Last week, the U.S. Court of Appeals for the Federal Circuit issued an 8-2 en banc opinion in EcoFactor, Inc. v. Google LLC, No. 2023-1101 (May 21, 2025)––a patent infringement case involving smart thermostat technology. The full Federal Circuit reversed a district court’s denial of a new trial on damages and reinstated a prior Federal Circuit panel ruling on issues other than damages.
EcoFactor sued Google in the Western District of Texas, alleging that Google’s Nest thermostats infringed claims of EcoFactor’s U.S. Patent No. 8,738,327. At trial, EcoFactor’s damages expert, David Kennedy, opined that Google should pay damages based on a per-unit royalty rate, relying on three prior lump-sum settlement licenses between EcoFactor and other companies. Kennedy asserted the settlement licenses reflected an industry-accepted per-unit rate, but the actual license agreements only stated that EcoFactor, not the licensees, believed a certain rate was reasonable—without any indication that the licensees agreed to that rate. Further, the operative provisions of the licenses expressly stated the lump-sum payments were not based on sales and did not constitute a royalty. Following trial, a jury found infringement and awarded EcoFactor $20 million in lump-sum damages. Google appealed and a Federal Circuit panel upheld the verdict in a 2-1 decision with the dissenting judge criticizing the reliability of Kennedy’s damages calculations. The full Federal Circuit later agreed to rehear the case en banc primarily to determine if Kennedy’s testimony was properly allowed.
The Federal Circuit sitting en banc reversed, finding the district court abused its discretion by admitting Kennedy’s testimony and denying Google’s motion for a new trial on damages. The Court found EcoFactor’s prior licenses did not support the conclusion that prior licensees agreed to the per-unit royalty rate Kennedy used. Likewise, the Court found the only other evidence Kennedy relied on for his asserted per-unit royalty rate––testimony by EcoFactor’s CEO regarding calculation of the lump-sum amounts in the licenses––was unsupported by evidence of actual or projected sales data. The Court concluded Kennedy’s expert opinion was not based on sufficient facts or data and prejudiced Google, noting that on the record it could not be “sure that the admission of Mr. Kennedy’s testimony did not influence the jury’s damages award.” Accordingly, the Court remanded for a new trial on damages. Finding the parties’ remaining arguments “unpersuasive,” the Court reinstated the panel’s rulings on non-damages issues.
