Case: 23-1101 Document: 213 Page: 1 Filed: 05/21/2025
United States Court of Appeals
for the Federal Circuit
______________________
ECOFACTOR, INC.,
Plaintiff-Appellee
v.
GOOGLE LLC,
Defendant-Appellant
______________________
2023-1101
______________________
Appeal from the United States District Court for the
Western District of Texas in No. 6:20-cv-00075-ADA, Judge
Alan D Albright.
______________________
Decided: May 21, 2025
______________________
BRIAN DAVID LEDAHL, Russ August & Kabat, Los Angeles, CA, argued for plaintiff-appellee. Also represented by
KRISTOPHER DAVIS, MARC A. FENSTER, MINNA JAY, REZA
MIRZAIE, JAMES PICKENS.
GINGER ANDERS, Munger, Tolles & Olson LLP, Washington, DC, argued for defendant-appellant. Also represented by VINCENT LING, Los Angeles, CA; EVAN JENNINGS
MANN, San Francisco, CA; STEPHANIE JILL GOLDBERG,
KRISTIN ELIZABETH HUCEK, LEO L. LAM, ROBERT ADAM
LAURIDSEN, EUGENE M. PAIGE, ROBERT A. VAN NEST,
Keker, Van Nest & Peters LLP, San Francisco, CA.
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2 ECOFACTOR, INC. v. GOOGLE LLC
______________________
Before MOORE, Chief Judge, LOURIE, DYK, PROST, REYNA,
TARANTO, CHEN, HUGHES, STOLL, and STARK, Circuit
Judges. 1
Opinion for the court filed by Chief Judge MOORE, in
which Circuit Judges LOURIE, DYK, PROST, TARANTO,
CHEN, HUGHES, and STOLL join.
Opinion concurring in part and dissenting in part
filed by Circuit Judge REYNA, in which Circuit Judge
STARK joins.
Opinion concurring in part and dissenting in part
filed by Circuit Judge STARK, in which Circuit Judge
REYNA joins.
MOORE, Chief Judge.
Relevant to this en banc proceeding, Google LLC
(Google) appeals an order from the United States District
Court for the Western District of Texas denying Google’s
motion for a new trial on damages. We reverse the district
court’s denial of Google’s motion and remand for a new trial
on damages.
Google also appeals the district court’s denial of its motion for summary judgment of invalidity under 35 U.S.C.
§ 101 and denial of its motion for judgment as a matter of
law (JMOL) of noninfringement. On June 3, 2024, a panel
of this court affirmed the denial of JMOL and denial of a
new trial and held the denial of summary judgment was
not appealable. We reinstate the panel opinion as to the
issues other than damages.
1Circuit Judge Newman and Circuit Judge Cunningham did not participate.
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ECOFACTOR, INC. v. GOOGLE LLC 3
BACKGROUND
EcoFactor, Inc. (EcoFactor) owns U.S. Patent
No. 8,738,327, which relates to the operation of smart thermostats in computer-networked heating and cooling systems. ’327 patent at 1:22–25. In January 2020, EcoFactor
sued Google in the Western District of Texas, alleging
Google’s Nest thermostats infringed claims of the ’327 patent, among other patents. Complaint, EcoFactor, Inc. v.
Google LLC, No. 6:20-cv-00075 (W.D. Tex. Jan. 31, 2020),
ECF No. 1. After discovery, Google moved for summary
judgment that all asserted claims of the ’327 patent, including claim 5, were directed to patent-ineligible subject matter under
35 U.S.C. § 101 and were therefore invalid. See
J.A. 1134, 1151. 2 The district court denied the motion.
J.A. 5046 at 31:17–18.
Before trial, Google moved to exclude testimony from
EcoFactor’s damages expert, David Kennedy, under Federal Rule of Evidence 702 and Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993). 3 S.A. 156–57. 4
Specifically, Google argued Mr. Kennedy’s testimony that
$X is an established royalty for the patented technology
was unsupported by reliable methodology or sufficient
facts.
Id. The district court denied the motion. J.A. 2254.
At trial, Mr. Kennedy opined that Google should pay
damages in the amount of $X per allegedly infringing unit.
J.A. 5780 at 644:13–16. The jury found Google infringed
claim 5 of the ’327 patent and awarded EcoFactor
2 “J.A.” refers to the parties’ Joint Appendix filed at
ECF No. 14.
3 This motion, objecting to the admissibility of
Mr. Kennedy’s testimony, suffices to preserve this issue for
appeal. FED. R. EVID. 103(b).
4 “S.A.” refers to the parties’ Supplemental Appendix
filed at ECF No. 209.
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4 ECOFACTOR, INC. v. GOOGLE LLC
$20,019,300 in lump-sum damages. 5 J.A. 45, 49. Google
filed a renewed motion for JMOL of noninfringement,
J.A. 157, and a motion for a new trial on damages, arguing
Mr. Kennedy’s opinion should have been excluded from
trial because it was unreliable, S.A. 961–80. The district
court denied the motions, J.A. 6662 at 64:4–6; J.A. 6688 at
90:6–7, and Google appealed.
A panel of this court unanimously affirmed the district
court’s denial of JMOL of noninfringement and held the denial of summary judgment was not appealable. EcoFactor,
Inc. v. Google LLC, 104 F.4th 243, 248–51 (Fed. Cir. 2024),
reh’g en banc granted, opinion vacated,
115 F.4th 1380
(Fed. Cir. 2024) (En Banc Order). On the denial of Google’s
motion for a new trial on damages, the panel affirmed, but
with a dissent.
Id. at 251–57;
id. at 257–62 (Prost, J., dissenting-in-part). Google petitioned for rehearing en banc,
arguing the majority erroneously affirmed the denial of a
new trial on damages because Mr. Kennedy’s damages testimony was unreliable and therefore inadmissible. We
granted Google’s petition and ordered briefing and argument on the following damages issue:
The parties are requested to file new briefs, which
shall be limited to addressing the district court’s
adherence to Federal Rule of Evidence 702 and
Daubert v. Merrell Dow Pharmaceuticals, Inc., 509
U.S. 579 (1993), in its allowance of testimony from
EcoFactor’s damages expert assigning a per-unit
5 The lump sum award by the jury did not equate to
the royalty sought by EcoFactor or the royalty proposed by
Google.
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ECOFACTOR, INC. v. GOOGLE LLC 5
royalty rate to the three licenses in evidence in this
case. 6
En Banc Order at 1380. In addition to the parties’ briefs, 7
we received twenty-one amicus briefs. We heard oral argument on March 13, 2025. We have jurisdiction under 28
U.S.C. § 1295(a)(1).
DISCUSSION
I. New Trial
Google argues the district court abused its discretion in
denying a new trial on damages because Mr. Kennedy’s expert opinion was unreliable under Rule 702 and Daubert.
We agree.
“For issues not unique to patent law, we apply the law
of the regional circuit in which this appeal would otherwise
lie.” i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 841
(Fed. Cir. 2010). The Fifth Circuit reviews the denial of a
motion for a new trial for abuse of discretion. Fornesa v.
Fifth Third Mortg. Co.,
897 F.3d 624, 627 (5th Cir. 2018).
6 Judge Reyna’s partial dissent suggests that contract interpretation is “contrary to the scope of the en banc
appeal.” Reyna Dissent at 7. We do not agree. The three
licenses Mr. Kennedy interpreted are in fact contracts.
The question presented focused on whether Mr. Kennedy’s
expert opinion about the interpretation of the licenses satisfies Rule 702 and Daubert. Interpretation of the licenses
is fairly included within the question presented.
7 In addition to the issue on which rehearing en banc
was granted, Google’s opening brief addressed the issue of
whether the expert damages testimony was reliably apportioned. Appellant Br. 41–58. The apportionment arguments exceed the scope of the rehearing that was granted,
and we instructed EcoFactor that it need not address that
portion of Google’s brief. ECF No. 165.
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6 ECOFACTOR, INC. v. GOOGLE LLC
The Fifth Circuit reviews a trial court’s decision to admit
expert testimony for abuse of discretion. In re MBS Mgmt.
Servs., Inc., 690 F.3d 352, 354 (5th Cir. 2012). If expert
testimony was improperly admitted, “we next review the
error under the harmless error doctrine, affirming the
judgment, unless the ruling affected substantial rights of
the complaining party.” Vogler v. Blackmore,
352 F.3d 150,
154 (5th Cir. 2003) (quoting Bocanegra v. Vicmar Servs.,
Inc.,
320 F.3d 581, 584 (5th Cir. 2003)).
“[I]t may be an abuse of discretion for the trial court
not to create a record suitable for review of its admissibility
decision. A sufficient record is one that includes both the
court’s ruling and the reasons for that ruling.” 4 Jack B.
Weinstein & Margaret A. Berger, Weinstein’s Federal Evidence § 702.02[6][d] (Mark S. Brodin, ed., Matthew Bender
2d ed. 2025); see also In re Volkswagen of Am., Inc., 545
F.3d 304, 310 n.4 (5th Cir. 2008) (en banc) (“Meaningful
appellate review of the exercise of discretion requires consideration of the basis on which the trial court acted.”
(quoting Gurmankin v. Costanzo,
626 F.2d 1115, 1119–20
(3d Cir. 1980))). In this case, the district court gave no rationale for ruling that the expert testimony was admissible
or denying Google’s motion for a new trial on damages.
J.A. 2254 (omnibus order denying Google’s motion in
limine without reasoning); J.A. 6688 at 90:6–7 (denying
Google’s motion for a new trial from the bench). An absence
of reviewable reasoning may be sufficient grounds for this
court to conclude the district court abused its discretion. In
addition, of importance to this case on remand and to other
cases involving patent damages, we also conclude that the
denial of Google’s motion 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.
Federal Rule of Evidence 702 governs the admissibility
of expert testimony. The version of the Rule that governed
at the time of the district court’s decision read as follows:
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ECOFACTOR, INC. v. GOOGLE LLC 7
A witness who is qualified as an expert by
knowledge, skill, experience, training, or education
may testify in the form of an opinion or otherwise
if:
(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact
in issue;
(b) the testimony is based on sufficient facts or
data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles
and methods to the facts of the case.
FED. R. EVID. 702 (2011).
The Supreme Court explained in Daubert that the trial
judge plays a “gatekeeping role,” 509 U.S. at 597, through
which it must “ensure that any and all scientific testimony
or evidence admitted is not only relevant, but reliable,”
id.
at 589. “And where such testimony’s factual basis, data,
principles, methods, or their application are called sufficiently into question, the trial judge must determine
whether the testimony has ‘a reliable basis in the
knowledge and experience of [the relevant] discipline.’”
Kumho Tire Co. v. Carmichael,
526 U.S. 137, 149 (1999)
(alteration in original) (internal citation omitted) (quoting
Daubert,
509 U.S. at 592).
In 2000, Rule 702 was amended in response to Daubert
and its progeny to clearly codify the trial court’s gatekeeping role. FED. R. EVID. 702 advisory committee’s note to
2000 amendment. The 2000 amendment added the three
reliability-based requirements for admissibility of expert
testimony: it must be based on sufficient facts or data, it
must be the product of reliable principles and methods, and
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8 ECOFACTOR, INC. v. GOOGLE LLC
those principles and methods must be reliably applied. Id.
These changes “affirm[ed] the trial court’s role as gatekeeper and provide[d] some general standards that the
trial court must use to assess the reliability and helpfulness of proffered expert testimony.”
Id. In 2023, Rule 702
was amended to clarify that the proponent of expert testimony bears the burden of establishing its admissibility and
to emphasize that an expert’s opinion must stay within the
bounds of a reliable application of the expert’s basis and
methodology. 8 FED. R. EVID. 702 advisory committee’s note
8 The 2023 amendment did not substantively change
the relevant standard. FED. R. EVID. 702 advisory committee’s note to 2023 amendment (“Nothing in the amendment
imposes any new, specific procedures. Rather, the amendment is simply intended to clarify that Rule 104(a)’s requirement applies to expert opinions under Rule 702.”).
Rule 702 as amended in 2023 states:
A witness who is qualified as an expert by
knowledge, skill, experience, training, or education
may testify in the form of an opinion or otherwise
if the proponent demonstrates to the court that it
is more likely than not that:
(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact
in issue;
(b) the testimony is based on sufficient facts or
data;
(c) the testimony is the product of reliable principles and methods; and
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ECOFACTOR, INC. v. GOOGLE LLC 9
to 2023 amendment. The Advisory Committee noted that
“many courts have held that the critical questions of the
sufficiency of an expert’s basis, and the application of the
expert’s methodology, are questions of weight and not admissibility. These rulings are an incorrect application of
Rules 702 and 104(a).” Id. The Advisory Committee explained that “[j]udicial gatekeeping is essential” to ensure
an expert’s conclusions do not “go beyond what the expert’s
basis and methodology may reliably support.”
Id.
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. FED. R. EVID. 104(a) (“The
court must decide any preliminary question about whether
a witness is qualified, a privilege exists, or evidence is admissible.”); Inwood Lab’ys, Inc. v. Ives Lab’ys, Inc., 456 U.S.
844, 856 (1982) (“Determining the weight and credibility of
the evidence is the special province of the trier of fact.”).
“[T]he question of whether the expert is credible or the
opinion is correct is generally a question for the fact finder,
not the court. Indeed, ‘[v]igorous cross-examination,
presentation of contrary evidence, and careful instruction
on the burden of proof are the traditional and appropriate
means of attacking shaky but admissible evidence.’” Summit 6, LLC v. Samsung Elecs. Co.,
802 F.3d 1283, 1296
(Fed. Cir. 2015) (second alteration in original) (internal citation omitted) (quoting Daubert,
509 U.S. at 596). While
the credibility of an expert’s damages calculation is
properly left to a jury, a determination of reliability under
Rule 702 is an essential prerequisite.
(d) the expert’s opinion reflects a reliable application of the principles and methods to the facts of
the case.
FED. R. EVID. 702 (2023).
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10 ECOFACTOR, INC. v. GOOGLE LLC
Distinguishing “the gatekeeping role of the judge” under Rule 702 from the fact finder’s role “is particularly essential in the context of patent damages.” Apple Inc. v.
Motorola, Inc., 757 F.3d 1286, 1315 (Fed. Cir. 2014), overruled on other grounds by Williamson v. Citrix Online,
LLC,
792 F.3d 1339 (Fed. Cir. 2015) (en banc in part). Estimation of a reasonable royalty by its nature “necessarily
involves an element of approximation and uncertainty.”
Unisplay, S.A. v. Am. Elec. Sign Co.,
69 F.3d 512, 517 (Fed.
Cir. 1995); see also VLSI Tech. LLC v. Intel Corp.,
87 F.4th
1332, 1346 (Fed. Cir. 2023) (“[S]ome steps in a sound [hypothetical negotiation] analysis may involve unavoidable
‘approximation and uncertainty.’” (quoting Lucent Techs.,
Inc. v. Gateway, Inc.,
580 F.3d 1301, 1325 (Fed. Cir. 2009))).
Indeed, “the record may support a range of ‘reasonable’ royalties, rather than a single value,” and “there may be more
than one reliable method for estimating a reasonable royalty.” Apple,
757 F.3d at 1315. It follows that damages
experts may properly give testimony resulting in contradictory reasonable royalty amounts based on the same set of
facts. See FED. R. EVID. 702 advisory committee’s note to
2000 amendment (“[Rule 702] is broad enough to permit
testimony that is the product of competing principles or
methods in the same field of expertise.”). Expert testimony
is particularly beneficial to assist the trier of fact in resolving such complex, technical issues as patent damages. See
35 U.S.C. § 284 (acknowledging expert testimony is an appropriate “aid to the determination of damages or of what
royalty would be reasonable under the circumstances”).
To estimate a reasonable royalty in this case, Mr. Kennedy’s damages opinion employed the hypothetical negotiation or “willing licensor-willing licensee” framework,
which “attempts to ascertain the royalty upon which the
parties would have agreed had they successfully negotiated
an agreement just before infringement began.” Lucent
Techs., 580 F.3d at 1324 (citing Georgia-Pacific Corp. v.
U.S. Plywood Corp.,
318 F. Supp. 1116, 1120 (S.D.N.Y.
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ECOFACTOR, INC. v. GOOGLE LLC 11
1970)). As a general matter, this is a sound approach, well
supported in our precedent. See, e.g., VLSI, 87 F.4th at
1345–46; Carnegie Mellon Univ. v. Marvell Tech. Grp.,
Ltd.,
807 F.3d 1283, 1303–04 (Fed. Cir. 2015); Lucent
Techs., 580 F.3d at 1324–25. A critical consideration in this
analysis is the amount that the alleged infringer would
agree to pay as a willing licensee. Georgia-Pacific,
318 F.
Supp. at 1121; Carnegie Mellon,
807 F.3d at 1304 (“A key
inquiry in the analysis is what it would have been worth to
the defendant, as it saw things at the time, to obtain the
authority to use the patented technology . . . .”). One important factor is “[t]he royalties received by the patentee
for the licensing of the patent in suit, proving or tending to
prove an established royalty.” Georgia-Pacific,
318 F.
Supp. at 1120. “Actual licenses to the patented technology
are highly probative as to what constitutes a reasonable
royalty for those patent rights because such actual licenses
most clearly reflect the economic value of the patented
technology in the marketplace.” LaserDynamics, Inc. v.
Quanta Comput., Inc.,
694 F.3d 51, 79 (Fed. Cir. 2012).
“Actual licenses to the patents-in-suit are probative not
only of the proper amount of a reasonable royalty, but also
of the proper form of the royalty structure.” Id. at 79–80.
A lump-sum license analysis involves significantly different considerations, from the perspective of both the licensee and the licensor, compared to a running royalty license.
Lucent Techs., 580 F.3d at 1326–27. Because of these “fundamental differences,” “[f]or a jury to use a running-royalty
agreement as a basis to award lump-sum damages” and
vice versa, “some basis for comparison must exist in the evidence presented to the jury.” Id. at 1330; see also
Whitserve, LLC v. Comput. Packages, Inc.,
694 F.3d 10, 30
(Fed. Cir. 2012).
As part of his analysis, Mr. Kennedy considered lump-sum settlement licenses between EcoFactor and three licensees: Daikin Industries, Ltd. (Daikin); Schneider Electric USA, Inc. (Schneider); and Johnson Controls Inc.
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12 ECOFACTOR, INC. v. GOOGLE LLC
(Johnson). J.A. 5763–73. Mr. Kennedy testified that the
Daikin, Schneider, and Johnson lump-sum amounts reflected an $X per unit rate applied to their sales. See
J.A. 5778 at 642:14–15 (Kennedy testimony estimating a
reasonable royalty based in part on “[$X] per unit that
other people have paid”); J.A. 5740 at 604:1–2 (Kennedy
testimony referencing “the EcoFactor licenses with ‘other
competitors at the rate of $[X] per unit’”). Mr. Kennedy did
not merely assume, without himself endorsing, the premise
that the licenses reflected such a rate; he put forth his own
opinion that they do so, asserting the proposition with the
imprimatur of his expertise. See J.A. 5759 at 623:13–14
(“that’s really my area as a licensing expert to say”).
Mr. Kennedy concluded, “Google should pay the same rate
as comparable licenses.” J.A. 5779 at 643:15–16; see also
J.A. 5780 at 644:15–16 (“[T]hey would agree to $[X] per
unit.”). We hold the existing licenses upon which Mr. Kennedy relied were insufficient, individually or in combination, to support his conclusion that prior licensees agreed
to the $X royalty rate and therefore the district court
abused its discretion in failing to exclude this testimony.
A. Daikin, Schneider, and Johnson Licenses
Contract interpretation—including whether the contract is ambiguous—is a question of law, which we answer
de novo. McLane Foodservice, Inc. v. Table Rock Rests.,
L.L.C., 736 F.3d 375, 377 (5th Cir. 2013). We do not find
the contracts ambiguous. The plain language of the licenses does not provide a basis for Mr. Kennedy to opine
that the parties agreed to an $X per unit rate in agreeing
to the lump-sum payment amounts. We examine each license in turn.
The Daikin license contains a preliminary recital,
which states,
WHEREAS, Ecofactor represents that it has agreed
to the payment set forth in this Agreement based
on what Ecofactor believes is a reasonable royalty
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ECOFACTOR, INC. v. GOOGLE LLC 13
calculation of $[X] per-unit for estimated past and
Daikin’s projected future sales of products accused
of infringement in the Litigation.
J.A. 10389 (emphasis added). The $X royalty rate does not
appear anywhere else in the license. The Daikin license
goes on to state in its operative payment provision that
[s]uch [a lump-sum] amount is not based upon
sales and does not reflect or constitute a royalty.
J.A. 10391. The license itself therefore directly contradicts
any claim that the lump sum is based upon any particular
royalty rate or even that it is based upon sales volume.
While the Daikin license could be relied upon as evidence
of the royalty rate sought by EcoFactor as the willing licensor, it provides no support for the conclusion that Daikin
agreed to pay the $X rate or agreed that $X rate was a reasonable royalty.
The Schneider license also contains a preliminary recital, which states,
WHEREAS Ecofactor represents that it has agreed
to the payment set forth in this Agreement based
on what Ecofactor believes is a reasonable royalty
calculation of $[X] per-unit for what it has estimated is past and projected future sales of products
accused of infringement in the Litigation, although
nothing in this clause should be interpreted as
agreement by Schneider that $[X] per unit is a reasonable royalty.
J.A. 10400 (emphasis added). The $X rate does not appear
anywhere else in the license. The “whereas” recital of the
Schneider license indicates that EcoFactor believes $X is a
reasonable royalty, but it makes equally clear that Schneider did not agree that $X per unit is a reasonable royalty.
Judge Stark’s partial dissent suggests this whereas clause
“could show that Schneider agreed with EcoFactor to use
the $X rate to calculate the lump-sum it paid, and disputed
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14 ECOFACTOR, INC. v. GOOGLE LLC
only whether that agreed-upon $X rate was reasonable.”
Stark Dissent at 5 (emphasis in original). The license itself
expressly rejects this inference when it further states in its
operative payment provision that
[s]uch [a lump-sum] amount is not based upon
sales and does not reflect or constitute a royalty.
J.A. 10402. To the extent Mr. Kennedy read this unambiguous license and opined that it reflected Schneider’s agreement to the $X royalty rate, there are not sufficient facts or
data to support this opinion. See J.A. 5769 at 633:16–18
(“There is a statement there about the $[X], both from EcoFactor and Schneider, in that ‘whereas’ clause. And it’s per
unit.”). The Schneider license does not support Mr. Kennedy’s testimony that Schneider agreed to pay the $X rate
or agreed that $X was a reasonable royalty. There are no
facts in dispute; both of these premises are rejected in the
express language of the license. Mr. Kennedy could have
relied upon the Schneider license as evidence of the amount
EcoFactor would agree to as the willing licensor, but the
license cannot be read to support Mr. Kennedy’s testimony
that Schneider was agreeing to pay the $X royalty.
The Johnson license contains substantially the same
preliminary recital as the Daikin license:
WHEREAS, EcoFactor represents that it has
agreed to the payment set forth in this Agreement
based on what EcoFactor believes is a reasonable
royalty calculation of $[X] per-unit for estimated
past and Johnson Control’s projected future sales
of products accused of infringement in the Litigation.
J.A. 10411 (emphasis added). The $X royalty rate does not
appear anywhere else in the Johnson license. Similar to
the Daikin and Schneider licenses, the “whereas” recital of
the Johnson license indicates EcoFactor’s representation of
its unilateral belief that $X constitutes a reasonable
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ECOFACTOR, INC. v. GOOGLE LLC 15
royalty and does not provide a basis for Mr. Kennedy to testify that Johnson agreed to the $X rate. 9
The plain language of the license agreements does not
support Mr. Kennedy’s testimony that Daikin, Schneider,
and Johnson agreed to pay the $X per unit royalty rate. In
fact, the Daikin and Schneider licenses expressly disavow
it. The “whereas” recital of each license provides no indication that the licensees agreed to pay the $X rate or
shared EcoFactor’s belief that $X constituted a reasonable
royalty. The licenses therefore do not, individually or in
combination, provide support for Mr. Kennedy’s testimony
that the licensees agreed to pay the $X rate or that the licensees agreed that $X was a reasonable royalty. This
analysis does not usurp the province of the jury, nor does it
involve this court deciding disputes of fact. It involves the
gatekeeping function of the court to ensure that there are
sufficient facts or data for Mr. Kennedy’s testimony that
the licensees agreed to the $X royalty rate.
9 Moreover, unlike the disputes settled by the Daikin
and Schneider licenses, the litigation settled by the Johnson license did not involve assertion of the ’327 patent.
Compare J.A. 10411 (Johnson), with J.A. 10398 (Daikin)
and J.A. 10409 (Schneider). While all three licenses are for
EcoFactor’s entire patent portfolio, Mr. Kennedy opined
that the value of a settlement license is almost entirely attributable to the asserted patents. J.A. 5767–68 at 631:21–
632:1 (“These license agreements are for the portfolio . . . .
But in the real world, what the focus is is on the asserted
patents. And then when the agreement is done, there’s –
the rest of the patents are thrown in usually either for
nothing or very little additional value.”). According to
Mr. Kennedy’s methodology, this would attribute no “or
very little” value to the ’327 patent in arriving at the $X
rate purportedly applied in the Johnson license.
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16 ECOFACTOR, INC. v. GOOGLE LLC
To be sure, the licenses are relevant to a reasonable
royalty analysis. The “whereas” recital in each license
states EcoFactor’s belief that $X is a reasonable royalty for
its patent portfolio, J.A. 10389; J.A. 10400; J.A. 10411, and
could therefore be relied upon as an indication of the
amount that EcoFactor would have accepted as a willing
licensor. Georgia-Pacific, 318 F. Supp. at 1121 (reasonable
royalty analysis “requires consideration not only of the
amount that a willing licensee would have paid for the patent license but also of the amount that a willing licensor
would have accepted”). Mr. Kennedy, however, opined that
the unilateral assertion in each license’s “whereas” recital
evidenced the licensees’ agreement to pay the $X royalty
rate. J.A. 5778 at 642:13–15 (“One of the key [Georgia-Pacific factors] is the . . . $[X] per unit that other people have
paid.”); J.A. 5779 at 643:15–16 (“Google should pay the
same rate as comparable license[e]s”). This assertion by
Mr. Kennedy—that prior willing licensees had agreed to
the $X royalty rate—is not supported by the licenses. The
licenses, individually or in combination, do not support
Mr. Kennedy’s opinion that the licensees were paying the
$X rate, agreed to pay the $X rate, or agreed that the $X
rate was a reasonable royalty.
B. Testimony from EcoFactor’s CEO
Apart from the licenses themselves, the only evidence
upon which Mr. Kennedy relied was the testimony of EcoFactor’s CEO, Shayan Habib. See, e.g., J.A. 5739–40 at
603:25–604:2; J.A. 5794 at 658:17–18 (“Well, I have the testimony of Mr. Habib about how [the lump-sum license payment] was calculated, but I don’t have any
documentation.”); J.A. 5804–06 at 668:6–670:20; J.A. 5811
at 675:22–24 (“Q. And apart from what Mr. Habib has told
you, you don’t have any other information showing how
$[X] was arrived at? A. That’s correct.”). Mr. Habib’s testimony does not provide a sufficient basis for Mr. Kennedy’s testimony that Daikin, Schneider, and Johnson
agreed to pay a royalty of $X per unit.
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ECOFACTOR, INC. v. GOOGLE LLC 17
Mr. Habib testified that the lump-sum payments for
each of the three licenses was calculated by multiplying the
licensee’s past and future projected sales by the $X per unit
rate. See J.A. 5667 at 531:19–23 (Habib testimony on Daikin license); J.A. 5668–69 at 532:23–533:2 (Habib testimony on Schneider license); J.A. 5669–70 at 533:25–534:3
(Habib testimony on Johnson license). Mr. Habib’s claim
regarding calculation of the lump-sum amounts is not supported by any record evidence. When asked about the basis
for his understanding of the lump-sum calculations,
Mr. Habib testified that neither he nor anyone else at EcoFactor had been given access to sales data for Daikin,
Schneider, or Johnson. J.A. 5691 at 555:13–20; J.A. 5695
at 559:6–13; J.A. 5697–98 at 561:21–562:4. Nor did
Mr. Habib reference data from which any market predictions were made regarding past or projected sales for any
of the licensees. Mr. Kennedy similarly testified that he
had not seen any licensee sales data or documentation regarding calculation of the lump-sum license payments, but
that he relied on Mr. Habib’s testimony that the calculations were based on the $X per unit rate. J.A. 5794 at
658:8–25; J.A. 5797 at 661:15–24; J.A. 5804 at 668:6–25.
Mr. Habib stated that the origin of the $X per unit rate was
his “general understanding” of the relevant industry.
J.A. 5670 at 534:19–25. He then testified, with no evidentiary support and contrary to the language of the licenses
themselves, that the three companies all agreed to an $X
per unit royalty rate. J.A. 5671 at 535:5–11 (“Q. Did the
fact that these three companies all agreed to a $[X] per-unit royalty rate help with your understanding of what is
or is not reasonable? A. Yes. It did. So, you know, if three
companies were willing to accept it, then yeah. That further made it clear to me that it was a reasonable royalty
rate that was being accepted by counterparties.”).
Mr. Habib’s testimony amounts to an unsupported assertion on behalf of EcoFactor that the $X rate was applied
to calculate the lump-sum payment amounts. Mr. Habib
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18 ECOFACTOR, INC. v. GOOGLE LLC
testified that neither he nor anyone at EcoFactor had
knowledge about the sales figures which would be needed
to convert the $X royalty rate into the lump-sum payment
amounts. See J.A. 5691 at 555:12–20; J.A. 5695 at 559:6–
13; J.A. 5697–98 at 561:21–562:4. His testimony referenced no evidentiary support. It did not include actual,
projected, or even estimated sales figures. He relied entirely on his asserted “general understanding of the space,”
J.A. 5670 at 534:22–23, without ever explaining how a general understanding informed him as to the missing sales
data. In the absence of any evidence, Mr. Habib’s testimony amounts to an unsupported assertion from an interested party. His testimony cannot provide a sufficient
factual basis for Mr. Kennedy to provide a reliable opinion
that the licensees agreed to pay the $X rate.
Finally, the dissents suggest that the $X royalty rate is
supported by “[Mr. Habib’s] belief – developed with input
from non-attorney advisors, who (unlike him) had access to
his competitors’ confidential sales data and projections –
that the lump-sum amounts were calculated based on an
$X rate.” Stark Dissent at 5; see also Reyna Dissent at 3–
4. This is inaccurate. During the pretrial conference about
Google’s Daubert motion to exclude Mr. Kennedy’s testimony, Google explained there is no record evidence that
any advisors had access to licensees’ sales data, no evidence
of calculations based upon sales data, and no reference to
any of this in Mr. Kennedy’s report. S.A. 265–66 at 68:4–
69:14. The district court ruled that Mr. Kennedy could not
rely upon a claim that his opinion was based upon anyone
having access to sales data. S.A. 266 at 69:15 (“Then he’s
not going to get to say it.”); see also S.A. 1109 at 10:8–11
(“THE COURT: So what I’m hearing is that – that the only
thing that your expert is going to rely on is these settlement
agreements; is that fair? MR. AICHELE: For the royalty
calculation, yes.”); S.A. 1110–11 at 11:20–12:4 (district
court holding that with regard to sales data allegedly provided to advisors: “anything that the Plaintiff’s expert
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ECOFACTOR, INC. v. GOOGLE LLC 19
intends at trial to say he relied on needs to be in your hands
by the end of this week”). At trial, when Mr. Habib similarly tried to claim that a lump-sum amount was calculated
using confidential financial information that was shared
with counsel, this testimony was objected to and
Mr. Habib’s answer was stricken—a ruling not appealed.
J.A. 5670 at 534:4–15. There is no record evidence that
Mr. Habib or Mr. Kennedy relied upon advisors who had
access to licensees’ actual or projected sales data. Judge
Stark’s partial dissent states that this created a factual dispute for the jury to resolve. Stark Dissent at 4–8. Respectfully, there was no factual issue; it is not the province of
the jury to credit testimony which was expressly excluded
from trial.
C. Additional Record Evidence
EcoFactor points to additional evidence in the record,
not referenced by Mr. Kennedy, which EcoFactor argues
supports Mr. Kennedy’s opinion regarding the $X royalty
rate. Appellee Br. 21–22. This additional evidence is not
relevant to the inquiry at hand. 10 When evaluating the
10 Judge Reyna’s partial dissent suggests that market
share data could have permitted a calculation that the
lump sums were based on an $X rate. Reyna Dissent at 4–
5. Mr. Kennedy did not rely upon any market share data
to calculate the $X royalty rate that he says the three licensees agreed to pay. J.A. 5797 at 661:15–24; J.A. 5805–
06 at 669:19–670:1 (“Q. Beyond what . . . the ‘whereas’
clause states in that agreement and what Mr. Habib told
you, you didn’t do anything else to confirm that the lump
sum paid by Johnson Controls was derived by applying the
rate of [$X] to its past and projected product sales? A.
Yeah. I’d say those two things, both parties signing the
agreement and my experience, are – that, I believe, is – encompasses what I did.”). Mr. Kennedy used the market
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20 ECOFACTOR, INC. v. GOOGLE LLC
sufficiency of an expert’s factual basis for the propositions
asserted as the expert’s opinion, a court examines the evidence on which the expert purports to rely. Rule 702 requires the expert’s relied-upon facts or data—not the
record as a whole—to constitute a sufficient basis for the
expert’s testimony. FED. R. EVID. 702(b) (requiring expert
testimony to be “based on sufficient facts or data” (emphasis added)).
EcoFactor argues additional record evidence supports
a finding that at least the Johnson license applied the $X
royalty rate, which renders Mr. Kennedy’s testimony admissible. Not so, even apart from the fact that Mr. Kennedy did not rely on such evidence. Mr. Kennedy relied on
the three licenses as collectively proving an established
royalty rate. J.A. 5778–79 at 642:9–643:18 (Kennedy testimony referencing the $X rate “that other people have
paid” and asserting “Google should pay the same rate as
comparable licenses”); see also J.A. 5762–73 at 626:25–
637:25 (Kennedy testimony referencing the Daikin, Schneider, and Johnson licenses in his analysis of Georgia-Pacific
factor 1). Mr. Kennedy did not suggest that any single license was indicative of an established rate for the patented
technology.
D. Conclusion on Mr. Kennedy’s Testimony
For the foregoing reasons, a fundamental premise of
Mr. Kennedy’s testimony—that Daikin, Schneider, and
Johnson agreed to pay the $X rate—was not based on sufficient facts or data, as required by Rule 702(b). Mr. Kennedy’s reliance on the unilateral “whereas” recital of each
license as representing the licensees’ agreement to the $X
rate was untethered from the licenses and unsupported by
the evidence on which Mr. Kennedy relied. Gen. Elec. Co.
share data only as a check on the lump sum amounts. E.g.,
J.A. 5804 at 668:6–16.
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ECOFACTOR, INC. v. GOOGLE LLC 21
v. Joiner, 522 U.S. 136, 146 (1997) (“[N]othing in either
Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to
existing data only by the ipse dixit of the expert.”). “Rule
702 sets forth the overarching requirement of reliability,
and an analysis of the sufficiency of the expert’s basis cannot be divorced from the ultimate reliability of the expert’s
opinion.” FED. R. EVID. 702 advisory committee’s note to
2000 amendment. This deficiency renders Mr. Kennedy’s
testimony unreliable and therefore inadmissible under
Rule 702.
This is not a case where the relevant evidence can reasonably support competing conclusions. Whether prior licensees agreed to pay the $X rate was not the subject of
estimation or approximation in Mr. Kennedy’s reasonable
royalty analysis. In other words, this is not an issue involving unavoidable imprecision on which Mr. Kennedy’s
expertise was brought to bear. To the contrary, this was a
concrete factual premise of Mr. Kennedy’s testimony,
which he asserted to be true based on the licenses and the
testimony of Mr. Habib. There can be no doubt that this
evidence fails to provide “good grounds” for Mr. Kennedy’s
testimony regarding the licensees’ agreement to pay $X per
unit. See Daubert, 509 U.S. at 590. Nor did Mr. Kennedy
have access to evidence of relevant sales figures to verify
whether the lump sums corresponded to a particular unitbased rate. Without this fundamental premise, Mr. Kennedy’s testimony unravels. 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.
The district court’s decision to admit Mr. Kennedy’s
unreliable testimony was undoubtedly prejudicial. The $X
rate was crucial to Mr. Kennedy’s damages analysis; he
opined that it would be both the starting point and the outcome of a hypothetical negotiation between EcoFactor and
Google. J.A. 5778 at 642:13–15 (“One of the key [Georgia-
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22 ECOFACTOR, INC. v. GOOGLE LLC
Pacific factors] is the . . . $[X] per unit that other people
have paid.”); J.A. 5779 at 643:15–18 (“Google should pay
the same rate as comparable licenses . . . . I think that
would be a very reasonable and conservative first offer.”);
J.A. 5780 at 644:13–16 (“So this is the final outcome. I believe after weighing all the positives and negatives, some
quantitative and some qualitative, it would – they would
agree to $[X] per unit.”).
On this record, we cannot be sure “that the error did
not influence the jury or had but a very slight effect on its
verdict.” Carlson v. Bioremedi Therapeutic Sys., Inc., 822
F.3d 194, 202 (5th Cir. 2016) (quoting Kelly v. Boeing Petroleum Servs., Inc.,
61 F.3d 350, 361 (5th Cir. 1995)). EcoFactor and Judge Reyna’s partial dissent suggest that
there was other evidence that supported the jury verdict.
Appellee Br. 8; Reyna Dissent at 13–14. A harmless or
prejudicial error analysis, however, is not a sufficiency of
the evidence analysis. On this record, we cannot be sure
that the admission of Mr. Kennedy’s testimony did not influence the jury’s damages award. The evidence relied
upon by Mr. Kennedy does not provide a sufficient basis for
his testimony that the lump-sum settlement licenses were
based on a royalty rate of $X per unit. The district court
therefore abused its discretion by denying Google’s motion
to exclude Mr. Kennedy’s testimony. In light of this prejudicial error, the district court abused its discretion by denying Google’s motion for a new trial on damages. We reverse
the district court’s denial of Google’s motion for a new trial
and remand for a new trial on damages.
II. Proper En Banc
EcoFactor challenges the nature of this en banc proceeding. Because the en banc panel consists of fewer than
all judges in regular active service, as required by 28 U.S.C.
§ 46(c), EcoFactor argues this en banc court is statutorily
improper and cannot alter the decision of the three-judge
panel. We do not agree.
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ECOFACTOR, INC. v. GOOGLE LLC 23
The Judicial Conduct and Disability Act, which gives
the Judicial Council of each circuit authority to temporarily
remove judges from hearing “further cases,” 28 U.S.C.
§ 354(a)(2)(A), was enacted after
28 U.S.C. § 46(c). Judicial
Conduct and Disability Act of 1980,
Pub. L. No. 96-458, 94
Stat. 2035 (1980) (codified at 28 U.S.C. §§ 351–64);
62 Stat.
871 (1948) (codified at
28 U.S.C. § 46(c)). Congress did not
limit the remedy of temporary suspension to apply only to
panel cases. “[F]urther cases” therefore includes cases
heard en banc pursuant to
28 U.S.C. § 46(c). See Cannon
v. Univ. of Chi.,
441 U.S. 677, 696–98 (1979) (Congress is
presumed to legislate with knowledge of the law, and a
newly-enacted statute is presumed to be harmonious with
existing law and judicial concepts).
Indeed, there are strong reasons why Congress authorized such a remedy to include en banc cases. En banc rehearing is not ordinarily undertaken unless “necessary to
secure or maintain uniformity of the court’s decisions” or
“the proceeding involves one or more questions of exceptional importance.” FED. R. APP. P. 40(b). Misconduct of
various forms as well as “mental or physical disability” are
among the grounds for invocation of the Judicial Conduct
and Disability Act. 28 U.S.C. § 351(a). It would be anomalous to find that Congress allowed a Judicial Council to
suspend judges from hearing cases, but excepted from that
suspension only those cases of exceptional importance. We
do not find such an anomaly in the statutes.
CONCLUSION
We have considered the parties’ remaining arguments
and find them unpersuasive. For the foregoing reasons, we
reverse the district court’s denial of Google’s motion for a
new trial on damages. We reinstate the portions of the
panel opinion that pertain to issues other than damages, in
which the panel rejected Google’s attempt to appeal the district court’s denial of summary judgment and affirmed the
Case: 23-1101 Document: 213 Page: 24 Filed: 05/21/2025
24 ECOFACTOR, INC. v. GOOGLE LLC
district court’s denial of Google’s motion for JMOL of noninfringement.
AFFIRMED-IN-PART, REVERSED-IN-PART, AND
REMANDED
COSTS
No costs.
Case: 23-1101 Document: 213 Page: 25 Filed: 05/21/2025
United States Court of Appeals
for the Federal Circuit
______________________
ECOFACTOR, INC.,
Plaintiff-Appellee
v.
GOOGLE LLC,
Defendant-Appellant
______________________
2023-1101
______________________
Appeal from the United States District Court for the
Western District of Texas in No. 6:20-cv-00075-ADA, Judge
Alan D Albright.
______________________
REYNA, Circuit Judge, with whom STARK, Circuit Judge,
joins, concurring in part and dissenting in part. 1
From the outset, this appeal has been about whether
the district court abused its discretion by admitting EcoFactor’s expert opinion on damages and denying Google’s
motion for a new trial. On September 25, 2024, we issued
an order that limited the parties’ briefing and argument to
“the district court’s adherence to Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals,
1 I join the parts of the en banc court’s opinion (1) reinstating portions of the June 3, 2024 panel opinion and
(2) holding that this en banc proceeding is proper.
Case: 23-1101 Document: 213 Page: 26 Filed: 05/21/2025
2 ECOFACTOR, INC. v. GOOGLE LLC
Inc., 509 U.S. 579 (1993), in its allowance of testimony from
EcoFactor’s damages expert assigning a per-unit royalty
rate to the three licenses in evidence in this case.”
But now, the en banc court abandons the scope of this
proceeding that we officially set. The en banc court does
speak to Rule 702 and Daubert, but only when reciting
well-known law. The crux of its analysis focuses exclusively on its new theory that this case is about contract interpretation as a question of law.
The en banc court’s sudden shift deprives EcoFactor of
notice and an opportunity to be heard, and avoids what this
appeal is really about, i.e., the extent to which district
courts have discretion to decide fact-based questions of admissibility under Rule 702 and Daubert. And after only
finding fault with a narrow point of Mr. Kennedy’s testimony on contract interpretation grounds, the en banc court
appears to inexplicably rule that Mr. Kennedy’s entire testimony should have been excluded.
Most extraordinarily, the en banc court’s new theory is
not dispositive to the disposition of this case. Assuming
that the en banc court’s conclusion on contract interpretation is correct, Fifth Circuit law requires us to affirm under
the harmless error doctrine. The en banc court’s one conclusory paragraph on this issue states that Mr. Kennedy’s
testimony “was undoubtedly prejudicial” without providing
any explanation why it was an abuse of discretion for the
district court to rule otherwise. This may prove to be the
most consequential step the en banc court takes because,
under its logic, even when improperly admitted evidence is
wholly duplicative of properly admitted evidence, the district court has no discretion but to decide that the erroneous admission was per se prejudicial. This is not the
correct standard under Fifth Circuit law for vacating a jury
verdict.
For the following reasons, I respectfully dissent. This
dissent is divided into two parts. In the first part, I address
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ECOFACTOR, INC. v. GOOGLE LLC 3
the admissibility of Mr. Kennedy’s expert opinion and the
en banc court’s departure from the question at hand. In
the second part, I address the en banc court’s failure to conduct any meaningful harmless error analysis.
I. Admission of Expert Testimony
A
The issue before the en banc court is whether the district court abused its discretion in ruling that Mr. Kennedy’s expert testimony is supported by sufficient facts or
data under Federal Rule of Evidence 702. Mr. Kennedy offered his expert opinion on “the amount of patent damages
in this case,” and ultimately concluded that Google LLC
(“Google”) should pay damages based on a royalty rate of
$X per unit. J.A. 5740 (604:3–17). Mr. Kennedy based his
conclusion on the Georgia-Pacific factors, which the en
banc court affirms is, as a general matter, “a sound approach, well supported in our precedent.” Maj. Op. 11.
Mr. Kennedy’s testimony is supported by license agreements between EcoFactor, Inc. (“EcoFactor”) and Johnson
Controls, Inc. (“Johnson”), Daikin Industries, Ltd. (“Daikin”), and Schneider Electric, USA (“Schneider”).
J.A. 10389–399; J.A. 10400–410; J.A. 10411–419. All
three licenses are lump sum licenses, and each license includes a representation from EcoFactor that the lump sum
amounts were calculated based on a reasonable royalty of
$X per-unit. J.A. 10389; J.A. 10400; J.A. 10411.
Mr. Kennedy’s testimony is further supported by testimony from EcoFactor’s Chief Executive Officer and signatory to all three licenses, Mr. Habib. Mr. Habib testified
extensively about the $X rate, including the following exchange:
Q. Could you explain to us where the $[X] per-unit
royalty rate came from that we are seeing in each
of these agreements?
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4 ECOFACTOR, INC. v. GOOGLE LLC
A. Sure. So it comes from my general understanding of the space. I’ve been in the industry for seven
years and I have an understanding of the market
and what is reasonable for the technologies that we
have. So that’s one of the inputs. The other is I have
a very strong understanding of EcoFactor itself and
our margins and what the value of the product itself is. And thirdly, it comes from consulting with
advisors.
J.A. 5670–71 (534:19–535:4). 2 Mr. Habib also testified that
“[t]he $[X rate] is our baseline policy,” and that it was his
understanding that Johnson, Daikin, and Schneider
agreed to the $X rate. J.A. 5671 (535:5–11, 535:16);
J.A. 5672 (536:17–18) (“So, firstly, my understanding was
that all of it is based on $[X] per infringing unit.”).
Mr. Kennedy’s testimony is also supported by undisputed market share data. First, Mr. Habib testified about
Google’s sales compared to the sales of Johnson, Daikin,
and Schneider, and he concluded that “as it relates to the
smart thermostat business, they’re actually either quite
new or very small in our space specifically.” J.A. 5666
(530:8–19); J.A. 5672–73 (536:12–537:3). Google and its
expert did not dispute any of this data. J.A. 6255–57
(1119:5–1121:5).
Second, Mr. Kennedy relied on Mr. Habib’s testimony,
and Mr. Kennedy testified about the relative market
shares of Google, Johnson, Daikin, and Schneider.
J.A. 5746 (610:1–20), J.A. 10467. Google and its expert
2 Regardless of whether Mr. Habib was permitted to
testify about his advisors’ knowledge of the licensees’ confidential sales data, Maj. Op. 18–19, Mr. Habib’s testimony
at J.A. 5670–71 (534:19–535:4) was properly before the
jury without objection and thus can support Mr. Kennedy’s
testimony.
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ECOFACTOR, INC. v. GOOGLE LLC 5
again did not challenge this data or Mr. Kennedy’s testimony. J.A. 6257–58 (1121:6–1122:13).
A natural conclusion that Mr. Kennedy and the jury
could reasonably draw from this data is that if Google’s
market share and thus sales are a given multiple of those
of Johnson, Daikin, and Schneider, all else being equal,
Google should pay a lump sum amount that is also the
given multiple of what each licensee paid. Additionally,
another natural conclusion reasonably drawn from the evidence of the undisputed market share of the three licensees is that the market share data provides an estimate of
the licensees’ sales. Given the known lump sum amounts,
a jury could determine whether the lump sum amount is
based on the $X rate. Mr. Habib testified to this exact
point, and again Mr. Kennedy relied on Mr. Habib’s following testimony:
Q. So earlier you had mentioned that the three
companies we’ve been discussing are fairly large.
Did that help inform you as to whether the total
sums that were paid in each of the agreements we
looked at were reasonable?
A. Yes. It did. So, firstly, my understanding was
that all of it is based on $[X] per infringing unit.
Secondly, I understood what these companies do.
You know, they’re pretty large, but in our space,
they’ve been relatively new or more recent. And
there are high barriers to entry, as we’ve heard in
previous testimony, in our space. . . . And so it
makes sense that their sales number[s] would be
low since they’d recently started.
J.A. 5672 (536:12–24). This undisputed data further supports Mr. Kennedy’s testimony by serving as a reasonableness check on both the $X rate and his ultimate damages
opinion.
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6 ECOFACTOR, INC. v. GOOGLE LLC
In light of the record, the district court did not abuse
its discretion in ruling that the three license agreements,
Mr. Habib’s testimony, and undisputed market share data
constitute sufficient facts or data under Rule 702. 3 Rule
702 does not require that expert opinion be based on undisputed or dispositive facts or data. Rather, Rule 702 recognizes that there may be multiple versions of the facts and
does not “authorize a trial court to exclude an expert’s testimony on the ground that the court believes one version of
the facts and not the other.” FED. R. EVID. 702 advisory
committee’s note to 2000 amendment; id. (“The evidentiary
requirement of reliability is lower than the merits standard
of correctness.” (citations omitted)). This is so because “the
trial court’s role as gatekeeper is not intended to serve as a
replacement for the adversary system.” United States v.
14.38 Acres of Land Situated in Leflore Cnty., Miss.,
80
F.3d 1074, 1078 (5th Cir. 1996). This is one reason why
district courts have “broad discretion” in deciding admissibility, especially on fact-intensive questions such as this,
and appellate courts should not find error “unless the ruling is manifestly erroneous.” Guy v. Crown Equip. Corp.,
394 F.3d 320, 325 (5th Cir. 2004) (citations omitted); Roman v. W. Mfg., Inc.,
691 F.3d 686, 692 (5th Cir. 2012)
(“Wide latitude is granted to what the trial court decides.”).
The en banc court does not establish that the district court
committed manifest error. Given the facts of this case, the
correct standard under Rule 702, and the broad discretion
of district courts, the inquiry should end here.
3 For many of the same reasons, the district court did
not abuse its discretion in ruling that Mr. Kennedy’s testimony is the product of reliable principles and methods.
The en banc court does not meaningfully discuss, let alone
find fault with, Mr. Kennedy’s methodology.
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ECOFACTOR, INC. v. GOOGLE LLC 7
B
But the inquiry does not end, because the en banc court
opens a new theory within its Rule 702 analysis: contract
interpretation. Maj. Op. 12–16 (“Contract interpretation—
including whether the contract is ambiguous—is a question
of law, which we answer de novo.”). This is not a case of
contract interpretation. Neither party briefed or argued
that any issue presented is one of contract interpretation
subject to de novo review. This new theory is contrary to
the scope of the en banc appeal. We limited the scope of
the en banc proceeding to “the district court’s adherence to
Federal Rule of Evidence 702 and Daubert [] in its allowance of testimony from EcoFactor’s damages expert assigning a per-unit royalty rate to the three licenses in evidence
in this case.” EcoFactor, Inc. v. Google LLC, 115 F.4th 1380
(Fed. Cir. 2024) (“En Banc Order”). We did not order that
the scope of the appeal focus on contract interpretation. If
the en banc court determined, which it did not, that this
appeal should address contract law, then it should have so
ordered, and the parties and the twenty-one amici could
have briefed matters of contract law. The en banc court’s
sua sponte transformation of this case into one of contract
interpretation and resolution of that issue in favor of
Google raises party presentation concerns and deprives
EcoFactor of notice and an opportunity to be heard. See,
e.g., Astellas Pharma, Inc. v. Sandoz Inc.,
117 F.4th 1371,
1377–79 (Fed. Cir. 2024). 4
4 Notably, even accepting the en banc court’s contract interpretation theory, the Johnson license does not
contain any other clauses that are pertinent to the $X rate.
The en banc court identifies no such language, and instead,
only discards the Johnson license on apportionment
grounds, which are not at issue in this proceeding. Maj.
Op. 15 n.9; En Banc Order; ECF No. 165. Thus the
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8 ECOFACTOR, INC. v. GOOGLE LLC
The en banc court’s conclusion that the three licenses
at issue do not legally bind the contracting parties to the
$X rate is of no moment. This is the wrong question to ask.
It is undisputed that all three licenses legally bind the contracting parties to a lump sum amount, not a royalty rate.
The right question to ask is whether, even though the three
parties are not legally bound to the $X rate, there are sufficient facts or data to support Mr. Kennedy’s testimony that
$X is a reasonable royalty rate. And as I previously laid
out, there are sufficient facts.
C
As an afterthought to its contract interpretation analysis, the en banc court mishandles or ignores evidence
other than the terms of the three licenses that independently support Mr. Kennedy’s testimony. First, the en
banc court impermissibly weighs the credibility of
Mr. Habib’s testimony in an effort to diminish its effect.
What the en banc court does not do, however, is explain
how the district court’s presumably contrary view of
Mr. Habib’s testimony amounts to an abuse of discretion.
The en banc court reasons that Mr. Habib’s testimony is
not supported by “any record evidence” and is nothing more
than an “unsupported assertion.” Maj. Op. 17. This reasoning misunderstands the very purpose of a fact witness,
whose basis for testifying is personal knowledge. FED. R.
EVID. 602. Google did not object to Mr. Habib’s testimony
as lacking personal knowledge, being speculative, or constituting hearsay, and thereby missed its opportunity to
challenge Mr. Habib’s testimony via the proper avenue for
these concerns. FED. R. EVID. 103.
Johnson license unambiguously supports Mr. Kennedy’s
opinion that EcoFactor and Johnson applied the $X rate to
reach the lump sum amount.
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ECOFACTOR, INC. v. GOOGLE LLC 9
The en banc court’s reasoning could perhaps apply had
Mr. Habib testified as an expert himself, thereby requiring
a sufficient evidentiary basis to support his testimony before a jury could assign his testimony any weight. But it is
not the role of the en banc court to determine that
Mr. Habib’s personal knowledge of the relevant industry
and of EcoFactor’s finances and technology, as well as his
consultations with advisors, are worthless and thus cannot
be relied upon by Mr. Kennedy. Critically, as Google
acknowledged, there is no record evidence that an expert
in Mr. Kennedy’s field would not typically rely on fact witness testimony such as Mr. Habib’s. Oral Arg. 10:40–
12:20. 5 The en banc court’s outright dismissal of Mr.
Habib’s testimony lays bare that the en banc court has chosen to believe one version of the facts over the other. This
is not the gatekeeping function prescribed to district court
judges, let alone appellate judges reviewing under an
abuse of discretion standard of review. FED. R. EVID. 702
advisory committee’s note to 2000 amendment; 14.38 Acres
of Land Situated in Leflore Cnty., Miss., 80 F.3d at 1078;
XY, LLC v. Trans Ova Genetics, L.C.,
890 F.3d 1282, 1295
(Fed. Cir. 2018) (“The jury holds the exclusive function of
appraising credibility and determining the weight to be
given to the testimony.” (cleaned up)).
The en banc court also fails to address whether the undisputed market share data and Mr. Habib’s testimony
about that data support Mr. Kennedy’s opinion. It is
within the discretion of the district court to rule that the
undisputed market share data supports Mr. Kennedy’s
opinion in two ways: First, the total damages amount
Mr. Kennedy opined that Google should pay was proportionate on a market share basis to the total amount Johnson, Daikin, and Schneider paid EcoFactor; and second, the
5 Available at https://oralarguments.cafc.uscourts.
gov/default.aspx?fl=23-1101_03132025.mp3.
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10 ECOFACTOR, INC. v. GOOGLE LLC
undisputed market share data allowed Mr. Kennedy to determine whether the three lump sum amounts were based
on the $X rate. Yet the en banc court never addresses these
facts on which Mr. Kennedy based his expert opinion.
D
Even accepting the en banc court’s ruling that the district court erred in admitting Mr. Kennedy’s testimony that
Johnson, Daikin, and Schneider agreed to the $X rate, the
en banc court errs in its apparent remedy: wholesale exclusion of Mr. Kennedy’s testimony. By exclusively focusing
its analysis on whether Johnson, Daikin, and Schneider
agreed to the $X rate, the en banc court only addresses and
finds fault with Mr. Kennedy’s analysis under Georgia-Pacific factor one, “[t]he royalties received by the patentee for
the licensing of the patent in suit.” Georgia-Pacific Corp.
v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120
(S.D.N.Y. 1970). This is effectively a subset of Mr. Kennedy’s testimony and analysis. The en banc court explicitly
concedes that “the Daikin license could be relied upon as
evidence of the royalty rate sought by EcoFactor as the
willing licensor,” and that “Mr. Kennedy could have relied
upon the Schneider license as evidence of the amount EcoFactor would agree to as the willing licensor.” 6 Maj.
Op. 13–14. This is exactly what Mr. Kennedy did—he relied on the Johnson, Daikin, and Schneider licenses as evidence of Georgia-Pacific factors one, four, and fifteen,
among others. So, even if the en banc court were correct
that Mr. Kennedy’s testimony under Georgia-Pacific factor
one is not supported by sufficient facts or data, the en banc
court has provided no adequate rationale as to why it appears that its sole remedy is wholesale exclusion of
Mr. Kennedy’s testimony.
6 While the en banc court does not explicitly say as
much, the same is true of the Johnson license.
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ECOFACTOR, INC. v. GOOGLE LLC 11
II. Prejudicial or Harmful Error
It is well-established under Fifth Circuit law that the
party moving for a new trial bears the burden to show that
any error in admission is prejudicial such that it affected
substantial rights and, in view of the entire record, “influenced the jury or had more than a very slight effect on its
verdict.” Harris v. FedEx Corp. Servs., Inc., 92 F.4th 286,
303–04 (5th Cir. 2024) (cleaned up); Cruz v. Cervantez,
96 F.4th 806, 814 (5th Cir. 2024). Additionally, the Fifth
Circuit has previously recognized that a moving party does
not carry its burden to show prejudicial or harmful error
when erroneously admitted evidence is duplicative of
properly admitted evidence. See, e.g., Williams v. Manitowoc Cranes, L.L.C.,
898 F.3d 607, 627 (5th Cir. 2018).
Here, Google makes no meaningful showing as to how
Mr. Kennedy’s opinion that $X was a reasonable royalty
rate affected its substantial rights. Nor can it.
This is not a case where but for expert testimony, the
$X rate would not have been before the jury and thus any
erroneous admission skewed the jury’s perspective. The
record shows that the precise testimony from Mr. Kennedy
that the en banc court identifies as problematic and Google
repeatedly identified as “powerful,” Oral Arg. 1:01:43–
1:02:26, was also put to the jury, without objection, from
Mr. Habib:
Q. So could you tell me a little bit about the context
of this agreement with Daikin?
A. Absolutely. This is an agreement which is subject -- or post litigation. And it’s a settlement agreement where we agreed to a reasonable royalty
calculation of $[X] per unit for estimated past and
Daikin’s projected future sales of the accused products. . . .
Q. Can you tell me how [the Schneider lump sum]
was derived?
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12 ECOFACTOR, INC. v. GOOGLE LLC
A. Again, my understanding of this number is that
this was based off of taking the $[X] of our base royalty rate and multiplying it by the past and future
projected sales for Schneider. And we arrived at
this [lump sum] number. . . .
Q. Can you tell me how [the Johnson lump sum]
was derived?
A. Again, very similar to the other two agreements.
It was $[X] multiplied by their past and future projected sales. And by doing that, we arrived at this
[lump sum] number. . . .
Q. Did the fact that these three companies all
agreed to a $[X] per-unit royalty rate help with your
understanding of what is or is not reasonable?
A. Yes. It did. So, you know, if three companies were
willing to accept it, then yeah. That further made it
clear to me that it was a reasonable royalty rate that
was being accepted by counterparties. . . .
J.A. 5667–71 (531:6–12, 532:23–533:2, 533:25–534:3,
535:5–11) (emphasis added). The remainder of Mr. Habib’s
testimony about the $X rate and the parties’ relative market share was also properly before the jury. As were all
three licenses that recite the $X rate, which were introduced during Mr. Habib’s testimony. J.A. 5666–5669
(530:20–533:12). Although Google attempted in a pretrial
motion in limine to prevent EcoFactor from introducing the
unredacted licenses, it concedes that the unredacted license agreements and the $X rate can once again come into
evidence. Oral Arg. 7:55–8:00, 8:45–9:15. As will the testimony of Mr. Habib, to which Google never objected.
The record also shows that the jury received evidence
that EcoFactor and at least one licensee, Johnson, agreed
to the $X rate. The following email exchange between EcoFactor and Johnson during the time they negotiated the
Case: 23-1101 Document: 213 Page: 37 Filed: 05/21/2025
ECOFACTOR, INC. v. GOOGLE LLC 13
Johnson license indicates that Johnson accepted the $X
rate:
2. [Johnson:] By characterizing these as “rates,”
may we assume that they apply to all licensees? Or,
have others paid less than the rates? Obviously,
JCI wouldn’t want to do a deal that would place it
at a competitive disadvantage relative to other licensees. [EcoFactor:] CORRECT, THESE APPLY
TO EVERYONE
3. [Johnson:] We are applying the rates to the time
period that EcoFactor has said is implicated in the
investigation . . . .
J.A. 10797–99 (emphasis added). 7
Even without Mr. Kennedy’s repetitive testimony, the
jury was inundated with evidence of the $X rate. And,
while EcoFactor sought damages based on the $X rate, the
jury returned a verdict that appears to be based on a much
smaller royalty rate. It was therefore Google’s burden to
show that even though the jury discounted the $X rate and
the vast majority of EcoFactor’s evidence about the $X rate
was rightfully before the jury from sources other than
7 The en banc court wrongly dismisses “additional
evidence in the record,” without identifying or discussing
that evidence, on the sole basis that Mr. Kennedy did not
reference that evidence. Maj. Op. 19. While that may be
relevant for purposes of reviewing the district court’s pretrial decision on admissibility, we are reviewing Google’s
motion for a new trial and thus as Google conceded, the entire trial record may be considered. Oral Arg. 19:52–20:51;
Foradori v. Harris, 523 F.3d 477, 506 (5th Cir. 2008) (citation omitted). Thus any prejudicial error analysis must address other record evidence, including EcoFactor’s
negotiation correspondence with Johnson. We err if we fail
to consider all relevant record evidence.
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14 ECOFACTOR, INC. v. GOOGLE LLC
Mr. Kennedy, the admission of Mr. Kennedy’s testimony
affected Google’s substantial rights. Jordan v. Maxfield &
Oberton Holdings, L.L.C.,
977 F.3d 412, 417
(5th Cir. 2020); Koch v. United States,
857 F.3d 267, 277
(5th Cir. 2017). In similar scenarios, the Fifth Circuit has
ruled that any such error is harmless. See, e.g., Williams,
898 F.3d at 627 (“So any error regarding the admission of
the [disputed evidence] was harmless: The similar [undisputed evidence] provided the jury sufficient evidence to
find [the defendant] liable.”); Cruz, 96 F.4th at 814–16
(finding harmless error because the disputed evidence “is
materially duplicative of [the undisputed evidence], such
that admitting it would have added very little” and “ample
evidence supported the jury’s conclusion”); Harris,
92 F.4th
at 304 (“[Appellant] fails to show that [the erroneous admission of expert] testimony affected its substantial rights.
Even without [the] testimony, [the appellee] presented sufficient evidence for a reasonable jury to find [for the appellee].”). In view of the record in this case, the district court
did not abuse its discretion.
The en banc court addresses none of this. Instead, the
en banc court excuses Google for its failure to meet its well-established burden under Fifth Circuit law.
…
I believe the en banc court’s opinion confuses the questions at hand, at times it unjustifiably and improperly exceeds the scope of our appellate review of the district
court’s gatekeeping role by choosing to “believe[] one version of the facts and not the other,” and fails to engage in
any meaningful prejudicial or harmless error analysis. I
respectfully dissent.
Case: 23-1101 Document: 213 Page: 39 Filed: 05/21/2025
United States Court of Appeals
for the Federal Circuit
______________________
ECOFACTOR, INC.,
Plaintiff-Appellee
v.
GOOGLE LLC,
Defendant-Appellant
______________________
2023-1101
______________________
Appeal from the United States District Court for the
Western District of Texas in No. 6:20-cv-00075-ADA, Judge
Alan D Albright.
______________________
STARK, Circuit Judge, with whom REYNA, Circuit Judge,
joins, concurring in part and dissenting in part. 1
As both the Majority and Judge Reyna observe, see Majority Opinion at 4-5; Reyna Dissent at 1-3, we granted en
banc review to “address[] the district court’s adherence to
Federal Rule of Evidence 702 and Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993).” En Banc
1 I join the parts of the Majority Opinion (i) reinstating the portion of the Panel Opinion, ECF No. 18, affirming
the district court’s denial of Google’s motions for summary
judgment and for judgment as matter of law, and (ii) holding that our proceeding is a “Proper En Banc.”
Case: 23-1101 Document: 213 Page: 40 Filed: 05/21/2025
2 ECOFACTOR, INC. v. GOOGLE LLC
Order, ECF No. 76 at 2. Surprisingly, however, the Majority Opinion has very little to say about Rule 702 and Daubert. On these topics, I read the Majority’s holding as so
narrow as to have almost no applicability beyond this case.
Nevertheless, because this is our first en banc review
of a utility patent case in years, I am concerned that today’s
opinion will be misinterpreted as constraining damages experts in a manner not called for by either Rule 702 or Daubert. I fear, too, that the Majority 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.
Lastly, while I share the Majority’s frustration with the
district court’s failure to create a better record for review, I
do not agree that this deficiency is an abuse of discretion
warranting reversal. If any remedy is required, it should
be to vacate and remand for a better explanation from the
district judge, not order him to conduct a new trial.
I explain these three points, and why I believe we
should affirm the district court, in more detail below.
I
The Majority justifies its decision by declaring that
“[t]his is not a case where the relevant evidence can reasonably support competing conclusions,” as instead “[t]here
can be no doubt” that EcoFactor’s three licensees did not
agree to a lump-sum settlement based on an $X rate. Majority Opinion at 21 (emphasis added). To my colleagues,
then, the record is so completely one-sided that the court’s
holding is this: “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.” Id. (emphasis
added).
If I shared this view of the record, I would join the Majority Opinion. I agree that a district court should not
Case: 23-1101 Document: 213 Page: 41 Filed: 05/21/2025
ECOFACTOR, INC. v. GOOGLE LLC 3
admit expert testimony that is unquestionably at odds with
the evidence upon which an expert opinion is based. But I
disagree with my colleagues’ characterization of the record.
As Judge Reyna explains, there was sufficient evidence
supporting Mr. Kennedy’s belief that one or more of EcoFactor’s licensees agreed to an $X rate. Reyna Dissent at
3-14.
The quarrel over how the record before us should be
understood should not, however, obscure an important reality: today’s decision only governs where an expert’s testimony is undoubtedly contrary to a critical fact upon which
the expert relies. Thus, in the vast majority of patent
cases, where the relevant evidence the experts are considering can support competing conclusions, the Majority
Opinion is inapplicable.
II
Notwithstanding the narrowness of the Majority’s
holding, there is a risk that its opinion will be misread as
requiring district judges, in pursuit of their gatekeeping responsibilities, to invade the province of jurors and resolve
fact disputes. Regrettably, my colleagues seem to have
opened the door to turning Rule 702 into a vehicle for judicial resolution of fact disputes, at least with respect to damages experts. My concern is grounded in the Majority’s
apparent conclusion that the district court abused its discretion by permitting Mr. Kennedy to testify to an opinion
that rested on disputed facts. Disputed facts, however, are
not necessarily insufficient facts and data on which a reliable expert opinion may be based.
As we have previously explained – in a case that, like
today’s, applied Fifth Circuit law – when “parties’ experts
rely on conflicting sets of facts, it is not the role of the trial
court to evaluate the correctness of facts underlying one expert’s testimony.” Micro Chem., Inc. v. Lextron, Inc., 317
F.3d 1387, 1392 (Fed. Cir. 2003); see also
id. (“Defendants
confuse the requirement for sufficient facts and data with
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4 ECOFACTOR, INC. v. GOOGLE LLC
the necessity for a reliable foundation in principles and
method, and end up complaining that [the expert’s] testimony was not based on ‘reliable facts.’”); Pipitone v. Biomatrix, Inc.,
288 F.3d 239, 249-50 (5th Cir. 2002) (holding that
jury was entitled to hear expert testimony and decide
whether to accept or reject it after considering whether
predicate facts on which expert relied were accurate). In
reaching this conclusion, both our court and the Fifth Circuit followed guidance from the Advisory Committee that
drafted the 2000 amendments to Rule 702, which directed
that the inquiry into “‘sufficient facts or data is not intended to authorize a trial court to exclude an expert’s testimony on the ground that the court believes one version of
the facts and not the other.’” Micro Chem.,
317 F.3d at
1392 (quoting Adv. Comm. note). The Advisory Committee
reiterated this point in connection with the 2023 amendments to Rule 702, writing: “It will often occur that experts
come to different conclusions based on contested sets of
facts. Where that is so, the Rule 104(a) standard does not
necessarily require exclusion of either side’s experts. Rather, by deciding the disputed facts, the jury can decide
which side’s experts to credit.” (emphasis added).
In my view, a reasonable jury could side with Mr. Kennedy’s interpretation of the disputed facts and, thereby,
find as a fact that EcoFactor entered into lump-sum settlements with licensees who agreed to payments based on an
$X rate. Mr. Kennedy’s interpretation is supported by language in each of the disputed licensing agreements. In
each one, EcoFactor expressly represents its belief that the
lump-sum payment is based on an $X royalty rate, making
it at least marginally more likely that this is truly how the
calculation was done than would be the case if Mr. Kennedy had made up the $X figure himself, solely for the purpose of litigation. J.A. 10389, 10400, 10411. More support
is found in the Schneider Agreement, which includes a provision – “nothing in this clause should be interpreted as
agreement by Schneider that [$X] per unit is a reasonable
Case: 23-1101 Document: 213 Page: 43 Filed: 05/21/2025
ECOFACTOR, INC. v. GOOGLE LLC 5
royalty” (J.A. 10400) (emphasis added) – which could show
that Schneider agreed with EcoFactor to use the $X rate to
calculate the lump-sum it paid, and disputed only whether
that agreed-upon $X rate was reasonable. Mr. Kennedy’s
understanding of the agreements is also based on the testimony of EcoFactor’s CEO, Mr. Habib, who testified that
he signed the license agreements for EcoFactor based on
his belief – developed with input from non-attorney advisors, who (unlike him) had access to his competitors’ confidential sales data and projections – that the lump-sum
amounts were calculated based on an $X rate. J.A. 5667-
71. 2
To be sure, there is also evidence in the record supporting Google’s contrasting belief that none of Schneider, Daikin, or Johnson ever agreed to an $X rate. For example,
the Schneider and Daikin agreements (though not the
Johnson agreement) provide that the “[lump-sum] amount
[paid by each licensee] is not based upon sales and does not
2 The Majority observes, correctly, that Mr. Habib’s
testimony regarding reliance on counsel was stricken, Majority Opinion at 18 (citing J.A. 5670 (striking “our counsel”
from Mr. Habib’s answer regarding advisors with access to
confidential data)), but his testimony that he relied on non-attorney advisors remained in the record, J.A. 5670-71 (Mr.
Habib testifying that $X rate came, in part, “from consulting with advisors”). The jury could reasonably infer that,
consistent with standard practice, these advisors had access to the confidential sales data and projections of the
parties EcoFactor had sued, who later became licensees.
J.A. 5670 (“[S]o I wasn’t allowed to see them because –
which is understandable and I would say normal. Since we
are competitors, they wouldn’t want me to have their confidential financial information.”). A jury could have found
Mr. Habib’s testimony, which Mr. Kennedy relied upon,
J.A. 5739-43, 5763-66, 5769-71, 5797-98, credible.
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6 ECOFACTOR, INC. v. GOOGLE LLC
reflect or constitute a royalty.” J.A. 10391, 10402. If
Google believed this provision unambiguously constitutes
the “express[] disavow[al]” or “reject[ion]” of the $X rate
that the Majority concludes it is, Majority Opinion at 14-
15, Google could have sought partial summary judgment
that $X is not a reasonable royalty rate, or through some
other procedural device asked the district court to interpret
the license agreements. Google did not do so, yet the Majority now decides, as a matter of law, that all three agreements are unambiguous, despite neither party asking us to
do so. See Majority Opinion at 12-16. 3
3 Perhaps because we have no briefing on the issue
of contract interpretation, the Majority does not analyze
the licenses under the applicable state laws. See J.A. 10407
(Schneider license governed by Massachusetts law); J.A.
10395 (Daikin license governed by New York law); J.A.
10417 (Johnson license governed by Delaware law). In
these states, certain contract disputes are treated as issues
of fact that may need to go to a jury. See Bank v. Thermo
Elemental Inc., 888 N.E.2d 897, 909 (Mass. 2008) (explaining “it was error for the judge to rule as a matter of law” on
“meaning of [an unambiguous] provision,” as this “presented a question of fact to be decided by the fact finder –
in this case, the jury”); Amusement Bus. Underwriters v.
Am. Int’l Grp., Inc.,
489 N.E.2d 729, 732 (N.Y. 1985)
(“While the meaning of a contract is ordinarily a question
of law, when a term or clause is ambiguous and the determination of the parties’ intent depends upon the credibility
of extrinsic evidence or a choice among inferences to be
drawn from extrinsic evidence, then the issue is one of
fact.”); Sunline Com. Carriers, Inc. v. CITGO Petroleum
Corp.,
206 A.3d 836, 851-52 (Del. 2019) (holding that trial
court erred in finding contract unambiguous where two “viable” interpretations exist, and so reversing summary
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ECOFACTOR, INC. v. GOOGLE LLC 7
Because the jury could reasonably have credited EcoFactor’s interpretation of the disputed evidence, that evidence can constitute “sufficient facts and data” under Rule
702. A district court does not abdicate its gatekeeping role
by allowing an expert to rely on disputed facts. Thus, the
parties’ dispute over whether EcoFactor’s licensees actually agreed to an $X rate does not make Mr. Kennedy’s testimony inadmissible; it merely shows there was a fact
dispute requiring resolution by a proper factfinder.
That factfinder should not be us. Yet, in deeming there
to be only one correct view of the contested evidence, my
colleagues are taking it upon themselves to resolve the fact
dispute. The Majority finds that the licenses “were insufficient individually or in combination” to support Mr. Kennedy’s conclusion that any of the prior licensees agreed to
the $X rate, id. at 12, even though a jury could reasonably
find otherwise. My colleagues also dismiss Mr. Habib’s testimony as nothing more than “an unsupported assertion
from an interested party,” id. at 18, effectively deciding he
is not credible. While Mr. Habib’s interests in the outcome
of this suit, and his lack of direct access to the licensees’
confidential data, may very well undermine the probative
value of his testimony, that call is to be made by the jurors
who observed him testify. 4 The question of whether Mr.
judgment and remanding to allow “a jury [to] evaluate th[e]
parol evidence to determine the parties’ intent”).
4 Mr. Habib testified at trial, repeatedly and without
objection, that it was his “understanding” the three lump-sum payments were derived by taking the licensees’ “past
and future projected sales and multiplying that by” the $X
royalty rate. J.A. 5667 (Daikin); J.A. 5668-69 (Schneider);
J.A. 5669-70 (Johnson). Google has never contended, either in the district court or on appeal, that Mr. Habib lacks
sufficient personal knowledge to testify as a fact witness on
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8 ECOFACTOR, INC. v. GOOGLE LLC
Habib should be believed when he states as a matter of fact
that the licensees actually agreed to an $X rate is not one
we are privileged to answer.
Given our approach here, I fear that district courts will
take our decision as grounds for limiting damages experts
to relying only on undisputed facts. I am also afraid that
trial judges will read the Majority Opinion as requiring
them, in the exercise of their gatekeeping role, to resolve
fact disputes in Rule 702 proceedings even when no party
asks them to do so. And I worry that today’s opinion may
encourage future panels of this court to engage in improper
appellate factfinding.
III
Finally, like the Majority, I am troubled by the district
court’s failure to put its reasoning on the record. See Majority Opinion at 5-6. In denying Google’s Daubert motion,
the district judge said only: “I’m going to overrule the
Daubert motion. You can cross-examine [Mr. Kennedy].”
S.A. at 266. When the court later denied Google’s motions
in limine and for a new trial on damages, which were likewise predicated on Mr. Kennedy’s testimony, it again issued rulings devoid of substantive rationale. See J.A. 2254,
6688. 5 The district judge’s lack of explanation makes our
this point. See Fed. R. Evid. 602 (“A witness may testify to
a matter only if evidence is introduced sufficient to support
a finding that the witness has personal knowledge of the
matter. Evidence to prove personal knowledge may consist
of the witness’s own testimony.”).
5 The Majority notes that the ruling denying
Google’s motion for a new trial was from the bench. Majority Opinion at 6. I do not take this to be criticism of the
venerable practice of making oral rulings, which can create
efficiencies for busy trial judges and deliver decisions to
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ECOFACTOR, INC. v. GOOGLE LLC 9
reviewing function unnecessarily difficult. But it is not an
abuse of discretion. Even if it were, that abuse would not
warrant the relief we are granting.
The Majority relies principally on a treatise, not binding precedent, in arriving at its conclusion that “[a]n absence of reviewable reasoning may be sufficient grounds for
this court to conclude the district court abused its discretion.” Majority Opinion at 6; see also id. (citing 4 Weinstein’s Federal Evidence § 702.02[6][d]). Neither the Fifth
Circuit nor Third Circuit cases the Majority cites, nor any
of the cases cited in the section of Weinstein from which the
Majority derives its conclusion, requires that we overturn
a district court’s unexplained exercise of discretion (nor
that we replace a district court’s ruling with our own). To
the contrary, some of the cases cited in Weinstein determined that an explanatory deficiency was harmless error,
warranting no further proceedings whatsoever; others remanded for a district court to again exercise its discretion
in a manner to be determined by the district court itself.
See, e.g., Smith v. Jenkins, 732 F.3d 51, 65 (1st Cir. 2013)
(where “the absence of any findings or discussion on the
record leaves us hard-pressed to conclude that the district
court adequately fulfilled its gatekeeping role,” the appellate court reversed the denial of a motion to strike,
“leav[ing] . . . the district court to consider [admissibility]
on remand after performing a Daubert analysis”); In re
Paoli R.R. Yard PCB Litig.,
916 F.2d 829, 858-59 (3d Cir.
1990) (vacating summary judgment of no liability and
litigants more quickly. See generally Ueckert v. Guerra,
38
F.4th 446, 449 (5th Cir. 2022) (describing origins of English
“ex tempore” rulings and stating “federal courts at least
have not lost their power to rule from the bench”). The issue is the sufficiency of the explanation, not whether the
judge’s words are spoken instead of written.
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10 ECOFACTOR, INC. v. GOOGLE LLC
remanding for further proceedings, including a determination of whether the expert should be excluded).
The Majority provides no reasoning for why the district
court’s failure to explain itself is an abuse of discretion that
is properly remedied only by an entirely new jury trial on
damages. In my view, if the district court’s explanation is
so deficient as to be an abuse of its discretion, the proper
disposition should be to vacate the judgment and remand
for the district judge to fulfill his gatekeeping responsibility. He might on remand choose to do so by providing sufficient explanation of his prior ruling or re-doing his
analysis, potentially by conducting an evidentiary Daubert
hearing, making findings of fact, and interpreting the license agreements.
IV
For the reasons set out above, I would affirm the district court. Accordingly, I respectfully dissent.
