting exercise, and under section 1117(a) the burden of showing profits attributable to factors other than the infringement sits with the defendant. But an accounting expert cannot apportion across theories that were never separated in the underlying factual work.

Who supplies what, and where the two roles meet

This division should be stated explicitly rather than smoothed over. It is a credibility asset.

The digital marketing expert supplies: what was configured, when and by whom — account structure, targeting, budgets, bid strategy, conversion actions, the attribution model in force, tag deployment, change history; what ran — impressions, clicks, spend, placements, creatives, keyword and search-term data, landing pages; what a user actually saw and in what sequence; what the platform's own records do and do not contain, including retention and definitional limits; which alternative explanations the data can exclude; and, in a performance dispute, whether the work conformed to the contract's scope and to documented practice.

The damages or accounting expert supplies: the but-for financial model, margins and cost structure, discounting and present value, mitigation, apportionment among causes once the marketing expert has identified them, and the disgorgement computation — the defendant's sales, the claimed cost deductions, and the allocation of profit.

The seam is apportionment. The marketing expert says which explanations the data can and cannot exclude; the damages expert converts that into a number. A report that quietly crosses the line — a marketing opinion arriving at a lost-profits figure, or a financial model that assumes the causal story — is the version that draws a Rule 702 motion.

What a damages model cannot take from marketing data

Impressions, clicks, sessions and conversions are not dollars. Margin, cost structure, mitigation, apportionment and discounting live in the financial record, and a marketing expert who produces a lost-profits number without that foundation has stepped outside their method. The nearest analogous decision is Grasshopper House, LLC v. Clean & Sober Media, LLC (9th Cir. 20 Aug. 2021), a Lanham Act false advertising case about online reviews in which the plaintiff's expert valued a webpage visit at roughly $40 against the defense expert's $1.80, supported by a regression. The district court excluded him and the Ninth Circuit affirmed, recording that the regression "was flawed as to the issue of causation" and the methodology "so fundamentally flawed" that exclusion was within discretion. It is an unpublished memorandum disposition and not precedent, and should be described that way — but it is a digital marketing damages theory excluded on causation grounds.

The defendant's profits are not the claimant's loss, and neither substitutes for the other; section 1117(a) lists them as separate recoveries with separate proof requirements. A percentage of the defendant's ad spend is not a damages methodology, as Zazu says directly. Third-party competitor traffic estimates are panel-derived models, legitimate as directional context and not as the basis of a figure that inherits their error silently. And no marketing analysis establishes willfulness, intent or proximate cause as legal matters.

Frequently Asked Questions

Published 2026-08-12