Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in EcoFactor, Inc. v. Google LLC, 2023-1101 (June 3, 2023), affirming a judgment of infringement and dismissing three issues raised by Google on appeal.
EcoFactor sued Google alleging that Google’s Nest smart thermostats infringed U.S. Patent No. 8,738,327, which relates to the operation of smart thermostats. The district court denied Google’s motion for summary judgment, which argued that certain claims of the ’327 patent were invalid as directed towards ineligible subject matter. The district court also denied Google’s pretrial motion to exclude the opinion of EcoFactor’s damages expert. After trial, the jury returned a verdict of infringement and awarded damages. The district court denied Google’s post-trial motions for judgment of non-infringement as a matter of law and for a new trial on damages. Google appealed.
The Federal Circuit affirmed. Disposing of Google’s first issue, the Court held that the district court’s denial of summary judgment was not appealable because trial on the merits of the ineligibility issue had been held. Google had not appealed the jury’s verdict that the ’327 patent did not claim ineligible subject matter.
Next, the Court found that the evidence at trial was sufficient to support the jury’s finding that the ’327 patent’s limitation of “receiv[ing] temperature measurements from inside the structure” was met by the accused products. Expert testimony, statements on Google’s webpages, and the accused products’ source code evidenced the products measure temperature inside customer homes, not just inside the thermostat housing, as Google had contended on appeal.
Finally, the Court concluded that a new trial on damages was not warranted, because the opinion of EcoFactor’s expert regarding a hypothetical negotiation was sufficiently reliable. This finding was based on EcoFactor’s expert’s consideration of three EcoFactor license agreements, which provided for a payment of a lump sum amount based on a stated royalty rate—the same royalty rate employed in the expert’s damages calculation—and corroborating testimony of EcoFactor’s CEO. Despite the license agreements pertaining to interrelated EcoFactor patents not at issue, the Court found that EcoFactor’s expert showed the license agreements to be economically comparable to the hypothetical negotiation by citing evidence of market pressures and Google’s profit which could be attributed to the patent at issue. Judge Prost dissented from the majority’s decision on damages, finding EcoFactor’s expert’s method of deriving a royalty rate from the lump-sum licenses unreliable.
Coauthored by Elizabeth Harwood & Emily Threatt.
