Opinion ID: 386033
Heading Depth: 1
Heading Rank: 2

Heading: Compound Interest

Text: 10 When this case was last before us on the question of the proper assessment of damages, defendant in its principal brief urged upon us that we make a final determination of damages based on the royalties which plaintiff would have received, multiplied by a factor of two plus interest as computed in appendix A (of defendant's brief). Although we made the determination of damages as suggested and multiplied them by a factor of two, our mandate did not indicate whether the district court should apply simple or compound interest. As we have already indicated, the district court had previously compounded interest annually and defendant did not challenge or appeal from this method. The computation of interest set forth in the appendix to defendant's brief to us on the last appeal was also compounded annually, although on only the primary damages. Thus, compounding the interest annually would appear to be the method accepted by the parties. We believe that under the facts of this case it is also the fair and equitable method, not only because of the expensive and protracted litigation, but also because for a substantial period covered by this litigation interest rates have been considerably in excess of 6% per annum. 2 Application of the method in this case is an effort to achieve equity for a plaintiff that has been deprived of money to which it was entitled during a period in which the market's prevailing interest rates were generally significantly higher than 6% simple interest per annum. 11 Defendant cites to an earlier decision of this court in Baseball Display Co. v. State Ballplayer Co., 35 F.2d 1 (3d Cir. 1929), for the proposition that compound interest is impermissible. There we disapproved of the compounding of interest on profits as a penalty ... and then charging interest on the interest thus compounded to the date of the decree and thereafter interest on the decree with this accumulated interest. Id. at 3. We do not here compound the interest as a penalty. We believe compounding the interest is an appropriate exercise of discretion by the court in the circumstances of this case.