Invisible Hand of Patent Licensing: EcoFactor and the Market Realities of Partially Performative Pricing and Lump Sum Licenses
Patent – Patently-O 2024-12-13
Summary:
by Dennis Crouch
In a terse order issued December 4, 2024, the Federal Circuit significantly narrowed the scope of the pending en banc review in EcoFactor, Inc. v. Google LLC, rebuking Google for its opening brief that strayed well beyond the court’s limited grant of en banc review. The order specifically targets pages 41-58 of Google’s 61-page brief—the entire section addressing apportionment of patent damages—and instructs EcoFactor not to address those arguments in its response. Going forward, the case now focuses on an expert’s use of prior license agreements as evidence of reasonable royalty damages, particularly when those agreements involve a different payment calculation approach (lump-sum vs royalties) and “performative” clauses crafted with an eye toward future litigation.
The court’s only pending en banc patent case centers on U.S. Patent 8,738,327, which covers smart thermostat technology for controlling HVAC systems based on inside and outside temperature measurements. After a trial in Judge Albright’s Western District of Texas court, a jury found that Google’s Nest thermostats infringed claim 5 of the ‘327 patent and awarded EcoFactor $20 million in damages. The damages award was based on testimony from EcoFactor’s expert David Kennedy, who derived a per-unit royalty rate primarily from three portfolio license agreements that EcoFactor had entered with other companies during litigation.