EcoFactor v. Google: The Federal Circuit Sharpens the Gatekeeper's Knife on Damages

EcoFactor, Inc. v. Google LLC, 137 F.4th 1333 (Fed. Cir. 2025), decided en banc on May 21, 2025, is the Federal Circuit’s most pointed recent statement on the admissibility of patent-damages expert testimony. By an 8-2 vote, in an opinion attributed to Chief Judge Moore, the court held that the district court abused its discretion in admitting the patentee’s reasonable-royalty expert and reversed the denial of a new trial on damages. The decision reasserts the trial court’s role as an evidentiary gatekeeper and tightens the proof required to support a reasonable-royalty theory built on prior licenses.

At a glance

• Case: EcoFactor, Inc. v. Google LLC, 137 F.4th 1333 (Fed. Cir. 2025) (en banc), Appeal No. 2023-1101
• Decided: May 21, 2025; 8-2; opinion attributed to Chief Judge Moore; Judges Reyna and Stark dissenting
• Holding: The district court abused its discretion under Federal Rule of Evidence 702 by admitting a damages expert whose per-unit royalty opinion was not supported by sufficient facts or data
• Status: Reversed and remanded for a new trial on damages

The verdict and the expert

The technology at issue concerned smart, Wi-Fi-connected thermostats. A jury found infringement and awarded EcoFactor approximately $20 million in damages, based on the testimony of its damages expert, who opined that a hypothetical negotiation would have yielded a specific per-unit royalty rate. Google moved for a new trial, challenging the reliability of that opinion. The district court denied the motion; a panel of the Federal Circuit initially affirmed; and the full court took the case en banc to address the admissibility question.

The reasonable-royalty framework asks what royalty a willing licensor and licensee would have agreed to in a hypothetical negotiation at the time infringement began. Comparable licenses are a common and accepted input. The reliability problem in EcoFactor lay in how the expert derived a per-unit rate from licenses that were not, in fact, per-unit agreements.

The holding: Rule 702 is not a formality

The en banc court grounded its decision in Federal Rule of Evidence 702 and the Daubert gatekeeping obligation it codifies. A trial court must ensure that expert testimony rests on sufficient facts or data and reliable methodology before it reaches the jury; that reliability determination is an essential prerequisite to admissibility, not a question to be left to cross-examination and jury weighing.

Applying that standard, the court found the expert’s per-unit rate unsupported. The expert relied on EcoFactor’s prior license agreements that were structured as lump-sum payments, and pointed to “whereas” recitals in those agreements stating that the lump sums were based on a particular per-unit rate. But those recitals reflected EcoFactor’s unilateral statement of its target rate; they were not evidence that the licensees had actually agreed to pay on a per-unit basis, and the agreements contained language cutting against that reading. A reasonable-royalty opinion cannot transmute a licensor’s aspiration, recited in a lump-sum deal, into a market-validated per-unit rate. Because the foundation was insufficient, the testimony should have been excluded.

The two dissenters — Judges Reyna and Stark — objected that the majority had exceeded the proper scope of en banc review and had itself engaged in fact-finding and contract interpretation that belonged to the trial court and jury. That methodological objection is part of the decision’s significance: even within the Federal Circuit, the line between policing reliability and re-weighing evidence is contested.

Open questions

EcoFactor sharpens the gatekeeping obligation but leaves its boundaries unsettled. How far may a trial court probe the factual underpinnings of a damages model before it crosses from admissibility into the jury’s province — the very line the dissent accused the majority of crossing? And how should experts now use lump-sum licenses to support per-unit theories, if at all? The opinion signals deep skepticism of reverse-engineering per-unit rates from lump-sum deals, but it does not categorically forbid reliance on lump-sum comparables, leaving the contours to future cases. Whether the Supreme Court takes up the scope-of-review question is unconfirmed.

Implications for litigants

• Patentees: build the royalty from the data up. A per-unit rate must be supported by evidence that the market actually transacted on that basis. Recitals of intent in lump-sum agreements are unlikely to suffice.
• Accused infringers: invest in the Daubert motion. EcoFactor strengthens the tools available to exclude inflated or under-supported damages opinions before trial, and to obtain a new trial when such testimony reaches the jury.
• Both sides: expect more rigorous gatekeeping. District courts now have clear appellate backing to scrutinize the factual foundation of damages testimony, which should temper loosely supported nine-figure royalty theories.

Frequently asked questions

What went wrong with the expert’s opinion? He derived a specific per-unit royalty rate from license agreements that were lump-sum deals, relying on one party’s recited statements rather than evidence that licensees actually agreed to a per-unit rate.

What is the broader rule? District courts must rigorously perform their Rule 702/Daubert gatekeeping function and exclude damages opinions not supported by sufficient facts or data — reliability is a precondition to admissibility, not merely a matter of weight.

Did EcoFactor lose the case? Not entirely. The court reversed the denial of a new trial and remanded for a new trial on damages; the roughly $20 million award was set aside pending that retrial.

Authorities and sources

• EcoFactor, Inc. v. Google LLC, 137 F.4th 1333 (Fed. Cir. 2025) (en banc), Appeal No. 2023-1101 (May 21, 2025). En banc status, 8-2 vote, Reyna/Stark dissent, the ~$20 million award, and the new-trial holding corroborated across Wiggin and Dana, Sterne Kessler, IPWatchdog, Proskauer, White & Case, and Cleary Gottlieb analyses. (Opinion authorship attributed to Chief Judge Moore per Sterne Kessler’s reporting; any cert petition unconfirmed.)