United States Court of Appeals 

for the Federal Circuit ______________________ 

ECOFACTOR, INC.,

Plaintiff-Appellee

v.

GOOGLE LLC,

Defendant-Appellant

______________________ 

2023-1101

______________________ 

Appeal from the United States District Court for the 

Western District of Texas in No. 6:20-cv-00075-ADA, Judge 

Alan D. Albright.

______________________ 

Decided: June 03, 2024

______________________ 

BRIAN DAVID LEDAHL, Russ August & Kabat, Los Angeles, CA, argued for plaintiff-appellee. Also represented by 

MINNA CHAN, KRISTOPHER DAVIS, MARC A. FENSTER, REZA 

MIRZAIE, JAMES PICKENS. 

 ROBERT A. VAN NEST, Keker, Van Nest & Peters LLP, 

San Francisco, CA, argued for defendant-appellant. Also 

represented by KRISTIN ELIZABETH HUCEK, LEO L. LAM,

ROBERT ADAM LAURIDSEN, EUGENE M. PAIGE. 

 ______________________ 

Before LOURIE, PROST, and REYNA, Circuit Judges.

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2 ECOFACTOR, INC. v. GOOGLE LLC

Opinion for the court filed by Circuit Judge REYNA. 

Opinion dissenting-in-part filed by Circuit Judge PROST. 

REYNA, Circuit Judge. 

EcoFactor sued Google in the Western District of Texas 

alleging patent infringement of U.S. Patent No. 8,738,327. 

After discovery and resolution of various motions, the case 

was heard by a jury. The jury found that Google infringed 

the asserted claim 5 of the ’327 patent and awarded damages to EcoFactor. Google appeals three of the district 

court’s orders: the denial of Google’s motion for summary 

judgment that claim 5 of the ’327 patent was invalid under 

35 U.S.C. § 101; the denial of Google’s motion for judgment 

as a matter of law of non-infringement of the ’327 patent; 

and the denial of Google’s motion for a new trial on damages. For the following reasons, we affirm. 

BACKGROUND

A. U.S. Patent No. 8,738,327

U.S. Patent No. 8,738,327 (“’327 patent”) relates generally to the operation of smart thermostats in computernetworked heating and cooling systems (“HVAC systems”). 

The primary recited purpose of the patent is to reduce 

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 user’s 

HVAC system. ’327 patent at 1:21–27, 9:46–54. Claim 1 of 

the ’327 patent recites a system “for controlling the operational status of an HVAC system” where “at least one thermostat [is] associated with a structure that receives 

temperature measurements from inside the structure.” Id. 

at 9:26–31. Claim 1 includes an “estimation” limitation 

where “one or more servers receive inside temperatures 

from the thermostat and compare[] the inside temperatures of the structure and the outside temperatures over 

time to derive an estimation for the rate of change in inside 

temperature of the structure in response to outside 

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ECOFACTOR, INC. v. GOOGLE LLC 3

temperature.” Id. at 9:38–45 (emphasis added). Claim 5 

adds that “the estimation [limitation in claim 1] is a prediction about the future rate of change in temperature inside the structure.” Id. at 9:65–67. 

B. Procedural History

EcoFactor, owner of the ’327 patent, sued Google for 

patent infringement over Google’s smart thermostat products, particularly several Nest thermostats.1 After discovery, Google moved for summary judgment that certain 

claims of the ’327 patent (including claim 5) were invalid 

because they were directed to patent ineligible subject matter, an abstract idea, under 35 U.S.C. § 101. The district 

court denied the motion. J.A. 5046. 

The district court also denied Google’s Daubert motion 

to exclude the opinion of EcoFactor’s damages expert, Mr. 

Kennedy, rejecting Google’s argument that Mr. Kennedy’s 

opinion was unreliable and therefore prejudicial. 

J.A. 2254.

Following a six-day jury trial, the jury found that 

Google infringed claim 5 of the ’327 patent and awarded 

EcoFactor damages. J.A. 45–49. Google renewed its motion for judgment as a matter of law (“JMOL”) of non-infringement of the ’327 patent, arguing that the accused 

products do not measure, but rather, estimate the temperature inside the structure and therefore cannot infringe. 

Google also moved for a new trial on damages, arguing that 

the opinion of EcoFactor’s damages expert, Mr. Kennedy, 

was speculative and unreliable such that it should have 

been excluded from trial. The district court denied both 

motions from the bench. J.A. 6662; J.A. 6688. 

1 Google acquired Nest Labs, Inc. prior to the underlying lawsuit. 

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4 ECOFACTOR, INC. v. GOOGLE LLC

Google appeals. We have jurisdiction under 

28 U.S.C. § 1295(a)(1).

DISCUSSION

Google raises three issues on appeal.2 First, Google 

contends the district court erred in denying Google’s motion for summary judgment that claim 5 of the ’327 patent 

was directed to patent ineligible subject matter under 

§ 101. Second, Google asserts the district court erred in 

denying Google’s JMOL motion for non-infringement of the 

’327 patent. Third, Google contends the district court erred 

in denying Google’s motion for a new trial on damages because Mr. Kennedy’s damages opinion was based on unreliable methodology. We address each issue in turn. 

I. Patent Eligibility

Google appeals the district court’s denial of summary 

judgment that claim 5 of the ’327 patent was patent ineligible under § 101. 

Section 101 of the Patent Act provides that: “Whoever 

invents or discovers any new and useful process, machine, 

manufacture, or composition of matter, or any new and 

useful improvement thereof, may obtain a patent therefor, 

subject to the conditions and requirements of this title.” 

35 U.S.C. § 101. The Supreme Court has articulated a twostep test, commonly referred to as the “Alice” test, for examining whether a patent claims patent-ineligible subject 

matter. Alice Corp. Pty. Ltd. v. CLS Bank Intern., 573 U.S. 

2 This appeal was originally consolidated and included an original appeal by EcoFactor and cross-appeal by 

Google. The consolidated appeal contained other patents 

and issues. Prior to oral argument, the parties stipulated 

to the dismissal of the original appeal by EcoFactor, Appeal 

No. 22–1974, leaving only Google’s cross-appeal involving 

the ’327 patent. See Appeal No. 22–1974, ECF No. 59 at 7. 

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ECOFACTOR, INC. v. GOOGLE LLC 5

208, 217–18 (2014). At Alice step one, we review whether 

a claim is directed to a patent-ineligible concept, such as an 

abstract idea. Id. At Alice step two, we review whether the 

claim recites elements sufficient to transform the abstract 

idea into a patent-eligible application. Id. at 217–18, 221. 

Prior to trial, Google filed a motion for summary judgment, arguing that claim 5 of the ’327 patent (among others) was invalid as directed to patent ineligible subject 

matter under § 101. The district court reviewed the motion, relying on the Alice inquiry. The district court denied 

the motion and submitted step two of the Alice inquiry to 

the jury. J.A. 5046. 

At trial, the verdict form asked whether Google met its 

burden to prove by clear and convincing evidence that the 

elements of claim 5 of the ’327 patent, when taken individually and as an ordered combination, involved activities or 

technology that were well-understood, routine, or conventional to a skilled artisan at the time of the invention. 

J.A. 47. After hearing testimony and receiving evidence 

from both parties, the jury answered “no” for claim 5 of the 

’327 patent. J.A. 47. Google filed a post-trial JMOL motion 

repeating its § 101 arguments, which the district court denied. 

Google now appeals the district court’s denial of summary judgment regarding patent ineligibility of claim 5 of 

the ’327 patent, but we have held that a district court’s denial of summary judgment is not appealable after a trial on 

the merits. Syngenta Crop Prot., LLC v. Willowood, LLC,

944 F.3d 1344, 1364 n.7 (Fed. Cir. 2019) (citing Ortiz v. Jordan, 562 U.S. 180, 183–84 (2011)); see also 10 Wright and 

Miller, Federal Practice and Procedure § 2715 (4th ed.) (explaining a denial from summary judgment is an order 

“from which no immediate appeal is available”). We have 

explained that an order denying summary judgment is “not 

a judgment” and “does not foreclose trial on the issues on 

which summary judgment was sought;” rather, it is 

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6 ECOFACTOR, INC. v. GOOGLE LLC

“merely a judge’s determination that genuine issues of material fact exist.” Glaros v. H.H. Robertson Co., 797 F.2d 

1564, 1573 (Fed. Cir. 1986) (reasoning that a denial of summary judgment “does not settle or even tentatively decide 

anything about the merits of the claim” (citation omitted)). 

Denial of summary judgment decides only one thing—that 

the case should go to trial. Id.

At trial, the jury heard testimony from various witnesses on whether the elements of claim 5 were well-understood, routine, or conventional. See, e.g., J.A. 5345–

5346 (209:20–210:6); J.A. 6373–6374 (1237:15–1238:19);

J.A. 6415–6416 (1279:1–1280:20); J.A. 6449–6451 

(1313:17–1315:11). Google, however, appeals the order 

denying summary judgment but not the jury verdict of ineligibility. As the Supreme Court has explained, “the full 

record developed in court supersedes the record existing at 

the time of the summary-judgment motion.” Ortiz, 562 

U.S. at 184. Because trial on the merits of the § 101 issue 

was held, the court’s denial of summary judgment is not 

appealable. 

II. Infringement

For infringement, the only limitation at issue is 

claim 1’s recitation of a system for controlling the HVAC 

system that includes a thermostat “that receives temperature measurements from inside the structure.” ’327 patent 

at 9:26–31. Google alleges that because the accused thermostat products are designed to be completely enclosed in 

metal, plastic, and/or glass housings, they cannot directly 

measure the surrounding ambient temperature “inside the 

structure” like other thermostats.3 Appellant Br. 41–44. 

3 The parties agree that the term “ambient temperature” refers to the temperature surrounding a particular 

thermostat, i.e., the temperature of the room or structure 

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ECOFACTOR, INC. v. GOOGLE LLC 7

Google argues that its thermostats can only derive an estimate of the ambient temperature by measuring only the 

temperature within the thermostat housing itself, which is 

not “inside the structure.” See id. As a result, Google argues that the jury’s verdict of infringement is unsupported 

by substantial evidence. 

We review the disposition of motions for JMOL under 

the law of the regional circuit, here the Fifth Circuit. See 

Energy Transp. Grp. Inc. v. William Demant Holding A/S, 

697 F.3d 1342, 1350 (Fed. Cir. 2012). The Fifth Circuit reviews de novo the grant or denial of a JMOL motion. ClearValue, Inc. v. Pearl River Polymers, Inc., 668 F.3d 1340, 

1343 (Fed. Cir. 2012). Under Fifth Circuit law, a jury’s verdict is upheld if supported by substantial evidence. Med.

Care Am., Inc. v. Nat’l Union Fire Ins. Co., 341 F.3d 415, 

420 (5th Cir. 2003). 

We conclude that the jury’s infringement verdict is supported by substantial evidence. EcoFactor’s infringement 

expert testified that the accused thermostat products meet 

the claimed limitation because the thermostats measured 

temperature of the structure and not just the temperature 

within the thermostat housing. J.A. 5462–63 

(326:20–327:6). EcoFactor’s expert supported his conclusion with several forms of evidence. EcoFactor’s expert relied on website guides maintained by Google for the benefit 

of software engineers who develop applications for use with 

Nest thermostats. One website page states that the Nest 

thermostats measure the “[a]mbient temperature,” defined 

as the “temperature measured near the thermostat”—not 

just within the thermostat. J.A. 10429 (emphasis added). 

Another website page explains that the temperature sensors of certain Nest products measure ambient room temperature. J.A. 10888. EcoFactor’s expert testified that this 

in which the thermostat is placed. Appellant Br. 13, 43; 

Appellee Br. 1, 9–10. 

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8 ECOFACTOR, INC. v. GOOGLE LLC

evidence shows that the Nest thermostat “devices have 

temperature measurements near the thermostat” that 

measures the “inside temperature” of the structure and are 

not limited to measuring temperature inside the thermostat housing. J.A. 5453–55 (317:17–319:14). EcoFactor’s 

expert cited Google’s source code for the accused products 

and demonstrated where it described the function of the 

accused products to measure the surrounding temperature. 

J.A. 5456–60 (320:18–324:14). 

Google’s experts conceded the substance of EcoFactor’s 

evidence on cross-examination. Google’s non-infringement 

expert agreed that, according to Google’s website pages, the 

current ambient temperature in the room is measured by 

the Nest thermostat’s internal sensors. J.A. 6154–55 

(1018:9–1020:13). Another Google expert witness agreed 

that the accused thermostat products contain temperature 

sensors that measure the temperature inside customer 

homes. J.A. 5945–46 (809:4–809:17). 

The expert testimony from both parties, documentary 

evidence, and source code information demonstrating that 

the accused products measure temperature of the surrounding structure (and not just the housing) is substantial 

evidence. See In re Mouttet, 686 F.3d 1322, 1331 (Fed. Cir. 

2012) (explaining substantial evidence is “relevant evidence as a reasonable mind might accept as adequate to 

support a conclusion”). 

In conclusion, the jury’s infringement verdict that the 

accused Nest thermostat products satisfy the claim language of “receives temperature measurements from inside 

the structure” is supported by substantial evidence. 

III. Damages

Google argues that the district court abused its discretion in denying its Rule 59 motion for a new trial on damages. Appellant Br. 30. According to Google, a new trial 

on damages was warranted because the initial trial was 

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ECOFACTOR, INC. v. GOOGLE LLC 9

unfair or marred by prejudicial error. Id. at 25; J.A. 6689 

(91:4–8). The alleged error was the district court’s evidentiary ruling that the opinion of EcoFactor’s damages expert, Mr. Kennedy, was admissible. Appellant Br. 25, 30. 

Google argues that Mr. Kennedy’s damages opinion should 

have been excluded from trial because it lacked any reliable methodology or underlying calculations. Id. at 30. 

Google also argues that Mr. Kennedy’s opinion should have 

been excluded for lack of comparability and apportionment. 

Id. at 34. We address each argument in turn. 

We review the denial of a motion for a new trial under 

regional circuit law. Wordtech Sys., Inc. v. Integrated Networks Sols., Inc., 609 F.3d 1308, 1312 (Fed. Cir. 2010). The 

Fifth Circuit reviews a district court’s denial of a motion for 

a new trial for an abuse of discretion. Fornesa v. Fifth 

Third Mortg. Co., 897 F.3d 624, 627 (5th Cir. 2018). A new 

trial may be granted if the district court finds that “the verdict is against the weight of the evidence, the damages 

awarded are excessive, the trial was unfair, or prejudicial 

error was committed.” Seidman v. Am. Airlines, Inc., 923 

F.2d 1134, 1140 (5th Cir. 1991) (citation omitted); Fed. R. 

Civ. P. 59. “Courts do not grant new trials unless it is reasonably clear that prejudicial error has crept into the record or that substantial justice has not been done, and the 

burden of showing harmful error rests on the party seeking 

the new trial.” Jordan v. Maxfield & Oberton Holdings,

L.L.C., 977 F.3d 412, 417 (5th Cir. 2020) (citation omitted). 

Here, Mr. Kennedy used the hypothetical negotiation 

approach for calculating reasonable royalty damages under 

35 U.S.C. § 284. This approach “necessarily involves an element of approximation and uncertainty.” Lucent Techs., 

Inc. v. Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009) 

(citation omitted); see also generally 2 Janice M. Mueller, 

Mueller on Patent Enforcement § 20.04(a) at 869–70 (rev. 

ed. 2019). According to Mr. Kennedy, EcoFactor would 

have entered the hypothetical negotiation with the

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10 ECOFACTOR, INC. v. GOOGLE LLC

expectation of receiving a royalty in the amount of $X4 per 

unit and would have requested that from Google. 

J.A. 1277. Based on this $X rate, Mr. Kennedy calculated 

his proposed damages amount of $Y5. J.A. 5740 

(604:14–17). 

A.

Google argues that Mr. Kennedy’s damages model was 

speculative and conclusory. Appellant Br. 31. Specifically, 

Google argues that Mr. Kennedy’s proposed $X royalty rate

was “plucked . . . out of nowhere.” Id. at 34 (citation omitted). We disagree. 

“[W]hile all [damages] approximations involve some 

degree of uncertainty, the admissibility inquiry centers on 

whether the methodology employed is reliable.” Summit 6,

LLC v. Samsung Elecs. Co., 802 F.3d 1283, 1296 (Fed. Cir. 

2015). This includes whether a damages expert’s testimony is tied to the particular facts of the case. Virnetx, Inc. 

v. Cisco Sys., Inc., 767 F.3d 1308, 1333–34 (Fed. Cir. 2014); 

Whitserve, LLC v. Comput. Packages, Inc., 694 F.3d 10, 30 

(Fed. Cir. 2012); Lucent Techs., 580 F.3d at 1330. Testimony is inadmissible when it is based only on speculation 

or guesswork, such that the jury is left to fill in the gaps 

when calculating a damages award. Whitserve, 694 F.3d at

30–33 (holding that testimony was conclusory and speculative when expert did not explain how lump sum amounts

could be converted to a reasonable royalty rate); Wordtech, 

609 F.3d at 1320 (holding that expert’s reliance on two 

4 The amount of the per-unit royalty rate is confidential business information subject to a protective order, and 

as such, is not recited in this opinion. 

5 The amount of EcoFactor’s proposed damages 

award is confidential business information subject to a protective order, and as such, is not recited in this opinion. 

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ECOFACTOR, INC. v. GOOGLE LLC 11

lump licenses was inappropriate when neither explained 

how the lump-sum amounts were calculated). 

Far from plucking the $X royalty rate from nowhere, 

Mr. Kennedy based this rate on the following admissible 

evidence: three license agreements and the testimony of 

EcoFactor’s CEO, Mr. Habib. Turning first to the agreements, Mr. Kennedy relied on three license agreements

EcoFactor entered into with third-party smart thermostat 

manufacturers—the Schneider and Daikin licenses in 

2020, and the Johnson license in 2021. J.A. 10389–399; 

J.A. 10400–410; J.A. 10411–419. Each of these agreements 

included the same $X royalty rate at issue here. Each license agreement provided in a whereas clause that the licensee would pay EcoFactor a lump sum amount “set forth 

in this Agreement based on what EcoFactor believes is a 

reasonable royalty calculation of [$X] per-unit for . . . estimated past and [] projected future sales of products accused of infringement in the Litigation.” J.A. 10389

(emphasis added); J.A 10400; J.A. 10411. Thus, as Mr. 

Kennedy testified at trial, the $X royalty rate was “specifically spelled out in the license agreement[s].” J.A. 5764

(628:2–3). 

Mr. Kennedy then relied on the testimony of EcoFactor’s CEO, Mr. Habib, who signed the three license agreements on behalf of EcoFactor. J.A. 5794 (658:17–18); 

J.A. 5666 (530:23–25); J.A. 5669 (533:6–8). Mr. Habib testified that he had seven years in the industry, an understanding of the market, and “what is reasonable for the 

technologies that [EcoFactor] ha[s].” J.A. 5670 

(534:22–25). He then testified that the lump sums contained in each of the three license agreements were based 

on the $X royalty rate. J.A. 5672, 536:17–18 (“[M]y understanding was that all of it is based on [$X] per infringing 

unit.”). He testified that while he was shielded from the 

licensees’ confidential sales information, he understood 

that EcoFactor calculated each of the three licenses’ lump 

sums using the $X royalty rate and the past and future 

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12 ECOFACTOR, INC. v. GOOGLE LLC

projected sales for each licensee. J.A. 5798 (662:2–5); J.A. 

5670 (534:4–10). He also testified that despite being 

shielded from the licensees’ confidential sales numbers, he 

believed, based on his understanding of the market, that 

the lump sums reasonably reflected the licensees’ sales. 

J.A. 5672 (536:14–24). According to Mr. Habib, there were

“large players” and high barriers to entry in the smart thermostat and smart HVAC control industry, and the licensees were “relatively new or more recent.” J.A. 5672 

(536:19–24). Thus, “it ma[de] sense that their sale numbers would be low since they’d recently started.” J.A. 5672 

(536:23–24). He testified that the $X royalty rate in each 

of the three license agreements was accepted by the parties. J.A. 5671 (535:5–11) (“So, you know, if three companies were willing to accept it, then yeah. That further 

made it clear to me that it was a reasonable royalty rate 

that was being accepted by counterparties.”). 

Finally, in support of Mr. Kennedy’s proposed $X royalty rate, EcoFactor introduced at trial an email chain between EcoFactor and Johnson concerning the $X royalty 

rate. J.A. 10797–99; J.A. 6278 (1142:3–10). In the chain,

which was dated a few months before the parties signed the 

license agreement, the parties discuss the $X royalty rate. 

J.A. 10797–99. Johnson notes that “[w]e are applying the 

[$X rate] to the time period” identified by EcoFactor. 

J.A. 10798. 

In light of the three license agreements, Mr. Habib’s 

testimony, and the EcoFactor-Johnson email chain, we determine that Mr. Kennedy’s damages opinion concerning 

the $X royalty rate was sufficiently tied to the facts of the 

case and thus admissible. See Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197, 1212 (Fed. Cir. 2010); C & F 

Packing Co., v. IBP, Inc., 224 F.3d 1296, 1304–05 (Fed. Cir. 

2000). And based on this context, the “jury was entitled to 

hear the expert testimony” from Mr. Kennedy concerning 

the $X royalty rate and “decide for itself what to accept or 

reject.” Pavo Sols. LLC v. Kingston Tech. Co., 35 F.4th 

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ECOFACTOR, INC. v. GOOGLE LLC 13

1367, 1379 (Fed. Cir. 2022) (citation omitted). That is exactly what the jury did in this case. The jury heard Mr. 

Kennedy’s testimony and Google’s extensive cross-examination concerning Mr. Kennedy’s understanding of the 

three license agreements, his reliance on Mr. Habib’s testimony, and testimony concerning the emails between EcoFactor and Johnson about the $X royalty rate. J.A. 

5793–5812 (657:4–676:2); J.A. 5794 (658:17–18); J.A. 5667 

(531:8–25); J.A. 5668–5670 (532:3–534:3); J.A. 6278–6280

(1142:6–1144:19). Ultimately, the jury returned a verdict 

of $20,019,300, which represents significantly less than 

Mr. Kennedy’s proposed damages amount of $Y that would 

have resulted from applying the $X royalty rate to Google’s 

past sales. 

Google argues that Mr. Kennedy’s testimony is unreliable because there is no evidence that the parties to the 

three license agreements actually applied the $X royalty 

rate. To the contrary. First, the three admissible license

agreements each disclose that EcoFactor believed that the 

lump sums in each license was “based on” the $X royalty 

rate. Additionally, in its whereas clause, the Schneider license agreement, unlike the Johnson and Daikin agreements, states that “nothing in this clause should be 

interpreted as agreement by Schneider that [$X] per unit 

is a reasonable royalty.” J.A. 10400. This clause, included 

by Schneider, speaks to its belief that $X may not have been 

reasonable but it does not speak to whether $X was actually applied in arriving at the lump sum. Arguably, this 

provision, when read in context, could also mean that the 

$X royalty rate was applied by EcoFactor and Schneider. 

If Schneider did not believe that the $X royalty rate was 

actually being applied, it could have said such in the agreement. But Schneider did not. Finally, as noted above, 

Johnson noted in an email chain with EcoFactor that it was 

“applying” the $X royalty rate. How much weight should 

be given to the provisions in the license agreements, including whether they are “self-serving” as Google claims, and 

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14 ECOFACTOR, INC. v. GOOGLE LLC

the EcoFactor-Johnson email is a question for the jury. See 

Pavo, 35 F.4th at 1379; Finjan, 626 F.3d at 1212; C & F 

Packing, 224 F.3d at 1304.6 

To conclude, we determine that Mr. Kennedy’s opinion 

concerning the $X royalty rate was sufficiently reliable for 

admissibility purposes. For this reason, we hold that the 

district court did not abuse its discretion in denying 

Google’s motion for a new trial on damages. 

B.

Google argues that Mr. Kennedy’s damages testimony 

should have also been excluded from trial for a lack of comparability and apportionment. Appellant Br. 34. Google 

does not dispute the technical comparability between the 

three licenses and Mr. Kennedy’s hypothetically negotiated 

agreement. Nor could it. Mr. Kennedy relied on the testimony of EcoFactor’s technical expert, Mr. De la Iglesia, for 

his opinion that the three license agreements were 

6 The dissent relies on a statement in the body of the 

of the Schneider and Daikin license agreements to support 

its position that the parties did not apply the $X royalty 

rate contained in these two license agreements’ whereas 

clauses. See Dissent 3–6. This statement provides that the 

agreed to lump sum “does not reflect or constitute a royalty.” J.A. 10391; J.A. 10402. That the lump sum amount

is not a royalty does not mean the parties did not use the 

$X royalty rate discussed in the agreements to arrive at the 

lump sum amount. But even if we were to set aside these 

two license agreements, the Johnson license agreement 

alone would suffice. As Google’s own expert agreed at trial, 

“just one” license agreement can be sufficient to support a 

damages opinion. J.A. 6269 (1133:10–14). This assertion 

comports with our damages precedent, which does not demand “absolute precision” but may involve some degree of 

approximation and uncertainty. Virnetx, 767 F.3d at 1328.

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ECOFACTOR, INC. v. GOOGLE LLC 15

technically comparable to the hypothetically negotiated license. J.A. 5578–5583 (442:22–447:2); J.A. 5763

(627:7–23); J.A. 5768 (632:7–19). Google’s experts did not 

rebut Mr. De la Iglesia’s opinion on this issue at trial. J.A. 

6268–6270 (1132:4–1134:5). 

Rather, Google challenges Mr. Kennedy’s economic 

comparability analysis of the three licenses and the hypothetically negotiated agreement. Appellant Br. 36–37; Reply Br. 9. According to Google, the three license 

agreements were for EcoFactor’s entire patent portfolio 

and Mr. Kennedy failed to account for the value of the ’327 

patent within that portfolio. Appellant Br. 36. We disagree. 

Damages owed to the patentee must reflect the value 

of only the patented improvement—called apportionment. 

Omega Pats., LLC v. CalAmp Corp., 13 F.4th 1361, 1376 

(Fed. Cir. 2021). If a sufficiently comparable license is used 

for determining the appropriate reasonable royalty rate, 

further apportionment may not be required because the

comparable license has built-in apportionment. Id. at 

1377. “Built-in apportionment effectively assumes that the 

negotiators of a comparable license settled on a royalty rate 

and royalty base combination embodying the value of the 

asserted patent.” Id. (citation omitted). “For built-in apportionment to apply, the license must be sufficiently comparable in that principles of apportionment were effectively 

baked into the purportedly comparable license.” Id. (citation omitted). Part of this comparability analysis requires 

an expert to account “for differences in the technologies and 

economic circumstances of the contracting parties” to the 

past licenses and to the hypothetical negotiation at issue. 

Finjan, 626 F.3d at 1211–12. 

The degree of comparability of license agreements is a 

“factual issue[] best addressed by cross examination and 

not by exclusion.” ActiveVideo Networks, Inc. v. Verizon 

Commc’ns, Inc., 694 F.3d 1312, 1333 (Fed. Cir. 2012); BioCase: 23-1101 Document: 18 Page: 15 Filed: 06/03/2024
16 ECOFACTOR, INC. v. GOOGLE LLC

Rad Lab’ys, Inc. v. 10X Genomics Inc., 967 F.3d 1353, 1373 

(Fed. Cir. 2020); Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 

1201, 1227 (Fed. Cir. 2014); Finjan, 626 F.3d at 1211. For 

example, in Bio-Rad, we concluded that there was no abuse 

of discretion in allowing an expert to testify about three licenses, even though one of the licenses was ultimately not 

proven to be technically comparable to the hypothetically 

negotiated license. 967 F.3d at 1374 (holding that the “‘degree of comparability’ was appropriately left for the jury to 

decide”). 

Here, Mr. Kennedy sufficiently showed, for purposes of 

admissibility, that the three license agreements were economically comparable to the hypothetically negotiated 

agreement. Mr. Kennedy acknowledged that, based on Mr. 

De la Iglesia’s unrebutted testimony, the Schneider and 

Daikin licenses list seven technically comparable asserted 

patents, including the ’327 patent at issue in the hypothetically negotiated agreement. See J.A. 10398; J.A. 10409. 

He also noted that the Johnson license did not list the ’327 

patent as an asserted patent but listed four others that covered the same interrelated smart thermostat technologies. 

J.A. 10411; J.A. 1276. Finally, Mr. Kennedy acknowledged 

that the three licenses also covered patents in EcoFactor’s

portfolio that were not asserted in the underlying litigation 

facing Johnson, Schneider, and Daikin. J.A. 10398; 

J.A. 10409; J.A. 10411; J.A. 1275–76. 

Mr. Kennedy accounted for such differences. Mr. Kennedy testified that in arriving at the $X royalty rate in a 

hypothetical negotiation, Google would argue that the 

three license agreements included EcoFactor’s portfolio, 

not just the ’327 patent, and thus the $X royalty rate 

should be decreased. J.A. 5767 (631:19–23). Mr. Kennedy 

then provided that the three license agreements reflect a 

settlement and thus the $X royalty rate reflects a risk that 

that EcoFactor’s patents would be found not infringed or 

invalid. J.A. 1276. According to Mr. Kennedy, this consideration would not be present at the hypothetical 

Case: 23-1101 Document: 18 Page: 16 Filed: 06/03/2024
ECOFACTOR, INC. v. GOOGLE LLC 17

negotiation between EcoFactor and Google, since the assumption is that the ’327 patent was infringed and valid. 

J.A. 1276. As a result, this point would place upward pressure on the negotiated rate. 

The three licenses aside, Mr. Kennedy separately 

grounded his apportionment opinion on underlying internal profit and survey data from Google. Mr. Kennedy testified that, based on underlying customer surveys from 

Google and based on EcoFactor’s technical expert’s testimony, the infringed technology at issue in this case attributed to Z%7 of the profits for the infringed products. 

J.A. 5755–5758 (619:16–622:13); J.A. 5775–5777 

(639:22–641:7). Based on this data, Mr. Kennedy calculated the amount of profit per unit that could be attributed 

to the ’327 patent, which was more than double the $X royalty rate. J.A. 5755–5758 (619:16–622:13). According to 

Mr. Kennedy, this would also place upward pressure on the 

negotiated rate at the hypothetical negotiation. J.A. 5780 

(644:6–7) (“And that’s EcoFactor’s response, saying it 

should actually be a lot higher.”). Mr. Kennedy thus concluded that the $X royalty rate “would be a very reasonable 

and conservative first offer.” J.A. 5779 (643: 17–18). This 

testimony is additional evidence for the jury to consider 

and weigh when calculating a damages award. C & F Packing, 224 F.3d at 1304; ResQNet.com, Inc., v. Lansa, Inc., 

594 F.3d 860, 869 (Fed. Cir. 2010) (“At all times, the damages inquiry must concentrate on compensation for the economic harm caused by infringement of the claimed 

invention.”).

Based on this evidence, we conclude that the district 

court did not abuse its discretion in declining to grant a 

new trial on damages. Mr. Kennedy’s damages opinion 

7 The percentage amount is confidential business information subject to a protective order, and as such, is not 

recited in this opinion. 

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18 ECOFACTOR, INC. v. GOOGLE LLC

relied on sufficiently comparable licenses and his opinion

sufficiently apportioned the value of the ’327 patent for the 

issue to be presented to the jury. 

Supporting our conclusion is ActiveVideo. There, the 

damages expert relied on an agreement that included the 

patents at issue and other software services without any 

alleged attempt to “disaggregate the value of the patent license from the value of the services.” 694 F.3d at 1333 (citation omitted). We held that there was no error in failing 

to exclude the expert’s testimony because the degree of 

comparability and “any failure on the part of [the] expert 

to control for certain variables are factual issues best addressed by cross examination and not by exclusion.” Id. 

Here, Mr. Kennedy went further than the ActiveVideo expert by sufficiently accounting for the economic differences 

between the patents in the three license agreements (asserted and non-asserted) and the hypothetically negotiated 

agreement. And like in ActiveVideo, if there were any failures to control for certain variables in comparability, these 

factual issues were for the jury to decide. Id.

Contrary to Google’s position, our case law does not 

compel a contrary result. In Omega, we remanded for a 

new trial where the expert “merely identified . . . differences” between the patents in the licenses and the patents 

in the hypothetical negotiation and did not distinguish 

such facts. 13 F.4th at 1380–81. In Apple, two of the three 

license agreements relied on by the expert did not list the 

subject patent all, and the third license listed the subject 

patent as a non-asserted patent in a long list of “hundreds 

of Non-Asserted patents.” Apple Inc. v. Wi-LAN Inc., 25

F.4th 960, 973 (Fed. Cir. 2022). We determined that there 

was no record evidence supporting the expert’s assumption

that the subject patent was a “key patent” in these three 

licenses. Id. 

Unlike in Omega and Apple, here we have two of the 

three licenses at issue explicitly listing the ’327 patent as 

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ECOFACTOR, INC. v. GOOGLE LLC 19

an “asserted patent.” J.A. 10398; J.A. 10409. Additionally, 

Mr. Kennedy addressed and distinguished the remaining

patents discussed in the license agreements. He testified 

that at the hypothetical negotiation, Google would emphasize the downward pressure that these patents would have 

on the $X royalty rate. Mr. Kennedy then testified that 

EcoFactor would note upward pressure on the $X royalty 

rate by assuming that the ’327 patent was valid and infringed. And, unlike in these cases, Mr. Kennedy separately rooted his apportionment analysis on underlying 

internal profit and survey data from Google. As previously 

noted, based on this data, Mr. Kennedy was able to determine that the $X royalty rate was a conservative amount 

attributable to the ’327 patent. 

Google loses sight of the issue on appeal and the applicable standard of review. Our focus is on the admissibility

of Mr. Kennedy’s damages testimony, and we assess the 

district court’s determination of this issue under the highly 

deferential abuse of discretion standard. “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts” are jury 

functions, not those of a trial judge, and certainly not of an 

appellate judge. Reeves v. Sanderson Plumbing Prods.,

Inc., 530 U.S. 133, 150 (2000) (citation omitted). If the 

standard for admissibility is raised too high, then the trial 

judge no longer acts as a gatekeeper but assumes the role 

of the jury. 

Based on the record before us, we conclude that the district court did not abuse its discretion when it denied 

Google’s motion for a new trial. Google has not shown that 

the district court’s decision to admit Mr. Kennedy’s damages opinion resulted in prejudicial error or a substantial 

injustice requiring a new trial on damages. 

CONCLUSION

We have considered Google’s remaining arguments and 

find them unpersuasive. We reject Google’s attempt to 

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20 ECOFACTOR, INC. v. GOOGLE LLC

appeal the district court’s denial of summary judgment. 

We affirm the district court’s post-trial denials of Google’s 

motion for JMOL of non-infringement and Google’s motion 

for a new trial on damages. 

AFFIRMED

COSTS

No costs.

Case: 23-1101 Document: 18 Page: 20 Filed: 06/03/2024
United States Court of Appeals 

for the Federal Circuit ______________________ 

ECOFACTOR, INC.,

Plaintiff-Appellee

v.

GOOGLE LLC,

Defendant-Appellant

______________________ 

2023-1101

______________________ 

Appeal from the United States District Court for the 

Western District of Texas in No. 6:20-cv-00075-ADA, Judge 

Alan D. Albright.

 ______________________ 

PROST, Circuit Judge, dissenting-in-part. 

In recent years, our court has made some progress in 

clarifying important questions related to damages for patent infringement. Such clarifications relate to deriving a 

reasonable royalty from a lump-sum license and requiring

the patentee to confine its damages to the value of the patented technology. Unfortunately, the majority opinion 

here at best muddles our precedent and at worst contradicts it. I therefore respectfully dissent from the decision 

Case: 23-1101 Document: 18 Page: 21 Filed: 06/03/2024
2 ECOFACTOR, INC. v. GOOGLE LLC

to affirm the district court’s denial of Google’s motion for a 

new trial.1

Google argues that (1) Mr. Kennedy, EcoFactor’s damages expert, calculated an $X royalty rate2 from the Schneider, Daikin, and Johnson lump-sum licenses in an 

unreliable way; and (2) the $X rate in any event did not 

reflect the value of the ’327 patent (as distinct from that of 

other patents covered by those licenses). Google is right on 

both counts. The district court therefore, in my view,

abused its discretion by not granting a new damages trial 

given Mr. Kennedy’s flawed testimony.3

I 

Mr. Kennedy’s $X rate rests on EcoFactor’s self-serving, unilateral “recitals” of its “beliefs” in the license agreements. These recitals are not only directly refuted by two

of those same agreements; they also have no other support 

(e.g., sales data or other background testimony) to back 

them up. Our law does not allow damages to be so easily 

manufactured.

When deriving reasonable royalties from lump-sum licenses, we have emphasized that “lump sum payments . . . 

should not support running royalty rates without testimony explaining how they apply to the facts of the case.” 

1 I join the other aspects of the majority’s decision. 2 Because the specific per-unit royalty rate that Mr. 

Kennedy uses has been designated confidential, I use $X to 

refer to his rate.

3 When reviewing a district court’s exercise of discretion on a critical, often-complicated evidentiary decision 

such as a damages-expert Daubert, it usually helps to see

the court’s explanation for its decision. Here, at both the 

Daubert stage and in the context of Google’s new-trial motion, the district court gave no explanation. J.A. 2254, 

6687–89.

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ECOFACTOR, INC. v. GOOGLE LLC 3

Whitserve, LLC v. Comput. Packages, Inc., 694 F.3d 10, 30 

(Fed. Cir. 2012); see also Lucent Techs., Inc. v. Gateway, 

Inc., 580 F.3d 1301, 1330 (Fed. Cir. 2009) (requiring that 

“some basis for comparison must exist in the evidence presented to the jury”). We have vacated damages awards 

where the derivation of a reasonable royalty from a lump 

sum was “incompatible with the . . . agreement as a whole,” 

MLC Intell. Prop., LLC v. Micron Tech., Inc., 10 F.4th 1358, 

1368 (Fed. Cir. 2021), where there was no testimony explaining how lump-sum “payments could be converted to a 

royalty rate,” Whitserve, 694 F.3d at 30, and where “[n]either license describe[d] how the parties calculated each 

lump sum,” Wordtech Sys., Inc. v. Integrated Network Sols., 

Inc., 609 F.3d 1308, 1320 (Fed. Cir. 2010). Mr. Kennedy’s 

$X rate repeats the same fatal errors we identified in MLC, 

Whitserve, and Wordtech. As in those cases, the licenses 

here are for a lump-sum amount with no record evidence 

supporting a calculation of a royalty rate. 

Consider what these licenses do (and do not) say. 

Starting with the Schneider license, one preliminary recital states: “WHEREAS EcoFactor represents that it has 

agreed to the payment set forth in this Agreement based 

on what [it] believes is a reasonable royalty calculation of 

[$X] per-unit for what it has estimated is past and projected future sales of products accused of infringement in 

this Litigation.” J.A. 10400 (emphasis added). Yet the 

body of the license (i.e., its substantive and agreed upon

terms and conditions)—which, unlike the recitals, reflects 

the view of both parties—says that its lump-sum payment

“is not based upon sales and does not reflect or constitute a 

royalty.” J.A. 10402 (emphasis added). 

The Daikin and Johnson licenses both contain nearly 

identical preliminary recitals about the $X rate. 

J.A. 10389; J.A. 10411. As in the Schneider license, the 

body of the Daikin license—which, again, reflects the view 

of both parties—says that its lump-sum payment “is not 

based upon sales and does not reflect or constitute a 

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4 ECOFACTOR, INC. v. GOOGLE LLC

royalty.” J.A. 10391 (emphasis added). And while the 

Johnson license lacks a similar refutation of the recital’s 

“belief” (a belief that, again, was EcoFactor’s alone), it still 

offers nothing more than the recital itself to support any 

royalty rate.

These recitals became Mr. Kennedy’s $X rate. 

J.A. 5764 (628:10–17); J.A. 5769 (633:9–18); J.A. 5772–73 

(636:22–637:4). Mr. Kennedy also relied on the testimony 

of EcoFactor’s CEO, Mr. Habib, as support for this rate. 

J.A. 5794 (658:17–18). But Mr. Habib’s testimony does not 

establish anything beyond his unsupported “understanding” that these licenses used the $X royalty rate. See

J.A. 5668–69 (532:23–533:2). When asked during direct 

examination about the basis for his “understanding,” Mr. 

Habib testified that he was not allowed to see any underlying financial information or sales data. J.A. 5670 (534:4–

14). Mr. Habib also explained his basis for believing that 

the $X rate was a reasonable rate based on his understanding of the market, J.A. 5672 (536:14–24), but his marketbased testimony provided no explanation for converting 

from the lump-sum payments in these licenses to any royalty rate, let alone the $X royalty rate.4 

On this record, it’s impossible to establish that these 

lump-sum payments were calculated using any royalty 

rate, let alone the specific $X rate. The self-serving recitals 

reflect only EcoFactor’s transparent attempt to 

4 The only other basis Mr. Habib offers is that the $X 

royalty rate was EcoFactor’s baseline policy for licensing, 

regardless of the number of patents. J.A. 5671 (535:12–

24). Understandably, neither the majority nor EcoFactor 

rely on the baseline policy as a valid basis for Mr. Habib’s 

understanding that the $X rate was used. See Omega 

Pats., LLC v. CalAmp Corp., 13 F.4th 1361, 1379–80 (Fed. 

Cir. 2021) (concluding that a comparable license analysis 

using a baseline royalty rate policy is unreliable).

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ECOFACTOR, INC. v. GOOGLE LLC 5

manufacture a royalty rate using its “belief.” EcoFactor 

even had to refute its “belief” by agreeing, in the Schneider 

and Daikin licenses, that the lump-sum payment is not a 

royalty. Mr. Kennedy’s assertion that the Schneider and 

Daikin licenses used the $X rate is “incompatible with the 

. . . agreement[s] as a whole.” MLC Intell. Prop., 10 F.4th 

at 1368. And the Johnson license does not “describe how 

the parties calculated [the] lump sum.” Wordtech Sys., 609 

F.3d at 1320.

Mr. Kennedy cited nothing else showing that the $X 

rate was actually used. He cited no documents, records, 

sales data, or testimony showing any calculation of the 

lump-sum payments or otherwise establishing that these

licenses used the $X rate. Mr. Habib’s testimony, relying 

on no underlying data, likewise offers no support. EcoFactor offered no testimony explaining how the lump-sum 

“payments could be converted to a royalty rate.” Whitserve, 

694 F.3d at 30. 

At bottom, all we have are the recitals of one party’s 

“beliefs” contradicted by mutually agreed upon contractual 

language by both parties. That’s not enough under our law. 

None of the majority’s responses on this issue withstand scrutiny. The majority first insists that the Schneider and Daikin licenses do not disclaim the $X royalty rate. 

It reasons, “[t]hat the lump sum amount is not a royalty

does not mean [that] the parties did not use the $X royalty 

rate discussed in the agreements to arrive at the lump sum 

amount.” Maj. 14 n.6 (emphasis in original). If the majority’s point is that a lump sum is not itself a royalty, then 

fair enough—no one disputes that truism. The issue here, 

however, is whether the lump sum in these licenses reflects

the application of the $X royalty rate (or, in the majority’s 

words, whether it was used “to arrive at the lump sum 

amount”). And the majority cannot credibly claim that was 

the case when the licenses themselves say that each lumpsum payment “is not based upon sales and does not reflect 

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6 ECOFACTOR, INC. v. GOOGLE LLC

or constitute a royalty.” J.A. 10391, 10402 (emphasis 

added). I’m not sure how these licenses could more clearly 

establish that the lump sums were not calculated using

royalties. 

The majority next asserts that “the Johnson license 

agreement alone would suffice.” Maj. 14 n.6. But the Johnson license contains no language describing how its lumpsum payment was calculated, see Wordtech Sys., 609 F.3d 

at 1320, and Mr. Kennedy offered no other basis from 

which he could conclude that the Johnson license used the 

$X rate. 

The majority also cites an email chain that purportedly 

concerns the use of the $X rate in the Johnson license. But 

Mr. Kennedy never discussed this email; EcoFactor introduced this email during the cross-examination of Google’s 

expert. J.A. 6278 (1142:3–10). The question here is not 

whether any document in the record supports the jury’s 

damages award. We are instead asking whether Mr. Kennedy’s testimony was so unreliable that it requires a new 

trial. I can’t see how an email Mr. Kennedy never addressed supports the reliability of his analysis. 

In the end, Mr. Kennedy conjured the $X rate from 

nothing, and the majority’s treatment of his analysis cannot be squared with our law or the facts. 

II

Even if these licenses used the $X rate, Mr. Kennedy’s 

analysis has another significant problem: the $X rate does 

not reflect the ’327 patent’s value; rather, it includes the 

value of other patents. Our law is clear that this basic failure requires a new trial. 

“When relying on comparable licenses to prove a reasonable royalty, we require a party to account for differences in the technologies and economic circumstances of 

the contracting parties.” Apple Inc. v. Wi-LAN Inc., 25 

F.4th 960, 971 (Fed. Cir. 2022) (cleaned up). This 

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ECOFACTOR, INC. v. GOOGLE LLC 7

accounting, although not overly rigid and involving approximation, requires apportioning to just the value of patent(s) 

in the hypothetical negotiation. Omega Pats., LLC v. 

CalAmp Corp., 13 F.4th 1361, 1380–81 (Fed. Cir. 2021). 

This apportionment must be tied to the facts of each case. 

Id. at 1379–80.

The licenses here have a broad scope. Each license is

to “all patents and patent applications (along with patents 

issuing thereon) . . . that are now, or ever come to be, assigned to, owned by, or controlled by EcoFactor.” 

J.A. 10390; J.A. 10401; J.A. 10412. Because each license 

reflects a settlement, they also list the patents asserted in 

each underlying litigation. The Schneider and Daikin licenses list seven asserted patents, including the ’327 patent. J.A. 10398, 10409. The Johnson license lists four 

asserted patents; none are the ’327 patent. J.A. 10411. 

When calculating the ’327 patent’s value, Mr. Kennedy 

relied on EcoFactor’s technical expert, Mr. de la Iglesia,

who compared the asserted patents in each license to the 

’327 patent and concluded that the asserted patents and 

the ’327 patent were technologically comparable. J.A. 

5578–82 (442:14–446:10). But EcoFactor’s technical expert 

didn’t discuss the remaining patents in each license—the 

non-asserted patents in EcoFactor’s portfolio.5 Rather, Mr. 

Kennedy explained that since, “in the real world,” “the rest 

of the patents are thrown in usually either for nothing or 

very little additional value,” the presence of these non-asserted patents would place “downward pressure on the royalty rate” in a hypothetical negotiation over the ’327 

5 Although we don’t know the exact size of EcoFactor’s portfolio, at least one document suggests that EcoFactor’s portfolio is over three times larger than the seven 

asserted patents in the Schneider and Daikin licenses. 

Case: 23-1101 Document: 18 Page: 27 Filed: 06/03/2024
8 ECOFACTOR, INC. v. GOOGLE LLC

patent. J.A. 5767–68 (631:22–632:2); see also J.A. 5771–72 

(635:19–636:3).

Mr. Kennedy’s opinion is “untethered to the facts of 

this case.” Apple, 25 F.4th at 973. His generic testimony 

about “the real world,” general industry practice, and 

“downward pressure” does not account for the impact of 

EcoFactor’s specific non-asserted patents, and we don’t 

know whether any non-asserted patent in EcoFactor’s portfolio covers the same technological areas as the asserted 

patents. Mr. Kennedy did not ask the necessary question 

under our law—what effect the specific non-asserted patents in EcoFactor’s portfolio would have on the hypothetical negotiation.6 Even worse, other evidence in the record 

indicates that the specific non-asserted patents were not 

considered at all. Mr. Habib testified that the remaining 

patents in EcoFactor’s portfolio had no effect on the rate

used in these licenses because the $X rate was EcoFactor’s 

baseline policy. J.A. 5671 (535:12–24). 

In the end, Mr. Kennedy’s circumstance-agnostic analysis is insufficient under our law. Apple, 25 F.4th at 973 

(vacating a verdict where the same expert as in this case,

Mr. Kennedy, testified that excluding the non-asserted patents in a portfolio license would reduce the royalty rate by 

25 percent as a matter of industry practice); Omega Pats., 

13 F.4th at 1379 (vacating a verdict where the proposed

$5.00 royalty rate was the same for any number of patents);

MLC Intell. Prop., 10 F.4th at 1375 (vacating a verdict 

6 It would not be difficult for EcoFactor to offer an 

answer. For example, Mr. de la Iglesia could have determined that the non-asserted patents in the Schneider, Daikin, and Johnson licenses have no technological overlap 

with the ’327 patent and concluded that the non-asserted 

patents added only nominal value to the license. 

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ECOFACTOR, INC. v. GOOGLE LLC 9

where no evidence or explanation supported using the royalty rate in a forty-one-patent license for a single patent). 

The majority, in excusing Mr. Kennedy’s failure to 

properly apportion, ignores our law’s requirements. It

merely states that Mr. Kennedy “acknowledged that the 

three licenses also covered patents not in EcoFactor’s portfolio.” Maj. 16. But the majority ignores the key failure—Mr. Kennedy failed to account for the impact of the 

specific remaining patents in EcoFactor’s portfolio, other 

than by referencing a generic “downward pressure.” Neither Mr. Kennedy nor Mr. de la Iglesia tied this “downward 

pressure” to the specific non-asserted patents, and Mr. 

Habib affirmatively testified that EcoFactor’s practice was 

to use the same $X rate regardless of the number of patents. In these circumstances, I “fail to see how this patent/claim-independent approach accounts for 

apportionment.” Omega Pats., 13 F.4th at 1379. 

The majority also relies on ActiveVideo Networks, Inc. 

v. Verizon Communications, Inc., 694 F.3d 1312 (Fed. Cir. 

2012), for its conclusion. But in ActiveVideo, we concluded 

that “disagreements . . . with the conclusions reached by 

ActiveVideo’s experts and the factual assumptions and considerations underlying those conclusions” were “factual issues best addressed by cross examination and not 

exclusion.” Id. at 1333. Our conclusion presupposed that 

“the methodology is sound” and that “the evidence relied 

upon [is] sufficiently related to the case at hand.” i4i Ltd. 

P’Ship v. Microsoft Corp., 598 F.3d 831, 852 (Fed. Cir. 

2010), aff’d, 564 U.S. 91 (2011). As I explained above, 

that’s far from the case here. And to the extent the majority relies on one party’s characterization in ActiveVideo of 

the expert’s opinion as failing to “disaggregate the value of 

the patent license from the value of the services,” Maj. 18, 

we did not adopt that characterization of the expert’s opinion, see ActiveVideo, 694 F.3d at 1333. Additionally, any 

suggestion that disaggregating the value of the patented 

technology from the overall value of a license is not 

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10 ECOFACTOR, INC. v. GOOGLE LLC

required is flatly inconsistent with our law and 140 years 

of Supreme Court precedent. See VirnetX, Inc. v. Cisco 

Sys., Inc., 767 F.3d 1308, 1326 (Fed. Cir. 2014) (“[A] patentee ‘must in every case give evidence tending to separate or apportion the defendant’s profits and the patentee’s 

damages between the patented feature and the unpatented 

features.’” (quoting Garretson v. Clark, 111 U.S. 120, 121 

(1884))). 

To establish a purportedly independent basis for Mr. 

Kennedy’s conclusion, the majority asserts that he demonstrated the reasonableness of his $X rate by analyzing 

Google’s profits. Maj. 17. Mr. Kennedy determined what 

profits on Google’s accused Nest thermostats came from 

features that he maintained were attributable to the ’327 

patent. He then split the profits between Google and EcoFactor, using the $X rate as a reasonable basis. See J.A. 

5778 (642:13–17). His methodology isn’t reasonable. Rather than offering a cross-check, Mr. Kennedy’s circular 

profit analysis begins and ends with the same “fundamentally flawed premise”—the $X rate. Uniloc USA, Inc. v. 

Microsoft Corp., 632 F.3d 1292, 1317 (Fed. Cir. 2011).

Ultimately, the majority’s real concern is that, “[i]f the 

standard for admissibility is raised too high, then the trial 

judge no longer acts as the gatekeeper but assumes the role 

of the jury.” Maj. 19. But we must pay close attention to 

the reliability of the methodology underlying expert testimony to ensure that the jury can fulfill its proper role as 

the factfinder. See Gen. Elec. Co. v. Joiner, 522 U.S. 136, 

142 (1997) (emphasizing the district court’s “gatekeeper” 

role in “screening” expert testimony). As the Supreme 

Court has recognized, “the expert’s testimony often will 

rest upon an experience confessedly foreign in kind to the 

jury’s own.” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 

149 (1999) (cleaned up). Thus, an “effort to assure that the 

specialized testimony is reliable and relevant can help the 

jury evaluate that foreign experience.” Id. Our damages 

law ensures that an expert asks the right questions. Many 

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ECOFACTOR, INC. v. GOOGLE LLC 11

admissible answers to these questions are possible, and it 

is those answers that are subject to the crucible of crossexamination. Mr. Kennedy failed to ask the right questions at multiple junctures. The majority’s decision to overlook the prejudicial impact of his unreliable testimony 

abdicates its responsibility as a gatekeeper and contradicts 

our precedent. 

III

Mr. Kennedy’s analysis is unreliable. His $X rate has 

no basis in the record, and his $X rate does not reflect the 

’327 patent’s value alone but instead includes the value of 

other patents. Mr. Kennedy’s testimony did not meet the 

baseline standards of admissibility, and therefore the district court abused its discretion by not granting a new trial 

on damages. The majority’s conclusion otherwise departs 

from our law. I respectfully dissent.

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