In 1976, Stevens Linen Associates, Inc. (Stevens) (plaintiff) created a new fabric design entitled Chestertown. Stevens began selling and marketing Chestertown and received copyright registration for the design. After seeing Chestertown on display, Mastercraft Corporation (Mastercraft) (defendant), a competitor in the fabric business, created two fabrics based on the Chestertown design. After learning of Mastercraft’s fabrics, Stevens brought a copyright-infringement suit. The district court held that Mastercraft’s fabrics infringed upon the Chestertown design, and the trial turned to the issue of damages. Stevens claimed compensatory damages for lost sales under a number of different theories. First, Stevens argued that lost sales should be calculated based on the total amount of Mastercraft’s sales of the two infringing fabrics. Alternatively, Stevens argued that it should be compensated for lost sales resulting from the infringement, based on sales projections of Chestertown fabric prior to the infringement. Finally, Stevens argued that lost sales could alternatively be calculated by sales of the infringing fabrics to customers who had also purchased Chestertown fabric. The district court rejected all of Stevens’s theories as too speculative. Stevens appealed the district court’s decision regarding compensatory damages.