Seventh Circuit Vacates Internet Marketer's Lost Profits Award

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The U.S. Court of Appeals for the Seventh Circuit vacated a $5.6 million breach of contract damages award for lost profits because the plaintiff did not establish the prospective earnings of its Internet-based marketing venture with sufficient certainty.

Publications International Ltd. operates an auto guide and a related website that provide price quotes to consumers considering potential automobile purchases. The company originally derived revenue from selling sales leads generated by its website to wholesalers, who in turn sold those leads to individual automobile dealerships. Publications International then decided to sell its sales leads directly to dealerships, and it retained Smart Marketing Corp. to develop and market the direct-sales program. But technical glitches and disappointing sales hampered the project, and after five months Publications International terminated the Smart Marketing agreement. Smart Marketing sued Publications International for breach of contract and obtained a jury award of $5.6 million for lost profits.

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