Split En Banc CAFC Says Google Gets a New Trial on Damages, Scrapping $20 Million Award for EcoFactor

By Editorial Team

The full U.S. Court of Appeals for the Federal Circuit (CAFC) issued a split precedential decision in EcoFactor v. Google, overturning a district court's decision to deny Google a new trial on damages after a $20 million award to EcoFactor, Inc. The CAFC held that the district court's order should be reversed, with Judges Reyna and Stark dissenting in part.

District Court Proceedings

The dispute arose when EcoFactor sued Google for infringing its U.S. Patent No. 8,738,327 related to smart thermostat technology, specifically targeting Google's Nest thermostat products. Google attempted to invalidate certain patent claims as abstract under Section 101, but the district court rejected this motion. Additionally, Google's Daubert motion to exclude the damages expert testimony of EcoFactor's Mr. Kennedy was also denied.

Despite Google's arguments, a jury found Google infringed claim 5 of the patent and awarded EcoFactor damages. The district court further denied Google's motions for judgment as a matter of law of non-infringement and a new trial on damages.

CAFC Appeal

Google appealed the district court's decisions, arguing errors in denying the motion for summary judgment, JMOL motion for non-infringement, and a new trial on damages. In its original appeal, Google contended that Kennedy's damages opinion lacked reliability and comparability, but the CAFC found Kennedy's methodology admissible and upheld the damages award.

En Banc Rehearing

The CAFC granted an en banc rehearing focusing on the district court's adherence to Federal Rule of Evidence 702 and Daubert in allowing Kennedy's testimony on the royalty rate. The en banc majority concluded that the existing licenses Kennedy relied upon were insufficient to support his conclusion, leading to an abuse of discretion by the district court. Consequently, the CAFC ordered a new trial on damages.

Judges Reyna and Stark dissented, expressing concerns about the majority's departure from the en banc order's scope and potential misinterpretation of Rule 702 and Daubert. They suggested a remand for a better explanation from the district judge rather than a new trial.

Despite challenges to the en banc proceeding's composition due to Judge Newman's absence, the CAFC proceeded with the majority opinion, emphasizing the necessity of a new trial based on insufficient evidence supporting Kennedy's testimony.

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