As an expert in damages disputes, I frequently see opposing counsel attack the “but-for method” as if it were novel, unreliable, or optional.
It’s not.
If you read the case law, you’ll see that the “but-for” framework is not just an economic tool; it is the default legal standard of causation in U.S. law. Courts rely on it to separate recoverable damages from speculation across copyright, patent, and commercial disputes.
With the caveat that I am not a law practitioner and this is not legal advice, below is a refresher for practitioners working in damages, IP, and complex financial analysis:
1. Start with First Principles: The Supreme Court
The Supreme Court has made clear that “but-for” causation is the baseline rule—not a specialized doctrine.
In Comcast Corp. v. National Association of African American-Owned Media, 589 U.S. (2020), the Court held that a plaintiff must show their injury would not have occurred “but for” the challenged conduct. See https://supreme.justia.com/cases/federal/us/589/18-1171/.
The Court emphasized that this burden applies throughout the case, not just at trial. This reflects a fundamental principle:
If the result would have occurred anyway, it is not legally attributable to the alleged misconduct.
2. In Copyright: Courts Require a Causal Nexus (Not Speculation)
The “but-for” principle is embedded in copyright damages through 17 U.S.C. § 504(b), which allows recovery only of profits “attributable to the infringement.”
The Ninth Circuit’s decision in Mackie v. Rieser, 296 F.3d 909 (9th Cir. 2002), is particularly instructive. Full opinion: https://cdn.ca9.uscourts.gov/datastore/opinions/2002/07/25/0035839.pdf
There, the court rejected a claim for indirect profits - even though infringement was undisputed - because the plaintiff failed to demonstrate a non-speculative causal connection between the infringement and the defendant’s revenues. The court held that damages must be grounded in a “tangible nexus,” not conjecture.
In practical terms: No causal link = no damages.
This is simply the “but-for” framework applied rigorously.
3. The Same Rule Applies Across IP (Patent and Beyond)
The same causation principle governs damages across intellectual property law.
In Aro Manufacturing Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964), the Supreme Court defined compensatory damages as the difference between:
- the plaintiff’s actual condition, and
- the condition that would have existed absent the infringement
See https://supreme.justia.com/cases/federal/us/377/476/.
Similarly, in Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538 (Fed. Cir. 1995), the Federal Circuit explained that lost profits require proof that the patentee would have made the sales “but for” the infringement. See https://law.justia.com/cases/federal/appellate-courts/F3/56/1538/624381/.
These cases reinforce a consistent rule: Damages must reflect the delta between reality and a properly constructed “but-for world.”
4. Daubert Confirms the Method’s Admissibility
Challenges to the “but-for method” often collapse under basic expert admissibility standards.
Under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), courts admit expert testimony based on reliable, testable, and widely accepted methodologies. See https://supreme.justia.com/cases/federal/us/509/579/.
The “but-for” framework easily satisfies this test:
- It is testable (through counterfactual modeling)
- It is widely accepted in economics and law
- It aligns damages analysis with causation requirements
In practice, courts do not exclude “but-for” reasoning. They exclude unsupported assumptions mischaracterized as causation.
5. Federal vs. State Courts: Different Labels, Same Inquiry
Although terminology varies, federal and state courts apply materially the same causation analysis.
Federal courts explicitly use “but-for causation,” particularly in statutory and IP contexts.
State courts may use terms like “proximate cause” or “substantial factor,” especially in tort and contract cases.
Regardless of jurisdiction, the operative question generally remains identical: Would the claimed loss exist absent the defendant’s conduct?
If yes, it is not recoverable.
6. Where Damages Models Fail
The real issue in litigation is not whether the “but-for” framework is valid but whether it has been properly applied.
Courts routinely reject damages models that:
- Treat correlation as causation
- Attribute all revenue during a period to the alleged misconduct
- Ignore independent drivers (brand value, marketing, other IP, macro trends)
- Fail to isolate the incremental contribution of the alleged infringement
That last point is critical.
The law does not award total revenue. It awards only the portion of profit that would not exist in the “but-for world.”
7. Why This Matters
For litigators and experts, the implications are straightforward:
- The “but-for” framework is not optional
- It is embedded in statutory damages regimes (including § 504(b))
- It is necessary to survive Daubert scrutiny
- It is essential to avoid speculative damages
When applied correctly, it provides a disciplined, legally grounded method to isolate compensable value, test causation assumptions, and align expert testimony with the applicable law.
Final Thought
The debate over the “but-for method” is often misplaced.
The real question is not whether it should be used, because it *must* be used.
The real question is whether the analysis faithfully answers the only issue that matters: What would have happened in the absence of the alleged wrongful conduct?
Everything else is just narrative, and courts tend to see through that.
