EcoFactor, Inc. v. Google LLC, No. 2023-1101 (Fed. Cir. (W.D. Tex.) June 3, 2024). Opinion by Reyna, joined by Lourie. Opinion dissenting in part by Prost.

EcoFactor sued Google for infringement of a patent related to the operation of smart thermostats in computer-networked HVAC systems. Prior to a jury trial, Google moved for summary judgment that the asserted claim was patent ineligible under 35 U.S.C. § 101. The court denied the motion and submitted step two of the Alice inquiry to the jury.

At trial, the jury found the asserted claim infringed and awarded damages to EcoFactor. The jury also answered “no” to the verdict form’s question relating to Google’s burden under step two of the Alice inquiry. The district court denied Google’s post-trial motions and Google appealed, raising three issues.

First, Google appealed the district court’s denial of summary judgment that the asserted claim was patent ineligible under § 101. The Federal Circuit ruled that the denial of summary judgment “is not appealable.” The district court held a trial on the merits of the § 101 issue, and the Federal Circuit explained that “a district court’s denial of summary judgment is not appealable after a trial on the merits.”

Second, Google appealed the district court’s denial of its motion for judgment as a matter of law on noninfringement. Google argued that the jury’s verdict of infringement was not supported by substantial evidence, but the Federal Circuit disagreed. The court ruled that substantial evidence supported the verdict, including “expert testimony from both sides, documentary evidence, and source code information.”

Lastly, Google argued that the district court abused its discretion by denying Google’s Rule 59 motion for a new trial on damages. Google raised two core arguments. First, Google argued that the damages model used by EcoFactor’s damages expert was speculative and conclusory, leading to a proposed royalty rate “plucked … out of nowhere.” The Federal Circuit disagreed, ruling that the expert based the royalty rate on admissible evidence that included three license agreements, the testimony of EcoFactor’s CEO, and an email chain between EcoFactor and a licensee.

Google also argued that the damages opinions should have been excluded for lack of economic comparability and lack of apportionment. The three license agreements relied on by EcoFactor’s damages expert involved EcoFactor’s entire patent portfolio. Google argued that the expert failed to address the value of the lone asserted patent within that portfolio. The Federal Circuit again disagreed with Google, holding that the testimony was admissible. The expert had “accounted for [the] differences” in the portfolio licenses and had “separately grounded his apportionment opinion on underlying internal profit and survey data from Google.” Thus, the Federal Circuit affirmed.

Judge Prost dissented in part. She disagreed with the majority’s refusal to award a new trial on damages. In her view, EcoFactor’s damages expert calculated a royalty rate from the licenses “in an unreliable way,” as “the licenses here are for a lump-sum amount with no record evidence supporting a calculation of a royalty rate.” Separately, the expert’s analysis had “another significant problem”: the proposed royalty rate “does not reflect the [asserted] patent’s value; rather, it includes the value of other patents,” which is a “basic failure requir[ing] a new trial.”

View Opinion

[View source.]