Authored by: Jeremy J. Gustrowsky
A recent decision from the Federal Circuit has affirmed a jury’s $20 million verdict against Google, finding that its Nest smart thermostats infringed EcoFactor, Inc.’s U.S. Patent No. 8,738,327. The patent covers technology for controlling heating and cooling systems (HVAC) in a way that reduces energy use during peak demand, specifically by using thermostats that measure the temperature inside a building and predict how it will change. Google challenged the verdict on several grounds, but the court found the evidence and expert testimony sufficient to support the jury’s findings.
One of Google’s main arguments was that its thermostats only measure temperature inside the device housing, not the actual room temperature as required by the patent. However, EcoFactor’s expert pointed to Google’s own technical documentation and source code, as well as admissions from Google’s experts, showing that the thermostats do measure the ambient temperature of the room. This was enough for the jury to find infringement, and the appeals court agreed that the verdict was supported by substantial evidence.
Google also objected to the damages awarded, arguing that EcoFactor’s expert had used an unreliable method to calculate the royalty rate, relying on three prior license agreements that included a per-unit royalty rate. The court found that these agreements, along with supporting testimony and internal Google data, provided a reasonable basis for the damages calculation. The court emphasized that while damages calculations often involve some uncertainty, the methodology used here was sufficiently tied to the facts of the case and was properly left for the jury to weigh.
A dissenting judge argued that the damages expert’s analysis was flawed because it relied too heavily on EcoFactor’s own statements in the license agreements and did not adequately separate the value of the specific patent from other patents in EcoFactor’s portfolio. However, the majority held that any such issues were for the jury to consider, not grounds for excluding the expert’s testimony or overturning the verdict. As a result, the $20 million award to EcoFactor stands.