Summary
The United States Court of Appeals for the Federal Circuit en banc reversed the district court’s denial of a motion for a new trial on damages in a patent infringement lawsuit. The court held that the plaintiff’s damages expert’s testimony, which relied on prior lump-sum settlement licenses to establish a per-unit royalty rate, was inadmissible under Federal Rule of Evidence 702 and Daubert due to a lack of sufficient factual basis. The opinion also reinstates the earlier panel decision affirming the denial of judgment as a matter of law and deeming the summary judgment ruling unappealable.
Topics
Practice areas
Questions Presented
- Whether the district court abused its discretion by admitting EcoFactor's damages expert testimony under Federal Rule of Evidence 702 and Daubert.
- Whether the district court abused its discretion by denying Google's motion for a new trial on damages after admitting the expert testimony.
- Whether the Federal Circuit's en banc proceeding was proper despite the participation of fewer than all judges in regular active service.
- Whether Google's appeal from the denial of summary judgment on patent eligibility was appealable.
- Whether the district court properly denied judgment as a matter of law on noninfringement.
Holdings
- An expert's opinion that prior licensees agreed to an $X per-unit royalty was inadmissible because the licenses and other evidence did not provide sufficient facts or data to support that premise.
- The district court abused its discretion by denying Google's motion for a new trial on damages because admission of the unreliable expert testimony was prejudicial.
- The en banc proceeding was statutorily proper even though fewer than all judges in regular active service participated, because judges temporarily removed from hearing further cases under the Judicial Conduct and Disability Act may be excluded from the en banc proceeding.
- The court reinstated the prior panel opinion holding that the denial of summary judgment on patent eligibility was not appealable and affirming the denial of judgment as a matter of law on noninfringement.
Key quotations
“Where, as here, the relevant evidence is contrary to a critical fact upon which the expert relied, the district court fails to fulfill its responsibility as gatekeeper by allowing the expert to testify at trial.” (137 F.4th at 1345)
“Determinations of admissibility, which fall within the gatekeeping role of the court, are separate from determinations of weight and credibility, which are within the province of the jury in a jury case.” (137 F.4th at 1338)
Factual background
EcoFactor owns the '327 patent, which concerns smart thermostats in networked heating and cooling systems. Its damages expert, David Kennedy, used three lump-sum settlement licenses with Daikin, Schneider, and Johnson to opine that the licenses reflected an established royalty of $X per infringing unit. The licenses stated EcoFactor's unilateral belief that the payments reflected an $X per-unit calculation, but also stated that the lump sums were not based on sales and did not constitute royalties, or otherwise did not establish the licensees' agreement that $X was reasonable. The jury found Google infringed claim 5 and awarded $20,019,300.
Procedural history
EcoFactor sued Google in the Western District of Texas for infringement of, among other patents, U.S. Patent No. 8,738,327. The jury found infringement of claim 5 and awarded $20,019,300 in lump-sum damages. The district court denied Google's motions for judgment as a matter of law and for a new trial on damages. A prior Federal Circuit panel affirmed the denial of JMOL and the denial of a new trial, and held that the denial of summary judgment was not appealable. On rehearing en banc, the court reversed the denial of a new trial on damages, reinstated the panel opinion on the remaining issues, and remanded for a new trial on damages.
Remand instructions
The district court must conduct a new trial on damages. The panel opinion is reinstated as to the issues other than damages.