UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF TEXAS 

WACO DIVISION

ECOFACTOR, INC. 

Plaintiff, 

v. 

GOOGLE LLC, 

Defendant. 

Case No. 6:20-cv-00075-ADA

PLAINTIFF ECOFACTOR, INC.’S OPPOSITION TO DEFENDANT GOOGLE LLC’S 

MOTION TO EXCLUDE EXPERT TESTIMONY OF DAVID KENNEDY 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 1 of 25 PUBLIC VERSION
i

TABLE OF CONTENTS

I. INTRODUCTION.................................................................................................................1

II. FACTUAL BACKGROUND ...............................................................................................2

A. THE THREE PATENT LICENSES AND SETTLEMENT AGREEMENTS AT ISSUE ...................2

B. ECOFACTOR’S TECHNICAL EXPERT’S COMPARABILITY ANALYSIS ...............................3

C. MR. KENNEDY’S ANALYSIS OF THE LICENSES’ COMPARABILITY..................................4

D. MR. KENNEDY’S BROADER GEORGIA-PACIFIC ANALYSIS.............................................6

III. ARGUMENT ........................................................................................................................7

A. MR. KENNEDY’S RELIANCE ON THE PER-UNIT RATE THAT APPEARS EXPRESSLY IN 

THE PATENT LICENSE AGREEMENTS IS CONSISTENT 

WITH THE EVIDENCE AND THE LAW..............................................................................7

1. Google’s disagreements about the meaning or import of the evidence relied on 

by Mr. Kennedy goes to the weight of that opinion, which is not a basis for 

exclusion. ...........................................................................................................7

2. Mr. Kennedy’s reliance on the $5.16 rate as an input in his analysis is 

supported by substantial evidence......................................................................8

3. Google’s appeal to allegedly contrary evidence confirms that its complaints 

are about weight, not methodology....................................................................9

4. That the underlying calculations for the $5.16 rate are not in the record does 

not vitiate the evidence supporting reliance on that rate..................................11

B. MR. KENNEDY’S COMPARABILITY ANALYSIS IS THOROUGH AND FULLY CONSISTENT 

WITH FEDERAL CIRCUIT PRECEDENT ..........................................................................14

1. Mr. Kennedy analyzes and adjusts for the fact that the patent licenses are 

settlement agreements. .....................................................................................14

2. Ecofactor’s experts provide extensive opinions accounting for the fact that the 

settlements are

...........17

IV. CONCLUSION ...................................................................................................................20

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 2 of 25
ii

TABLE OF AUTHORITIES

Cases

ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 

694 F.3d 1312 (Fed. Cir. 2012) (............................................................................................... 8

Bio-Rad Lab'ys, Inc. v. 10X Genomics Inc., 

967 F.3d 1353 (Fed. Cir. 2020)......................................................................................... 14, 19

CloudofChange, LLC v. NCR Corp., 

No. 6:19-CV-00513-ADA, Opinion and Order (W.D. Tex., Nov. 9, 2021)............................ 7

Comcast Cable Commc'ns, LLC v. Sprint Commc'ns Co., LP,

218 F. Supp. 3d 375 (E.D. Pa. 2016)...................................................................................... 16

CSIRO v. Cisco, 

809 F.3d 1295 (Fed. Cir. 2015)................................................................................................. 9

Ericsson, Inc. v. D-Link Sys., Inc., 

773 F.3d 1201 (Fed. Cir. 2014)............................................................................................... 14

Georgia-Pacific Corp. v. U.S. Plywood Corp., 

318 F. Supp. 1116 (S.D.N.Y. 1970).......................................................................................... 8

GREE, Inc. v. Supercell Oy, 

No. 219CV00070JRGRSP, 2020 WL 4057640 (E.D. Tex., July 20, 2020) ........................... 18

i4i Ltd. Partnership v. Microsoft Corp., 

598 F.3d 831 (Fed. Cir. 2010)................................................................................................... 7

Baltimore Aircoil Co., Inc. v. SPX Cooling Techs. Inc.,

No. CV CCB-13-2053, 2016 WL 4426681 (D. Md. Aug. 22, 2016)..................................... 13

LaserDynamics, Inc. v. Quanta Comput. Inc., 

694 F.3d 51 (Fed. Cir. 2012)................................................................................................... 16

MLC Intell. Prop., LLC v. Micron Tech., Inc.,

10 F.4th 1358 (Fed. Cir. 2021),.............................................................................................. 12

Omega Pats., LLC v. CalAmp Corp., 

13 F.4th 1361 (Fed. Cir. 2021)................................................................................................ 19

Papst Licensing GmbH & Co., KG v. Samsung Elecs. Co., 

No. 6:18-CV-00388-RWS, 2018 WL 10126008 (E.D. Tex. Oct. 26, 2018)........................... 15

Pavo Sols. LLC v. Kingston Tech. Co., Inc., 

No. 814CV01352JLSKES, 2019 WL 8138163 (C.D. Cal. Nov. 20, 2019)...................... 12, 13

PerdiemCo, LLC v. Industrack LLC, 

No. 2:15-CV-726-JRG-RSP, 2016 WL 6611488 (E.D. Tex. Nov. 9, 2016)........................... 16

Prism Techs. LLC v. Sprint Spectrum L.P., 

849 F.3d 1360 (Fed. Cir. 2017)............................................................................................... 15

ProTradeNet, LLC v. Predictive Profiles, Inc., 

No. 6:18-CV-00038-ADA, 2019 WL 6499488 (W.D. Tex. Oct. 11, 2019) ....................... 7, 17

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 3 of 25
iii

ResQNet.com, Inc. v. Lansa, Inc.,

594 F.3d 860 (Fed. Cir. 2010)................................................................................................ 16

Summit 6, LLC v. Samsung Elecs. Co., 

802 F.3d 1283 (Fed. Cir. 2015)................................................................................................. 7

US Salt, Inc. v. Broken Arrow, Inc., 

563 F.3d 687 (8th Cir. 2009)................................................................................................... 13

Vectura Ltd. v. Glaxosmithkline LLC, 

981 F.3d 1030 (Fed. Cir. 2020)............................................................................................... 19

VirnetX, Inc. v. Cisco Sys., Inc., 

767 F.3d 1308 (Fed. Cir. 2014)............................................................................................... 14

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 4 of 25
1

I. INTRODUCTION

Plaintiff EcoFactor, Inc. (“EcoFactor”) hereby respectfully opposes Defendant Google 

LLC’s (“Google”) motion to exclude certain opinions from the expert report of EcoFactor’s

damages expert, David Kennedy. Google challenges Mr. Kennedy’s reliance on three patent 

license agreements that EcoFactor entered into with Google’s competitors in the smart thermostat 

marketplace: Two of the patent licenses settled 

litigation where EcoFactor asserted the patents-in-suit, and the third involved highly comparable 

patents. 

This rate is corroborated 

by contemporaneous documents and the sworn testimony of the EcoFactor officer who executed 

the agreements. Google nonetheless moves to exclude Mr. Kennedy’s opinions relying on the 

$5.16 per unit rate because the calculations upon which the royalty was based are not in the record, 

and because Google thinks other evidence in the record contradicts 

on the $5.16 rate. Each of these criticisms goes to the weight, not admissibility, of Mr. Kennedy’s 

opinions. 

Google also argues the licenses are not technically and economically comparable. Google 

entirely ignores that EcoFactor’s technical expert, Mr. Erik de la Iglesia, submitted opinions 

establishing the close technical comparability of the licensed patents as well as the licensed 

products. Google has not moved to exclude Mr. de la Iglesia’s opinions, on which Mr. Kennedy 

relies and builds on. Combined with Mr. de la Iglesia’s analysis, Mr. Kennedy’s analysis 

establishes comparability and recognizes and adjusts for the differences between the licenses and 

the hypothetical negotiation, including the fact that the licenses are settlements and portfolio 

licenses. Indeed the record shows that the three licenses are not only highly comparable, they are 

the only comparable licenses in the record. Therefore, Google’s demand that Mr. Kennedy ignore 

these licenses, and should be denied. 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 5 of 25
2

II. FACTUAL BACKGROUND

A. The Three Patent Licenses and Settlement Agreements at Issue 

Licenses to the Patents-in-Suit: Mr. Kennedy analyzes EcoFactor’s settlements with

 Inc. Each agreement 

includes a license to EcoFactor’s patent portfolio. EcoFactor sued in this 

District on the same three patents that are at issue at the hypothetical negotiation between 

EcoFactor and Google. then negotiated and paid a royalty in response to 

these specific infringement allegations. Indeed, 

These two 

agreements were executed in April and June 2020, within five months of the hypothetical 

negotiation in January 2020. Ex. 2, 3. Meanwhile, EcoFactor’s settlement with 

 occurred one year later, in July 2021. Ex. 4. It followed EcoFactor’s lawsuit 

 asserting patents related to the patents at issue in the hypothetical 

negotiation between EcoFactor and Google. Once again, the portfolio license specifies the patents 

that were asserted against in the lawsuit that resulted in the settlement. Ex. 

4 at ECODCT 0001239. 

The Per-Unit Royalty Rate: Each of the 

Ex. 2 at ECODCT 0001217, Ex. 3 at ECODCT 0001228, and Ex. 4 at ECODCT

0001239.

1 All citations to numbered exhibits herein are to the exhibits to Google’s motion. All citations 

to lettered exhibits are to the exhibits to this opposition. 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 6 of 25
3

In addition to this express language, Mr. Kennedy relied on the testimony of, and his own 

conversation with, EcoFactor’s CEO, Shayan Habib, who approved and executed the three 

licenses, including testimony that 

 Ex. 1, Corrected Expert Report of David Kennedy (“Kennedy Rpt.”) at ¶¶ 197, 202, 

266, 344, 348; Ex. A, September 15, 2021 Deposition of Shayan Habib, Volume I (“Habib Dep. 

v. I”) at 301:25-303:11; Ex. B, September 16, 2021 Deposition of Shayan Habib, Volume II

(“Habib Dep. v. II”) at 324:17-325:1, 430:1-432:2. Mr. Kennedy also cites emails between the 

EcoFactor and the licensees

B. EcoFactor’s Technical Expert’s Comparability Analysis

EcoFactor’s technical expert, Erik de la Iglesia, submitted an expert opinion establishing 

the technical comparability of the including (1) 

the comparability of the licensed patents, (2) the comparability of the licensed and accused 

products, and (3) the comparability of the licensed and accused infringing features. Ex. C,

September 27, 2021 Expert Report of Erik de la Iglesia (“de la Iglesia Rpt.”) ¶¶ 94-101. As to 

the patents, beyond the fact that EcoFactor asserted the same three patents against 

that it now asserts against Google, Mr. de la Iglesia also considered whether the 

additional patents EcoFactor asserted against are 

comparable to the patent-in-suit. Id. He concluded all the patents fall into the same smart 

thermostat technology categories as the patents-in-suit: HVAC performance modeling, 

occupancy detection and smart scheduling, and demand reduction. Id. ¶¶ 98-99. 

As to the licensed products, Mr. de la Iglesia’s considered each smart thermostat made by 

Google, including their features relevant to the smart 

thermostat technologies protected by EcoFactor’s patents, such as HVAC modeling, occupancy, 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 7 of 25
4

and demand reduction features. Id. ¶¶ 95-97. As to the infringing features, Mr. de la Iglesia also 

considered EcoFactor’s infringement allegations against the licensees’ products. Id. ¶¶ 99-101. 

He concluded that EcoFactor’s allegations against these same smart thermostat technology 

features are comparable to the features of Google’s smart thermostats that infringe the three 

asserted patents in this case. Id. (Tables describing three to five common elements from each 

patent that were asserted to infringe in the licensees’ products).

C. Mr. Kennedy’s Analysis of the Licenses’ Comparability. 

As part of his Georgia-Pacific analysis, EcoFactor’s damages expert, Mr. Kennedy, 

analyzed the similarities and differences between the litigation settlements with 

 and the hypothetical negotiation between EcoFactor and 

Google. Mr. Kennedy considered substantial evidence that are 

“major participants in the [smart thermostat] market,” just like Google. Ex. 1, Kennedy Rpt., ¶¶

72, 365-384. He also considered substantial evidence that the licensed products and technologies 

are economically comparable in terms of market demand. Id.¶¶ 133-171, ¶¶ 194-208, ¶¶ 365-384. 

Mr. Kennedy relies on Mr. de la Iglesia’s opinion that the asserted patents cover the HVAC 

performance modeling, occupancy detection and smart scheduling, and demand reduction

features, and analyzes dozens of pieces of marketing materials to establish the comparabilty of 

the licensed and accused products. See, e.g., id. at ¶¶75-105,¶¶ 133-171, ¶ 345, ¶ 384. 

Mr. Kennedy also contrasted this evidence of an acceptable per-unit rate in comparable 

agreements with the circumstances at the hypothetical negotiation. For example, Mr. Kennedy 

adjusts for the effect of litigation risk on the settlements 

by recognizing that it depressed the rate EcoFactor was able to obtain in the licenses. He considers 

the fact that the 

Id. ¶ 348. 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 8 of 25
5

 a consideration that does not exist 

at the Hypothetical Negotiation.” Id. ¶ 349. 

Finally, Mr. Kennedy adjusted for the difference in the number of licensed patents and 

products. Id. ¶¶ 344-349. Mr. Kennedy considers that at the hypothetical negotiation, Google 

would argue that the $5.16 per-unit rate needs to be apportioned down to reflect the additional 

patents in the portfolio that were also licensed. Id. ¶¶ 355-360. However, Mr. Kennedy relies on 

Mr. de la Iglesia’s technical analysis to conclude that each licensee acquired coverage for the 

same smart thermostat technologies that Google is obtaining coverage for at the hypothetical 

negotiation, on highly related patents or on the exact same patents. Id. ¶ 360. He then relies on 

his own analysis of the facts and circumstances surrounding the settlements to conclude that both 

EcoFactor and its licensees negotiated the $5.16 per-unit based on asserted patents, not the other 

patents in the portfolio: 

The three patents asserted against Google cover the same interrelated smart 

thermostat technologies as the seven patents asserted against which include 

the three patents asserted against Google. Further, only the seven patents that 

EcoFactor asserted in litigation against were the focus of the negotiation 

and the determination of the agreed royalty, rather than the remainder of 

EcoFactor’s portfolio. agreed to take a license after being sued on seven 

specific EcoFactor patents. litigated against EcoFactor on those patents, 

disputing infringement and validity, Accordingly, Daikin’s agreement to take a 

license followed its evaluation of the value of the three technology areas covered 

by those seven patents. Further, 

 [confirming they] were the focus 

of the deal.” 

Id. ¶ 347. Mr. Kennedy confirmed this understanding of the evidence with Mr. Habib, who told 

him that

 Id. ¶

173. See also id. ¶¶ 276, 325.

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 9 of 25
6

Mr. Kennedy performs a similar analysis for the other licenses, concluding that for each 

one, the asserted patents drove the value of the deal. Id. ¶ 348-349. Further, he opines that “while 

the final license may ultimately include other EcoFactor patents, ... the royalty EcoFactor 

receives is derived from those patents EcoFactor believes are infringed by the licensee. Therefore, 

little to no value is assigned to other patents that may be included in the license.” Id. ¶ 267. He 

opines that therefore, at the hypothetical negotiation, EcoFactor would have a strong argument 

that “only the asserted patents against were the focus of the agreements, 

the same patents infringed by Google were asserted against all of the 

asserted patents covered the same three interrelated smart technology areas, [and] EcoFactor’s 

licenses reflected a discount due to the fact that the licensees disputed infringement and validity.” 

Id. ¶ 357.

D. Mr. Kennedy’s Broader Georgia-Pacific Analysis

Google’s claim that Mr. Kennedy bases his royalty opinion “solely on these three 

settlement agreements” (Mot. at 5) ignores vast swaths of his Georgia-Pacific analysis unrelated 

to these settlements, including Mr. Kennedy’s apportionment analysis using an analytical 

approach that calculates Google’s marginal profit per-unit on the smallest saleable patent 

practicing unit that is attributable to the patented technology. Ex. 1, ¶¶ 165-171, ¶¶ 350-354, 

Exhibit 11A (applying the percentages appearing in Google’s conjoint survey regarding the 

relative importance of the accused features to Google’s internal financial documents on the 

marginal profits from each infringing sale). This approach relies on Mr. de la Iglesia’s 

unchallenged opinion establishing which product attributes are attributable to Google’s use of the 

patented technology. Ex. C, de la Iglesia Rpt. ¶¶ 75-76. Mr. Kennedy opines that the parties to 

the hypothetical negotiation would consider these per-unit profit figures under Georgia-Pacific 

factors 9, 10, 11, and 13 alongside the $5.16 per-unit rate that appears in the comparable patent 

license agreements under Georgia-Pacific factor 1. Ex. 1, Kennedy Rpt., ¶¶ 350-354, 359. Mr. 

Kennedy also considers the upward pressure from convoyed sales under Georgia-Pacific factor 

6, alongside his other adjustments for the upward pressure from the litigation uncertainty discount 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 10 of 25
7

that applied to the litigation settlements, and the downward pressure from the number of licensed 

patents in the agreements. Id. ¶¶ 338-342, 349, 355-360. 

III. ARGUMENT

A. Mr. Kennedy’s Reliance on the Per-Unit Rate that Appears Expressly in the 

License Agreements Is Consistent With 

the Evidence and the Law.

1. Google’s disagreements about the meaning or import of the 

evidence relied on by Mr. Kennedy goes to the weight of that 

opinion, which is not a basis for exclusion.

Google claims that Mr. Kennedy has failed to substantiate his reliance on the $5.16 rate 

 but it is clear that Google merely disagrees about what the evidence 

shows and does not show. Such a dispute about issues of fact is not a basis for exclusion. “[I]n 

a jury trial setting, the Court’s role under Daubert is not to weigh the expert testimony to the point 

of supplanting the jury’s fact-finding role; instead, the Court’s role is limited to that of a 

gatekeeper, ensuring that the evidence in dispute is at least sufficiently reliable and relevant to 

the issue before the jury that it is appropriate for the jury’s consideration. . . . Rather, ‘[v]igorous 

cross-examination, presentation of contrary evidence, and careful instruction on the burden of 

proof are the traditional and appropriate means of attacking shaky but admissible evidence.’” Ex. 

D, CloudofChange, LLC v. NCR Corp., No. 6:19-CV-00513-ADA, Opinion and Order at *3

(W.D. Tex., Nov. 9, 2021) (citations omitted). 

Consistent with this general rule, “‘questions relating to the bases and sources of an 

expert's opinion affect the weight to be assigned that opinion rather than its admissibility and 

should be left for the [trier of fact's] consideration.’” ProTradeNet, LLC v. Predictive Profiles,

Inc., No. 6:18-CV-00038-ADA, 2019 WL 6499488, at *3 (W.D. Tex. Oct. 11, 2019), quoting 

Summit 6, LLC v. Samsung Elecs. Co., 802 F.3d 1283, 1299 (Fed. Cir. 2015) (“[D]isputes over . 

. . the accuracy of the underlying facts are for the jury.”). See also i4i Ltd. Partnership v. 

Microsoft Corp., 598 F.3d 831, 852 (Fed. Cir. 2010) (“When the methodology is sound, and the 

evidence relied upon sufficiently related to the case at hand, disputes about the degree of relevance 

or accuracy (above this minimum threshold) may go to the testimony’s weight, but not its 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 11 of 25
8

admissibility.”); ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 694 F.3d 1312, 1333 

(Fed. Cir. 2012) (“Verizon’s disagreements are with the conclusions reached by ActiveVideo’s 

expert and the factual assumptions and considerations underlying those conclusions, not his 

methodology. These disagreements go to the weight to be afforded the testimony and not its 

admissibility.”). Thus, while a total lack of evidentiary support or “unjustified extrapolations” 

from the record can be the basis for exclusion, “[a]n expert's opinion and testimony should be 

excluded only if their testimony is so fundamentally unsupported that it cannot possibly help the 

fact finder. “ ProTradeNet, 2019 WL 6499488, at *2-3, citing Viterbo v. Dow Chem. Co., 826 

F.2d 420, 422 (5th Cir. 1987).

2. Mr. Kennedy’s reliance on the $5.16 rate as an input in his 

analysis is supported by substantial evidence.

Mr. Kennedy’s opinion is not so “fundamentally unsupported that it cannot possibly help 

the fact finder” or based on “unjustified extrapolations.” Instead, as discussed in detail above in 

Sections II. B. and C., and further addressed in Section III.B below, EcoFactor’s experts have 

provided extensive analyses establishing the comparability of the

agreements. Having determined that the licenses are highly comparable, and indeed are 

the only comparable licenses in the record (see Section III.B.1. below), Mr. Kennedy looked to 

the substantial evidence regarding the royalty rate provided in the licenses, and in corroborating 

evidence elsewhere in the record.2 No “extrapolation” is needed to understand the import of the 

2 Google takes Mr. Kennedy to task for purporting to provide evidence of an “established rate.” 

Mot. at 1, 5-6. What Google means is that Mr. Kennedy does not meet the multi-factor legal test 

for finding a rate is so well “established” that no reasonable royalty analysis is required at all. 

See, e.g., Ex. E, Report of Google’s Damages Expert W. Todd Schoettelkotte “Scheottelkotte 

Rpt.” at ¶¶ 18, 81. Google well knows that Mr. Kennedy is not using the term “established” in 

that specialized sense, but uses the term in the in the plain-meaning sense in which it is used in 

Georgia Pacific Factor 1: “The royalties received by the patentee for the licensing of the patent 

in suit, proving or tending to prove an established royalty,” i.e. comparable licenses entered 

into by the patent holder providing information relevant to determining a reasonable royalty. 

See Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970); 

Ex. 1, Kennedy Rpt. ¶¶ 263-269; Ex. 5, “Kennedy Dep.”, at 89:8-24. 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 12 of 25
9

And the fact that this 

statement is consistent across all three comparable licenses in itself corroborates its relevance in 

any one of the licenses. But Mr. Kennedy also relies on other corroborating evidence including 

the sworn testimony of the EcoFactor decisionmaker who agreed to and executed the licenses, 

Shayan Habib,3 his own discussion with Mr. Habib confirming that testimony and obtaining 

additional detail, and negotiation documents

Ex. 1, Kennedy Rpt. ¶¶ 197, 202, 266, 344, 348; Ex. 2 at ECODCT 0001217; Ex. 

3 at ECODCT 0001228; Ex. 4 at ECODCT 0001239; Ex. A, Habib Dep. v. I at 301:25-303:11; 

Ex. B, Habib Dep. v. II at 324:17-325:1, 430:1-432:2; Ex. 10; Ex. 9.

The negotiation documents would be significant evidence of a reasonable royalty, even if 

the same $5.16 rate was not as is the case here.

4 Evidence 

of what even one party to the hypothetical negotiation would have regarded to be a reasonable 

royalty is relevant evidence on which an expert can rely, if the agreement being contemplated is 

comparable to the hypothetical negotiation. In CSIRO v. Cisco, 809 F.3d 1295, 1303-04 (Fed. 

Cir. 2015), for example, the Federal Circuit found no methodological fault with the use of 

CSIRO’s “Rate Card” as part of the hypothetical negotiation analysis despite the fact that “CSIRO 

did not execute any licenses under the Rate Card terms” because of similarities with the 

circumstances of the hypothetical negotiation. See also Oracle Am., Inc. v. Google Inc., 798 F. 

Supp. 2d 1111, 1121 (N.D. Cal. 2011) (basing a real-world “offer” of the patents-in-suit “as the 

starting point” for the hypothetical negotiation). 

3. Google’s appeal to allegedly contrary evidence confirms that 

its complaints are about weight, not methodology. 

3 Google’s claim that Mr. Habib is not a reliable source because he has an interest in the 

outcome (Mot. at 12) is further evidence that what Google is disputing are the bases and sources 

of Mr. Kennedy’s opinions, not his methodology. 

4 Google falsely claims that EcoFactor has stated that Mot. at n. 5. In 

fact, what EcoFactor said is that

e., the same documents 

cited by Mr. Kennedy. Ex. 8.

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 13 of 25
10

That Google’s argument is really about a dispute of fact rather than any putative flaw in 

Mr. Kennedy’s methodology is conclusively demonstrated by their arguments regarding allegedly 

contrary evidence. Google demands not only that the Court put greater weight on this evidence 

than the evidence relied on by Mr. Kennedy, but that the Court hold as a matter of law that Mr. 

Kennedy was required to put the same gloss on what is, at best, disputed contrary evidence.

For example, Google claims that the statement

And as Mr. Kennedy has pointed out, parties 

to licenses often make statements denying that rates in a license represent a reasonable royalty, 

to avoid having rates agreed to in one instance be used against them in later litigations. Ex. 5, 

Kennedy Dep. at 101:15-102:12. That is also his understanding as to 

supports Mr. Kennedy’s view that this statement is hedging against future litigation.

5 

Moreover, the fact that 

 The negotiation documents cited 

5 The same applies to 

 Ex. 2 at ECODCT 0001219. 

And notably the has no such statement. Ex. 4 at ECODCT_0001241. 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 14 of 25
11

by Google similarly do not support its position. 

meaning EcoFactor would seek and accept more if it could, but would not accept less. 

Google’s request that this Court act as a finder of fact and adopt Google’s interpretation 

of the record is not a proper basis for a motion to exclude expert testimony. 

4. That the underlying calculations for the $5.16 rate are not in 

the record does not vitiate the evidence supporting reliance on 

that rate.

Google claims that Mr. Kennedy must ignore the extensive evidence discussed above 

regarding a $5.16 rate because the calculations by which EcoFactor determined

 and in which this rate was applied 

in the license agreements, is not in the record. But Google is 

well aware that these calculations are not in the record because they represent privileged work 

product or are otherwise restricted by court order. See, e.g., Ex. 8 at 2. Mr. Kennedy can only 

rely on the evidence available to him, and the evidence of the $5.16 rate, including the licenses

themselves, contemporaneous documents and testimony under oath, does not evaporate simply 

because issues of privilege have made some potentially relevant information unavailable to him. 

It is not particularly unusual to rely on evidence of a royalty rate in a license without having the 

sales data or other information on which that royalty is based. Google itself relies on two of its 

own agreements, even though Google asserted that information regarding the extent to which 

Google used the technology licensed in the agreements is privileged, to the extent such 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 15 of 25
12

information even exists. Ex. F, August 4, 2021 Deposition of James Maccoun at 149:21-150:3; 

152:20-25; Ex. G, October 28, 2021 Deposition of W. Todd Schoettelkotte at 81:15-25, 82:20-

83:9. Google suggests that Mr. Kennedy should nevertheless have come up with some calculation 

resulting in $5.16, but any such calculation would have been speculative, especially as it is clear 

from the record Ex. 

2 at ECODCT 0001217, Ex. 3 at ECODCT 0001228, and Ex. 4 at ECODCT 0001239

. Thus, what Google demands of Mr. Kennedy would actually be 

more speculative than what he actually does, which is rely on the actual evidence in the record.

None of Google’s cases stand for the principle that Mr. Kennedy must ignore the evidence 

in the record supporting his rate because the consideration in the

license agreements is a lump sum. The Wordtech line of cases on which Google relies holds that 

an expert cannot derive a royalty at from a black-box lump sum based on irrelevant or speculative 

evidence, not that the expert cannot rely on statements within the agreement itself evidencing the 

rate underlying that lump sum. The Pavo case cited by Google is illustrative. There, the expert’s 

opinion deriving a rate from a lump sum was excluded because she did so relying on the number 

of the licensee’s stores, in one case, and on worldwide sales, in another, without establishing that 

these were relevant “stand ins” for sales data. Pavo Sols. LLC v. Kingston Tech. Co., Inc., No.

814CV01352JLSKES, 2019 WL 8138163, at *4 (C.D. Cal. Nov. 20, 2019). However, the Pavo

court noted that this does not mean that a lump sum agreement cannot be relied on, if the expert 

shows how the evidence supports that reliance. Id. 

Similarly, in MLC Intell. Prop., LLC v. Micron Tech., Inc., 10 F.4th 1358, 1368 (Fed. Cir. 

2021), the Federal Circuit affirmed exclusion of an expert’s opinion that the rate in a “most 

favored customer” provision was the basis of the lump sum royalty in two licenses. The Federal 

Circuit acknowledged that it “may well have been proper” to consider the most favored nations 

rate as relevant evidence of a reasonable royalty, but it agreed with the district court’s finding that 

there was no evidence that the most favored customer rate was related to the lump sums actually 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 16 of 25
13

paid, as the “most favored customer provision did not state that [the rate therein] was applied to 

calculate the lump sum payment in either [] license; nor did the licenses provide any insight as to 

how the lump sum payments were actually calculated.” Id. at 1366, 1368. And the expert in 

Baltimore Aircoil Co., Inc. v. SPX Cooling Techs. Inc., No. CV CCB-13-2053, 2016 WL 

4426681, at *25 (D. Md. Aug. 22, 2016), assumed, without any evidence, that the sales of the 

defendant were the same as that of the licensee. 

As addressed above, in this case, Mr. Kennedy does show why he believes the lump-sum 

agreements apply to the facts of this case, describing how the evidence supports his reliance on 

the per-unit rate stated within the licenses. In this respect, the more relevant holding in Pavo is 

its holding on the other expert’s opinion in the case. See Pavo Sols. LLC v. Kingston Tech. Co., 

Inc., No. 814CV01352JLSKES, 2019 WL 8138163, at *18 (C.D. Cal. Nov. 20, 2019). While the 

heavily redacted ruling is somewhat difficult to follow, later rulings in the case make clear that 

the plaintiff’s expert relied on a comparable license agreement which included both a royalty and 

a statement regarding how that royalty was determined. See Pavo Sols. LLC v. Kingston Tech. 

Co., Inc., No. 814CV01352JLSKES, 2020 WL 9158697, at *8 (C.D. Cal. Aug. 7, 2020) (order 

denying Rule 50(b) motion and describing expert’s opinion in detail). The court ruled that it was 

not methodologically improper for the expert to rely on the statement within the agreement about 

how the royalty was determined, as well as corroborating statements in negotiations, rather than 

the agreed-to royalty amount. Id.; Pavo, 2019 WL 8138163, at *18 (“It is clear that Bergman's 

conclusions on the IPMedia License royalty structure do not result from the sort of unsupported 

analysis that has been rejected by the Federal Circuit. . . . in examining the IPMedia license and 

relying upon the license's own description of payments totaling [redacted], Bergman did not 

engage in impermissible speculation.”). 

Google also cites case law supporting the principle that an expert should not rely solely 

on statements by parties or counsel without any evidence supporting those facts. Mot. at 12-13. 

See, e.g., US Salt, Inc. v. Broken Arrow, Inc., 563 F.3d 687, 689-691 (8th Cir. 2009) (excluding 

lay opinion of CEO as speculative, and then excluding expert’s opinion based on that speculative 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 17 of 25
14

lay opinion). This caselaw is inapposite, because Mr. Kennedy is relying on signed, arms-length 

agreements, is not relying on any statements by counsel, and only relies on statements by 

EcoFactor’s CEO that are supported by contemporaneous documents and consistent with the 

testimony of that witness under oath. The reliability of Mr. Habib’s statements 

 And none of 

Google’s cases involve the circumstance that is at issue here, where Mr. Kennedy relies on 

 in addition to other 

evidence. 

B. Mr. Kennedy’s Comparability Analysis Is Thorough and Fully Consistent 

with Federal Circuit Precedent

The “‘degree of comparability’ of [] license agreements is a ‘factual issue[ ] best addressed 

by cross examination and not by exclusion.’” Bio-Rad Lab'ys, Inc. v. 10X Genomics Inc., 967 

F.3d 1353, 1373-74 (Fed. Cir. 2020). Indeed, exclusion of opinions on comparability is warranted 

only where the licenses have “no relationship to the claimed invention,” no “discernible link to 

the claimed technology,” or where the subject matter of the agreements is not even ascertainable. 

VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1330 (Fed. Cir. 2014). Moreover, the Federal 

Circuit, has repeatedly emphasized that “[p]rior licenses ... are almost never perfectly analogous 

to the infringement action.” Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1227 (Fed. Cir. 

2014). 

As discussed in detail above, EcoFactor’s technical and damages experts both establish 

the comparability of the licenses. See supra Sections II.

B. and C. Google claims that Mr. Kennedy’s analysis does not address the fact that the licenses 

are settlements of litigation, 

 None of these assertions is true. 

1. Mr. Kennedy analyzes and adjusts for the fact that the patent 

licenses are settlement agreements.

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 18 of 25
15

Far from ignoring the fact that the three patent licenses are settlement agreements, Mr. 

Kennedy both acknowledges and accounts for this difference relative to the hypothetical 

negotiation. Google’s central claim, that Mr. Kennedy does not even acknowledge they are 

settlements, is easily proven false. Taking the agreement as an example, Mr. Kennedy 

notes the 

See e.g. Ex. 1 

¶ 192-197 (emphasis added); see also ¶ 201 (specifying which lawsuits were settled). 

Mr. Kennedy also considers how to adjust for the fact that the negotiators to the settlement 

agreements did not operate under the presumption of infringement and validity that is present at 

the hypothetical negotiation. See supra Section II.C. For example, Mr. Kennedy relied on the 

testimony of, and his own conversations with, EcoFactor’s CEO, Shayan Habib, establishing that 

 Ex. 

1 at ¶ 349. This analysis is consistent with cases such as Prism, which in which the Federal Circuit 

has held that there is both a “discount for the probability of losing” and a risk that royalties in 

settlements are influenced by the costs of litigation, usually in favor of the licensee. Prism Techs. 

LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1369 (Fed. Cir. 2017) (“A settlement tends to 

undervalue the technology where it reflects a discount for the probability of losing. A patent 

owner may also accept too little, relative to the patent's value, when it accepts an amount out of a 

desire to avoid further expenditure of (presumptively unrecoverable) litigation costs.”). See also 

Papst Licensing GmbH & Co., KG v. Samsung Elecs. Co., No. 6:18-CV-00388-RWS, 2018 WL 

10126008, at *2 (E.D. Tex. Oct. 26, 2018) (“[T]he danger of improperly skewing the damages 

model in favor of the plaintiff is less here where Papst contends that Mr. Benoit's market approach 

damages rate actually decreases as a result of his reliance on the four settlement agreements.”). 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 19 of 25
16

Google argues that Mr. Kennedy ignored evidence that the settlements were 

 Mot. at 17. Yet Google articulates no reason why Mr. Kennedy should 

have placed more weight on such negotiation puffery than on statements than the express 

provisions of the executed agreements, and offers made during those negotiations, that he did rely 

on. This is, again, a dispute about issues of fact and weight rather than methodology. 

Moreover, “the Federal Circuit has repeatedly recognized the relevance of settlement 

agreements to the issue of reasonable royalties” (PerdiemCo, LLC v. Industrack LLC, No. 2:15-

CV-726-JRG-RSP, 2016 WL 6611488, at *4 (E.D. Tex. Nov. 9, 2016)), holding that whether it 

is reasonable to rely on a settlement is in part a function of what other evidence of comparable 

agreements is available. For example, in LaserDynamics, Inc. v. Quanta Comput. Inc., 694 F.3d 

51, 77-78 (Fed. Cir. 2012), the Federal Circuit ruled a settlement should have been excluded 

because, among other reasons, it was “the least reliable license [in the record] by a wide 

margin” where there were twenty-nine other licenses involving the patent-in-suit, many of which 

were “far more reliable.” Id. See also ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 872 (Fed. 

Cir. 2010) (“This court observes as well that the most reliable license in this record arose out of 

litigation.”); Comcast Cable Commc'ns, LLC v. Sprint Commc'ns Co., LP, 218 F. Supp. 3d 375, 

385 (E.D. Pa. 2016) (denying motion to exclude opinion based on settlement which was “not the 

‘least reliable license’ in the record, and the record is not replete with ‘far more reliable’ 

licenses.”). Thus, in PerdiemCo for example, an expert’s reliance on a single settlement 

agreement “cross[ed] the threshold of admissibility” where the expert could “reasonably conclude 

that such agreements are the most comparable licenses available,” and discussed the differences 

and similarities between the settlement and the hypothetical negotiation. PerdiemCo, 2016 WL 

6611488, at *4. 

Here, Mr. Kennedy concluded that not only were the 

 agreements very much comparable to the hypothetical negotiation, there were no other 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 20 of 25
17

relevant license in the record. See, e.g., Ex. 1, Kennedy Rpt., ¶¶ 250-259.6 Google disagrees, but 

the licenses they point to as comparable are clearly not as relevant, if they are relevant at all. As 

addressed in EcoFactor’s motion to exclude opinions of Mr. Schoettelkotte (D.I. 117, 120 at 1-

9), a 

 Google also relies on two patent licenses between Google and licensors named 

 But Google has stated it does not know if it ever used the 

technology licensed in these agreements, and if it did that would be privileged information. Ex. 

F, Maccoun Dep. at 149:21-150:1; 152:20-25; Ex. G, Schoettelkotte Dep. at 81:15-25, 82:20-

83:9. There is thus no basis to compare the black box lump sums in those agreements to the 

hypothetical negotiation. Ex. 1, ¶¶ 255, 257. Nor is there any evidence are

competitors of EcoFactor in the same respect as Google/Nest, if at all. Id.

Mr. Kennedy could thus reasonably conclude that the

settlements are the most comparable licenses available. And while the expert in 

PerdiemCo had only one such license, Mr. Kennedy has three licenses 

2. EcoFactor’s experts provide extensive opinions accounting for 

the fact that the settlements are 

As discussed above in Section II.B. and C., EcoFactor’s experts acknowledged and 

accounted for differences in the number of licensed patents relative to the hypothetical 

negotiation. Ex. 1, ¶¶ 194-208, 344-349, ¶¶ 355-360; Ex. C, de la Iglesia Rpt. ¶¶ 94-102. Mr. 

Kennedy opines that the parties to the settlements calculated the royalty based on the patents 

asserted to be infringed by the licensee. Ex. 1, ¶ 267. This is an entirely reasonable inference, 

especially for an expert with extensive experience in licensing. Ex. 1, ¶¶ 4-7; ProTradeNet, LLC 

v. Predictive Profiles, Inc., No. 6:18-CV-00038-ADA, 2019 WL 6499488, at *3 (W.D. Tex. Oct. 

6 Except for one Google’s settlement that is not comparable, but “is qualitative evidence of the 

premium placed on a settlement with a competitor.” Ex. 1 ¶ 259.

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 21 of 25
18

11, 2019) (“The Court finds that experts are permitted to rely on reasonable assumptions when 

reaching their conclusions.”). But this inference is also supported by the evidence, including 

information from Mr. Habib (Ex. 1, ¶¶ 173, 276, 325), and the agreements themselves, which:

•

Ex. 1 ¶ 192-197. 

Mr. Kennedy also relies on Mr. de la Iglesia’s conclusion that each licensee acquired 

coverage for the same smart thermostat technologies as in the hypothetical negotiation, on highly 

related patents (in the case of or on the exact same patents (in the case of 

. Id. Ex. C, de la Iglesia Rpt. ¶¶ 99. Google fails to address Mr. de la Iglesia’s 

comparability opinions, and it should not be permitted to collaterally attack those opinions 

through this motion. See GREE, Inc. v. Supercell Oy, No. 219CV00070JRGRSP, 2020 WL 

4057640, at *6 (E.D. Tex., July 20, 2020) (holding that it is appropriate for damages experts to 

rely on technical experts on technical issues, and those technical opinions and the damages 

expert’s reliance thereon cannot be attacked through a Daubert motion against the damages 

expert.). 

Mr. Kennedy opines that nevertheless, Google would argue that the $5.16 per-unit rate 

needs to be apportioned down to reflect the – including patents never asserted in 

litigation, and patents asserted in litigation but that are not asserted against Google. Id. ¶¶ 355-

360. But he concludes that “only the asserted patents against were the 

focus of the agreements, the same patents infringed by Google were asserted against 

 all of the asserted patents covered the same three interrelated smart technology areas, 

[and] EcoFactor’s licenses reflected a discount due to the fact that the licensees disputed 

infringement and validity.” Id. ¶ 357. 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 22 of 25
19

Mr. Kennedy’s opinion is wholly distinguishable from the opinion excluded in Omega 

Pats., LLC v. CalAmp Corp., 13 F.4th 1361, 1380 (Fed. Cir. 2021). There, the expert exclusively 

relied on plaintiff’s purported licensing policy that applied a five dollar per unit royalty regardless 

of the number of patents licenses. The expert’s evidence of this rate was most-favored-nations 

clauses that did not, in fact, show that that such policy would have been applied at the hypothetical 

negotiation. Id. (“Omega simply has not pointed to evidence that any of the relevant mostfavored-nation clauses would be implicated by a one-patent license to CalAmp at a rate of less 

than $5.00 per unit.”). And there is no indication that this expert was relying on a technical 

expert’s analysis. 

 Here, Mr. Kennedy relies on the technical analysis by Mr. de la Iglesia explaining that 

the seven patents asserted against and the four patents asserted against 

, all cover the same technologies as are covered by the patents asserted against 

Google: HVAC Performance Modeling, Smart Scheduling and Occupancy Detection, and 

Demand Reduction. Ex. C, de la Iglesia Rpt. ¶ 99. Because 

each acquired patent rights covering the same technologies, the jury has a proper basis 

from which to conclude that the $5.16 per-unit rate in the executed settlement agreements 

represents the market value for the specific features covered by the three patents EcoFactor asserts 

against Google. The Federal Circuit condones this real-world approach to determining a royalty 

rate on comparable features and products. Elbit Systems Land et al. v. Hughes Network Systems, 

927 F.3d 1292, 1302-03 (Fed. Cir. 2019). Moreover, 

A more relevant case is Vectura Ltd. v. Glaxosmithkline LLC, 981 F.3d 1030 (Fed. Cir. 

2020), in which the court found the license relied on by the expert sufficiently comparable even 

though: the license was from 2010 and the hypothetical negotiation was in 2016; the 2010 license 

encompassed rights to more than 400 patents; and the royalty established in that license was 

subject to a cap for sales above a certain amount. Id. The expert addressed these and other 

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 23 of 25
20

differences, and the Federal Circuit concluded (citing Bio-Rad) that “[the defendant] crossexamined [the expert] on those matters, and the disputes over that evidence were properly left for 

the jury to resolve. “ Id. at 1041.

IV. CONCLUSION

For the foregoing reasons, EcoFactor respectfully requests that the Court issue an Order 

denying Google’s motion to exclude Mr. Kennedy’s opinions.

Date: December 3, 2021 Respectfully submitted,

/s/ Reza Mirzaie

Reza Mirzaie

Marc A. Fenster

Paul A. Kroeger

Adam Hoffman

James Pickens

RUSS AUGUST & KABAT

12424 Wilshire Boulevard 12th Floor

Los Angeles, California 90025

Tel: 310-826-7474

Fax: 310-826-6991

rmirzaie@raklaw.com

mfenster@raklaw.com

prkoeger@raklaw.com

ahoffman@raklaw.com

jpickens@raklaw.com

Attorneys for Plaintiff EcoFactor, Inc.

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 24 of 25
1

CERTIFICATE OF CONFERENCE

I certify that my firm, including my colleagues James Pickens and Kris Davis, conferred 

with Defendant’s counsel regarding the foregoing Motion to Exclude on Thursday, November 11, 

2021, where EcoFactor explained that it would oppose the requested relief.

/s/ Reza Mirzaie

CERTIFICATE OF SERVICE 

I certify that this document is being served upon counsel of record for Defendant on 

December 3, 2021 via electronic service.

/s/ Reza Mirzaie

Case 6:20-cv-00075-ADA Document 137 Filed 12/10/21 Page 25 of 25