EcoFactor, Inc. v. Google LLC
6:20-cv-00075
| W.D. Tex. | May 21, 2025Background
- EcoFactor, Inc. owns a patent related to smart thermostat technology and sued Google, alleging its Nest thermostats infringed that patent.
- After a jury found infringement and awarded EcoFactor over $20 million, Google sought to exclude EcoFactor's damages expert testimony and for a new trial on damages, arguing the expert's methodology was unreliable.
- The district court denied Google’s motions, admitting the expert testimony and refusing a new damages trial.
- A panel of the Federal Circuit initially affirmed, but En Banc review was granted, specifically on whether the district court properly applied Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc. in admitting the expert’s damages testimony.
- At issue was whether lump-sum settlement licenses could support the expert’s opinion that licensees agreed to a specific per-unit royalty rate ($X/unit).
- The en banc court reversed the district court on damages, holding the expert’s testimony was not based on sufficient facts or data, and remanded for a new trial on damages.
Issues
| Issue | Plaintiff’s Argument | Defendant’s Argument | Held |
|---|---|---|---|
| Admissibility of Damages Expert’s Testimony under FRE 702 | Licenses, CEO testimony, and market data support expert’s per-unit royalty rate opinion | Expert’s per-unit rate opinion on damages was based on insufficient facts; licenses didn’t show agreement | Expert’s testimony was unreliable under Rule 702; evidence didn’t support that licensees agreed to per-unit rate; reversed and remanded |
| District court’s gatekeeping on expert evidence | District court had discretion and factual disputes should go to jury | District court erred as it didn’t adequately create a record or rationale on admissibility | District court abused its discretion in admitting the expert testimony without sufficient basis |
| Harmless error standard for evidentiary rulings | Any error was harmless because same evidence came from other sources | Error was prejudicial because expert’s testimony was central to damages | Prejudicial error; cannot be sure the testimony didn’t affect the damages verdict |
| Scope of en banc review regarding contract interpretation | Focus should be on Rule 702/Daubert, not new contract theory | Court properly interpreted whether licenses established the royalty rate | Interpretation of the licenses is integral to admissibility of the expert testimony |
Key Cases Cited
- Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (U.S. 1993) (established the trial court's gatekeeping role under FRE 702)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (U.S. 1999) (extended Daubert's gatekeeping to all expert testimony)
- Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009) (differentiates between lump-sum and running royalty license analysis)
- LaserDynamics, Inc. v. Quanta Comp. Inc., 694 F.3d 51 (Fed. Cir. 2012) (actual licenses are probative of a reasonable royalty)
- Apple Inc. v. Motorola, Inc., 757 F.3d 1286 (Fed. Cir. 2014) (discusses the gatekeeping role in patent damages)
- Micro Chem., Inc. v. Lextron, Inc., 317 F.3d 1387 (Fed. Cir. 2003) (gatekeeping does not extend to resolving competing fact theories)
- Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970) (framework for patent reasonable royalty analysis)