Opinion ID: 741003
Heading Depth: 3
Heading Rank: 1

Heading: Capacity

Text: 20 The government purchased 442,357 pairs of the infringing B/LPS eyewear over four years. The Claims Court found that Gargoyles could not have met that demand and that this fact was dispositive of the lost profits issue (although the court continued to analyze the other factors). The Claims Court credited Dr. Abram Hoffman, the government's accounting and finance expert, who testified that in order to meet the Army's demand during Operation Desert Storm, Gargoyles would have had to increase its output and coordinate additional suppliers while maintaining quality control. The trial court noted that no testimony had been offered regarding the capacity of these other suppliers or their willingness to meet demand. Dr. Hoffman also examined Gargoyles' finances and questioned its ability to increase production significantly. 21 Gargoyles claims that the testimony of Mr. Burns is more credible and was given insufficient weight by the trial court. Burns testified that Gargoyles always had an ample inventory of lenses and had excess molding capacity. Because Gargoyles had increased its capacity from 1987 to 1988, Burns concluded that meeting the new capacity would be merely a matter of hiring a few more people and adding a few more tables in the assembly area and there was more than one supplier for each part. Further, Gargoyles argues its testimony showed its business plan assumed great growth with financing accounted for (although the plan was not met) and that it could accommodate large orders. Last, Gargoyles argues Dr. Hoffman was not credible because he had not visited its factory and the trial court ignored a pre-litigation visit by Army personnel at which, Gargoyles contends, the Army was satisfied with production capacity. 22 Essentially, Gargoyles maintains that had the standard been a preponderance of the evidence, rather than clear and convincing evidence, the testimony of Mr. Burns might have proved sufficient over that of Dr. Hoffman. Certainly, if Tektronix dictates that the standard is clear and convincing evidence, then the matter merely becomes a choice between the credibility of two experts, and the Claims Court's conclusion that Gargoyles lacked capacity to produce the eyewear is supported by Dr. Hoffman's testimony. Anderson v. City of Bessemer City, 470 U.S. 564, 575, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518 (1985) (decision to credit one witness when there is conflicting testimony can virtually never be clear error); First Interstate Bank of Billings v. United States, 61 F.3d 876, 881 (Fed.Cir.1995). The question then becomes whether the lower standard would avail Gargoyles and thus make a remand necessary. Even assuming this court had the authority to consider the rule in Tektronix distinguishable or otherwise not controlling because the question of the proper standard of proof was not in issue, we hold that on these facts Gargoyles has not proven capacity to produce the eyewear sufficient to receive lost profits even under the lower standard discussed in Rite-Hite. A holding by the trial court otherwise would be reversible error. The government notes that the commercial eyewear in Gargoyles' inventory would not have been acceptable for military use. Further, Dr. Hoffman testified that Gargoyles would expect lower profit margins on government sales. Gargoyles missed projections in its business plan to a significant extent, so the probative value of the projections to demonstrate capacity for further financing or production is low. Thus, we hold there is insufficient evidence of record to entitle Gargoyles to lost profits even under the reasonable probability standard.