By Newspot Nigeria Legal Desk
In a pivotal decision, the United States Court of Appeals for the Federal Circuit has overturned a $20 million jury verdict against Google LLC. The case involved allegations that Google’s Nest smart thermostats infringed upon a patent held by EcoFactor Inc., a company specializing in energy-management technology.
Background of the Case
EcoFactor, based in Palo Alto, California, initiated the lawsuit in 2020, asserting that Google’s Nest thermostats utilized its patented method for reducing energy consumption during peak demand periods. In 2022, a jury in the Western District of Texas found in favor of EcoFactor, awarding the company $20 million in damages.
Federal Circuit’s Decision
However, on May 21, 2025, the full Federal Circuit, sitting en banc, vacated the damages award and ordered a new trial focused solely on the issue of damages. The court determined that the testimony provided by EcoFactor’s damages expert, David Kennedy, was unreliable and should not have been admitted during the trial. The court emphasized that Kennedy’s methodology lacked a sufficient factual foundation and did not reflect a reliable application of established principles.
Key Issues with Expert Testimony
The court’s decision highlighted two primary concerns:
- Reliance on License Agreements: Kennedy based his damages calculation on three license agreements between EcoFactor and other companies. However, these agreements were lump-sum settlements that did not specify per-unit royalty rates. The court found that Kennedy’s extrapolation of a per-unit rate from these agreements was speculative and lacked a solid evidentiary basis.
- Apportionment of Patent Value: The expert failed to adequately apportion the value of the patented technology relative to other technologies covered in the license agreements. This omission raised questions about the accuracy of the damages calculation and its reflection of the patented invention’s actual contribution to the overall product value.
Implications for Patent Litigation
This ruling underscores the importance of rigorous analysis and reliable methodologies in calculating patent infringement damages. It also reinforces the role of courts as gatekeepers in evaluating the admissibility of expert testimony under the standards established by Federal Rule of Evidence 702 and the Supreme Court’s decision in Daubert v. Merrell Dow Pharmaceuticals.
Next Steps
The case will return to the Western District of Texas for a new trial to determine appropriate damages, if any, owed by Google to EcoFactor. The court’s decision leaves the jury’s finding of patent infringement intact but necessitates a reassessment of the financial compensation due to the plaintiff.
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