EcoFactor, Inc. v. Google LLC, No. 2023-1101 (Fed. Cir. (W.D. Tex.) May 23, 2025). En banc opinion by Moore, joined by Lourie, Dyk, Prost, Taranto, Chen, Hughes, and Stoll. Opinion concurring in part and dissenting in part by Reyna, joined by Stark. Opinion concurring in part and dissenting in part by Stark, joined by Reyna.
EcoFactor sued Google for infringement of a patent directed to the operation of smart thermostats in computer-networked heating and cooling systems. Before trial, Google moved to exclude testimony from EcoFactor’s damages expert, David Kennedy, under Federal Rule of Evidence 702 and Daubert. Google argued that Mr. Kennedy’s testimony that $X is an established royalty for the patented technology was unsupported by reliable methodology or sufficient facts. The district court denied the motion.
At trial, the jury found that Google infringed the patent and awarded EcoFactor $20,019,300 in lump-sum damages. Google then filed post-trial motions, including a motion for a new trial on damages, which the district court denied. Google appealed.
A three-judge panel of the Federal Circuit unanimously affirmed as to some issues, but split in affirming the denial of Google’s motion for a new trial on damages. Google then petitioned for rehearing en banc, and the Federal Circuit granted the petition, limited to the damages issue: whether the district court adhered to Rule 702 and Daubert in allowing testimony from Mr. Kennedy assigning a per-unit royalty rate to three licenses in evidence.
After receiving briefing and argument, the Federal Circuit reversed the denial of Google’s motion for a new trial on damages and remanded. The en banc court reinstated the panel opinion on all other issues.
As to damages, the en banc court concluded that “the denial of Google’s motion [for a new trial on damages] was an abuse of discretion on this record because Mr. Kennedy’s opinion that the licenses show industry acceptance of an $X per unit royalty rate is not based upon sufficient facts or data.” Mr. Kennedy employed the hypothetical negotiation framework to conclude that Google should pay damages in the amount of $X per infringing unit, and his opinion relied on three EcoFactor license agreements as well as testimony from EcoFactor’s CEO.
As to the license agreements, the Federal Circuit held they were insufficient, individually or in combination, to support Mr. Kennedy’s conclusion. In fact, two of the three licenses were found to “expressly disavow it.” The Federal Circuit explained that the licenses could be relied on “as an indication of the amount that EcoFactor would have accepted as a willing licensor,” but Mr. Kennedy’s opinion went further. He opined that the licenses “evidenced the licensees’ agreement to pay the $X royalty”—an opinion the Federal Circuit held was “not supported by the licenses.”
As to the testimony by EcoFactor’s CEO, the Federal Circuit ruled that it did not provide a sufficient basis for Mr. Kennedy’s testimony. The CEO’s testimony amounted to “an unsupported assertion on behalf of EcoFactor that the $X rate was applied to calculate the lump-sum payment amounts,” and “his testimony referenced no evidentiary support.”
The Federal Circuit also determined that the district court’s decision to admit Mr. Kennedy’s unreliable testimony “was undoubtedly prejudicial.” Thus, the en banc court reversed and remanded for a new trial on damages.
Judge Reyna, joined by Judge Stark, wrote separately to join parts of the en banc opinion but dissented as to “the admissibility of Mr. Kennedy’s expert opinion and the en banc court’s departure from the question at hand,” and as to “the en banc court’s failure to conduct any meaningful harmless error analysis.”
Lastly, Judge Stark, joined by Judge Reyna, wrote separately to emphasize concerns over the scope of the en banc opinion. He explained that “surprisingly,” the opinion “has very little to say about Rule 702 and Daubert,” and instead applies a holding “so narrow as to have almost no applicability beyond this case.” He explained that “today’s decision only governs where an expert’s testimony is undoubtedly contrary to a critical fact upon which the expert relies.”
Judge Stark also explained he is “concerned that today’s opinion will be misinterpreted as constraining damages experts in a manner not called for by either Rule 702 or Daubert.” And he fears the opinion “may be misunderstood as inviting district judges, and future panels of this court, to resolve fact disputes under the guise of evaluating whether experts may testify at trial.” On the merits, Judge Stark would affirm the district court’s denial of Google’s motion for a new trial.
Sigray, Inc. v. Carl Zeiss X-Ray Microscopy, Inc., No. 2023-2211 (Fed. Cir. (PTAB) May 23, 2025). Opinion by Goldberg (sitting by designation), joined by Dyk and Prost.
Sigray filed an IPR petition challenging all claims of a Zeiss patent directed to X-ray imaging systems that incorporate projection magnification. In a final written decision, the Patent Trial and Appeal Board declined to hold any of the asserted claims unpatentable. Sigray appealed the Board’s decision, challenging only whether claims 1–6 were unpatentable based on the “Jorgensen” prior art reference.
The Federal Circuit focused its analysis on whether Jorgensen anticipated independent claim 1. The parties agreed that Jorgensen discloses all limitations of claim 1 except the requirement of “a magnification of the projection X ray stage … between 1 and 10 times.” The parties disputed whether Jorgensen inherently discloses that limitation.
In the final written decision, the Board stated it was not engaging in claim construction for the disputed limitation, but the Federal Circuit determined otherwise, concluding that “the Board’s analysis demonstrates that it construed the disputed claim limitation.” According to the Federal Circuit, the Board’s analysis showed that “the Board narrowed the disputed limitation to exclude magnification generated by small amounts of divergence, that would result in magnification ‘between 1 and 10 times.’” The Federal Circuit thus ruled that the Board erred when it “construed ‘between 1 and 10’ to exclude small amounts of magnification.”
The Federal Circuit then ruled that “it is undisputed that Jorgenson’s X-ray beams are not completely parallel and naturally must result in some magnification,” and “that miniscule amount of magnification … definitionally achieves a magnification within the claimed range of 1 to 10.” Based on that determination, the Federal Circuit concluded that Jorgensen anticipated claim 1, as this was “the only evidence-supported conclusion.” The Federal Circuit also ruled that Jorgensen anticipated dependent claims 2 and 3 because “Zeiss did not separately argue these claims to the Board.” As for the remaining challenged claims, Zeiss had argued unpatentability under various obviousness theories, so the Federal Circuit remanded those issues to the Board.
Ecto World, LLC, et al. v. RAI Strategic Holdings, Inc., No. IPR2024-01280 (PTAB May 19, 2025). Opinion by Stewart.
Ecto World and SV3 filed a request for Director Review of a decision by the Patent Trial and Appeal Board denying institution of their IPR petition. The Board had denied institution because the asserted prior art references were previously presented to the Office during prosecution where “they appeared on an IDS, and the Examiner certified that the IDS had been considered.” The Board also found that the IPR petition did not address whether the Office had materially erred in its decision to allow the application.
In seeking Director review, the petitioners argued that the Board improperly denied institution under 35 U.S.C. § 325(d) and misapplied the two-part Advanced Bionics framework for evaluating whether denial under § 325(d) is warranted.
The patent owner disagreed with the petitioners and also asserted that the Board should have denied institution under Fintiv. At the time the Petition and Patent Owner Preliminary Response were filed, an Office memorandum stated that the Board “will not discretionarily deny petitions based on applying Fintiv to a parallel ITC proceeding.” However, the Office rescinded that memorandum on February 28, 2025, and so the patent owner sought denial of institution under Fintiv.
The Director granted review and clarified that, under Advanced Bionics, “a petitioner must provide an analysis [under part two of Advanced Bionics regarding how the Office erred in a manner material to the patentability of the challenge claims] even when the asserted prior art is on an IDS, but the Examiner did not apply the reference.” In that analysis, the petitioner “must explain … how the Examiner erred in overlooking the prior art.”
Because this decision by the Director clarified how to apply Advanced Bionics (and how to apply factors for the framework set out in the Board’s Becton, Dickinson decision), the Director remanded to the Board. The Director also remanded to allow the parties to present arguments and evidence addressing the Fintiv factors in view of the parties’ parallel ITC proceeding, given the Office’s rescission of the earlier memorandum that had disallowed such discretionary denials.