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 by 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 by Chief Judge Moore, joined by Judges Lourie, Dyk, Prost, Taranto, Chen, Hughes, and Stoll. Judges Reyna and Stark each filed opinions concurring in part and dissenting in part, joining each other’s. Judges Newman and Cunningham did not participate
• 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: Affirmed-in-part, reversed-in-part, and remanded. The court reversed the denial of a new trial on damages and reinstated the earlier panel opinion as to the non-damages issues. The Supreme Court denied EcoFactor’s petition for certiorari on October 20, 2025 (No. 25-341)

The verdict and the expert

The technology at issue concerned smart, Wi-Fi-connected thermostats. A jury found infringement and awarded EcoFactor $20,019,300 in lump-sum 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 to exclude that testimony and, after trial, for a new trial on damages, challenging the reliability of the opinion. The district court denied the motions; a panel of the Federal Circuit affirmed on June 3, 2024; and the 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.

Judges Reyna and Stark each wrote separately, concurring in part and dissenting in part and joining each other’s opinion. Both joined the majority’s decision to reinstate the panel opinion on the non-damages issues and its holding that the en banc proceeding was properly constituted. Judge Reyna objected that the court had abandoned the scope of the en banc order it had itself set, which was limited to Rule 702 and Daubert, and instead resolved the appeal on a contract-interpretation theory the parties had not briefed. Judge Stark read the majority’s holding as very narrow but worried it would be misread as constraining damages experts beyond what Rule 702 requires, and as inviting judges to resolve fact disputes under the guise of admissibility; in his view the remedy should have been to vacate and remand for a fuller explanation from the district judge rather than order a new trial. 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. The Supreme Court will not answer those questions in this case: EcoFactor petitioned for certiorari on September 18, 2025, raising Seventh Amendment, Rule 702, and due-process objections to the en banc decision, and the Court denied the petition on October 20, 2025 (No. 25-341). The en banc decision stands.

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): slip opinion (PDF), U.S. Court of Appeals for the Federal Circuit. Authorship, the 8-2 lineup, the separate opinions of Judges Reyna and Stark, the $20,019,300 award, the license recitals, and the disposition are taken from the slip opinion itself.
• Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).
• Fed. R. Evid. 702, Cornell Legal Information Institute.
• Supreme Court of the United States, Order List of October 20, 2025 (PDF), denying certiorari in EcoFactor, Inc. v. Google, LLC, No. 25-341.