EcoFactor, Inc. v. Google LLC, Appeal No. 2023-1101 (Fed. Cir. June 3, 2024)

In the Federal Circuit’s only precedential patent opinion this week, the court addressed issues of infringement and admissibility that arose after a jury found that certain “smart thermostats” offered by Google infringed a patent owned by EcoFactor, Inc. (“EcoFactor”). The Federal Circuit affirmed the district court’s rulings.

EcoFactor’s patent relates to the operation of smart thermostats in HVAC systems. The primary recited purpose of the patent is to reduce the strain on the electricity grid during a period of expected high demand, through adjustments to the user’s thermostat settings that reduce the electricity consumed by the HVAC system. Google moved for summary judgment before the district court, arguing that EcoFactor’s patent was invalid because it was directed to an abstract idea. The district court denied the motion.  The district court also denied Google’s Daubert motion to exclude the opinion of EcoFactor’s damages expert, Mr. Kennedy, and rejected Google’s argument that Mr. Kennedy’s opinion was unreliable and therefore prejudicial. Trial was held and the jury returned a verdict in favor of EcoFactor. Google renewed its motion for judgment as a matter of law (JMOL) of non-infringement and moved for a new trial on damages. The district court denied both motions and Google appealed.

On appeal, Google raised three issues. First, Google argued the district court had erred in denying its motion for summary judgment that the patent was directed to patent-ineligible subject matter. Second, Google argued the district court had erred in denying Google’s JMOL motion for non-infringement. Third, Google argued the district court had erred in denying its motion for a new trial on damages because Mr. Kennedy’s damages opinion was based on unreliable methodology. The Federal Circuit rejected each of Google’s arguments.

On the first argument, regarding the denial of summary judgment motion, the Federal Circuit held there was no appealable issue because the trial on the merits superseded the record that existed at the time of summary judgment, and Google only sought to appeal the denial of the motion and not the jury verdict.

Second, addressing the JMOL seeking non-infringement, the Federal Circuit found that the jury’s infringement verdict was supported by substantial evidence.

Finally, on the denial of Google’s Daubert motion to exclude EcoFactor’s damages expert, the Federal Circuit found that Mr. Kennedy’s testimony was not speculative but based on admissible evidence. The Federal Circuit also rejected Google’s argument that Mr. Kennedy’s testimony was unreliable, again pointing to an array of admissible evidence on which the testimony was based. The Federal Circuit also addressed Google’s argument that Mr. Kennedy’s damages testimony should have been excluded from trial for a lack of comparability and apportionment. The Federal Circuit rejected both arguments, and found that Mr. Kennedy had sufficiently showed, for purposes of admissibility, that three license agreements on which EcoFactor relied were economically comparable to the hypothetically negotiated agreement, and that Mr. Kennedy separately grounded his apportionment opinion on underlying internal profit and survey data from Google.

The opinion can be found here.

By Mario E. Delegato

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.

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