Halaby and Kelly, ‘Disgorgement of Profits as a California Breach of Contract Remedy: Intellectual Property and Other Guideposts’

ABSTRACT
… Here, Patrick Kelly and I examine the history of, and limitations on, the new disgorgement-of-profits remedy for breach of contract under Restatement (Third) of Restitution and Unjust Enrichment §39. We suggest that up to the ‘cost of modification’ – the figure the breacher hypothetically would have had to pay to ‘buy out’ its remaining performance obligation under the contract but, choosing instead to breach, did not – disgorgement-of-profits is not inconsistent with the Civil Code’s limitations on monetary recovery for breach of contract. We also identify intellectual property infringement analogs – chiefly focusing on the ‘reasonable royalty’ calculation from patent law – that may guide California businesses and courts in applying disgorgement-of-profits in future breach of contract disputes and cases.

Halaby, Andrew and Kelly, Patrick, Disgorgement of Profits as a California Breach of Contract Remedy: Intellectual Property and Other Guideposts (January 1, 2019).

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