Sterne Kessler’s U.S. IP Update is a newsletter delivering the latest developments in U.S. intellectual property law, tailored for companies and legal counsel in Korea. Stay informed on key court decisions, policy changes, and trends impacting patents, trademarks, and other IP rights in the United States.
In This Issue:
U.S. Federal Circuit Clarifies Standard for Patent Damages Experts in EcoFactor, Inc. v. Google LLC
Sasha Rao, Nirav Desai, and Minji Kwak
In its first en banc decision in a utility patent case in several years, the U.S. Federal Circuit, in EcoFactor, Inc. v. Google LLC, reversed a $20 million USD jury award and ordered a new trial on damages. EcoFactor had sued Google, alleging patent infringement by Google’s Nest thermostats. EcoFactor’s damages expert had proffered a reasonable-royalty theory that relied in part on a royalty rate identified in certain settlement licenses negotiated by EcoFactor. The district court admitted the expert’s testimony, and the jury awarded EcoFactor $20 million. After its motion for a new damages trial was denied and a Federal Circuit panel affirmed, Google sought en banc review by the full court. The en banc majority reversed the denial of a new trial on damages, holding that the district court abused its discretion in admitting the expert’s damages testimony.
The majority found that the expert’s opinion lacked a factual basis because the contracts themselves did not state that the licensees agreed to a per-unit royalty, and in fact, two explicitly disavowed that interpretation. The court explained that “[w]here 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.” In other words, in the majority’s view, the evidence indisputably contravened the factual basis of the expert’s testimony. Such testimony should have been excluded before reaching the jury.
Takeaways
- Elevated Factual Scrutiny for Reliability: Ensure expert opinions are backed by sufficient facts, not just plausible logic or industry knowledge.
- No Deference to Unsubstantiated Assertions: Even established damages frameworks (like hypothetical negotiation) must be grounded in verifiable data; subjective or unsupported assertions will not suffice.
- Record Must Show Reasoning: When preparing for appeal, note that district courts should make explicit findings when admitting expert testimony—omitting these can itself be reversible error.
- Not a Jury Question: Expert’s opinion that rests on a demonstrably false or unsupported factual premise will likely be excluded before reaching the jury.
The full client alert can be viewed here.
U.S. Patent Trial and Appeal Board Issues Notable Director Discretionary Denial Decision
Melissa Haapala
As reported in our April 2025 edition, this year brought a significant change to pre-institution briefing procedures pertaining to whether the U.S. Patent Trial and Appeal Board (PTAB) will institute an inter partes review (IPR) or post-grant review (PGR). Briefing is now bifurcated to separately consider discretionary factors and the merits of a petition. Under the first phase of the process, the Director of the U.S. Patent and Trademark Offices determines whether discretionary denial of an IPR or PGR petition is warranted. Acting Director Stewart recently issued one of her first decisions under the new bifurcated process in iRhythm Tech. v. Welch Allyn, Inc. (IPR2025-00363, Paper 10). This decision provides valuable insights to both patent challengers and patent owners on how the Acting Director is evaluating new discretionary factors on: i) the “settled expectations” of the parties; and ii) the extent of the petitioner’s reliance on expert testimony.
Patent Licensing & Standing: A.L.M. Holding Co. v. Zydex Indus. Private Ltd. (D. Del. Nov. 25, 2024)
Anna G. Phillips and Colton Diges
In the United States, a plaintiff must have standing to bring suit in U.S. courts. For patent cases, this means that for a plaintiff to have constitutional standing, the plaintiff must show that it has “an exclusionary right in a patent that, if violated by another, would cause the party holding the exclusionary right to suffer legal injury.” An exclusionary right is the legal right to exclude others from making, using, selling, offering for sale, or importing into the United States a patented invention. These types of exclusionary rights have great significance, especially in the context of licenses—patentees must be careful in crafting licensing agreements or risk losing the constitutional standing to sue for patent infringement.
