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Simple English definitions for legal terms
market-share theory
Read a random definition: performance shares
A quick definition of market-share theory:
Market-share theory is a way to figure out how much money a company lost because of another company's bad behavior. It looks at how much of the market the company had before the bad behavior happened and how much they have now. It can also be used in patent cases when the person who made the patent and the person who copied it both sell their product in the same market as someone who didn't copy it. The court assumes that the person who made the patent would have sold the same percentage of the market as they did before if the other person hadn't copied them.
A more thorough explanation:
Market-share theory is a method used in antitrust cases to determine damages for lost profits. It involves calculating the impact of the defendant's violation on the plaintiff's output or market share. This theory assumes that the percentage of the market that the plaintiff holds is the same as the percentage of the defendant's market that the plaintiff would have captured if there was no violation.
For example, if a company is found guilty of antitrust violations and it caused another company to lose 10% of its market share, the damages awarded to the plaintiff would be based on the assumption that the plaintiff would have captured that 10% of the market if there was no violation.
Market-share theory is also used in patent cases when the patentee and the infringer share the market with a noninfringing competitor. In this case, the court assumes that the percentage of the market that the patentee holds is the same as the percentage of the infringer's market that the patentee would have captured but for the infringement.
For example, if a company infringes on a patent and causes the patentee to lose 5% of its market share, the damages awarded to the patentee would be based on the assumption that the patentee would have captured that 5% of the infringer's market if there was no infringement.