Authored by: Jeremy J. Gustrowsky
In a major decision for patent litigation, the Federal Circuit in EcoFactor, Inc. v. Google LLC clarified the standards for admitting expert testimony on patent damages. EcoFactor had sued Google, alleging that Google’s Nest thermostats infringed U.S. Patent No. 8,738,327, which covers smart thermostat technology. At trial, EcoFactor’s damages expert, Mr. Kennedy, told the jury that Google should pay damages based on a specific per-unit royalty rate, relying on previous lump-sum settlement agreements EcoFactor had with other companies.
However, the Federal Circuit found that Mr. Kennedy’s testimony was not based on “sufficient facts or data” as required by Federal Rule of Evidence 702. The key issue was that the licenses Mr. Kennedy relied on did not actually show that the other companies agreed to pay the specific per-unit royalty rate he cited. In fact, the contracts explicitly stated that the lump-sum payments were not based on sales or royalties. The court held that the expert’s opinion was therefore unreliable and should not have been presented to the jury.
The decision emphasizes the trial judge’s “gatekeeping” role under Daubert v. Merrell Dow Pharmaceuticals, Inc., requiring judges to ensure that expert testimony is not only relevant but also reliably grounded in the facts. The court explained that while damages experts can help juries understand complex issues, their opinions must be firmly supported by the evidence, not just by their own assertions or by unsupported statements from company executives.
As a result, the Federal Circuit reversed the damages award and ordered a new trial on damages, sending a clear message that patent damages experts must tie their opinions to concrete, factual evidence—especially when interpreting the meaning of prior licenses. This ruling is likely to impact how damages are calculated and presented in future patent cases, raising the bar for what counts as a reliable expert opinion.