EcoFactor, Inc. v. Google LLC

Anited States Court of Appeals

for the Federal Circuit

ECOFACTOR, INC.,

Plaintiff-Appellee

Vv.

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.

JUDGMENT

THIS CAUSE having been considered, it is

ORDERED AND ADJUDGED:

AFFIRMED-IN-PART, REVERSED-IN-PART, AND

REMANDED

FOR THE COURT

ge

May 21, 2025 Jarrett B. Perlow

Date Clerk of Court

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 Ange-

les, 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, Wash-

ington, DC, argued for defendant-appellant. Also repre-

sented 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.

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 mo-

tion 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.

1 Circuit Judge Newman and Circuit Judge Cun-

ningham did not participate.

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 ther-

mostats in computer-networked heating and cooling sys-

tems. ’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 pa-

tent, 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, includ-

ing claim 5, were directed to patent-ineligible subject mat-

ter 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 Fed-

eral 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.

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 de-

nial 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., dis-

senting-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 tes-

timony was unreliable and therefore inadmissible. We

granted Google’s petition and ordered briefing and argu-

ment 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.

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 argu-

ment 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 ex-

pert 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 con-

tract 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 sat-

isfies 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 appor-

tioned. Appellant Br. 41–58. The apportionment argu-

ments 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.

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 Evi-

dence § 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 con-

sideration 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 ra-

tionale 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:

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 spe-

cialized 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 princi-

ples 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 suffi-

ciently 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 gatekeep-

ing 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

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 gate-

keeper and provide[d] some general standards that the

trial court must use to assess the reliability and helpful-

ness of proffered expert testimony.” Id. In 2023, Rule 702

was amended to clarify that the proponent of expert testi-

mony 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 commit-

tee’s note to 2023 amendment (“Nothing in the amendment

imposes any new, specific procedures. Rather, the amend-

ment is simply intended to clarify that Rule 104(a)’s re-

quirement 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 spe-

cialized 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 princi-

ples and methods; and

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 ad-

missibility. These rulings are an incorrect application of

Rules 702 and 104(a).” Id. The Advisory Committee ex-

plained 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 determina-

tions of weight and credibility, which are within the prov-

ince 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 ad-

missible.”); 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.’” Sum-

mit 6, LLC v. Samsung Elecs. Co., 802 F.3d 1283, 1296

(Fed. Cir. 2015) (second alteration in original) (internal ci-

tation 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 applica-

tion of the principles and methods to the facts of

the case.

FED. R. EVID. 702 (2023).

10 ECOFACTOR, INC. v. GOOGLE LLC

Distinguishing “the gatekeeping role of the judge” un-

der Rule 702 from the fact finder’s role “is particularly es-

sential in the context of patent damages.” Apple Inc. v.

Motorola, Inc., 757 F.3d 1286, 1315 (Fed. Cir. 2014), over-

ruled on other grounds by Williamson v. Citrix Online,

LLC, 792 F.3d 1339 (Fed. Cir. 2015) (en banc in part). Es-

timation 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 [hy-

pothetical 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’ roy-

alties, rather than a single value,” and “there may be more

than one reliable method for estimating a reasonable roy-

alty.” Apple, 757 F.3d at 1315. It follows that damages

experts may properly give testimony resulting in contradic-

tory 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 resolv-

ing such complex, technical issues as patent damages. See

35 U.S.C. § 284 (acknowledging expert testimony is an ap-

propriate “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. Ken-

nedy’s damages opinion employed the hypothetical negoti-

ation 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.

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 im-

portant 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 differ-

ent considerations, from the perspective of both the licen-

see and the licensor, compared to a running royalty license.

Lucent Techs., 580 F.3d at 1326–27. Because of these “fun-

damental 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 ev-

idence 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 li-

censees: Daikin Industries, Ltd. (Daikin); Schneider Elec-

tric USA, Inc. (Schneider); and Johnson Controls Inc.

12 ECOFACTOR, INC. v. GOOGLE LLC

(Johnson). J.A. 5763–73. Mr. Kennedy testified that the

Daikin, Schneider, and Johnson lump-sum amounts re-

flected 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. Ken-

nedy relied were insufficient, individually or in combina-

tion, 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 con-

tract 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 li-

censes 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 li-

cense 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

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 licen-

sor, it provides no support for the conclusion that Daikin

agreed to pay the $X rate or agreed that $X rate was a rea-

sonable royalty.

The Schneider license also contains a preliminary re-

cital, 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 esti-

mated 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 rea-

sonable 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 Schnei-

der 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

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 unambig-

uous license and opined that it reflected Schneider’s agree-

ment 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 Eco-

Factor and Schneider, in that ‘whereas’ clause. And it’s per

unit.”). The Schneider license does not support Mr. Ken-

nedy’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 Litiga-

tion.

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

ECOFACTOR, INC. v. GOOGLE LLC 15

royalty and does not provide a basis for Mr. Kennedy to tes-

tify 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 indi-

cation 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 li-

censees 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 John-

son 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 at-

tributable 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.

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 pa-

tent 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-Pa-

cific 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 Eco-

Factor’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 tes-

timony of Mr. Habib about how [the lump-sum license pay-

ment] 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 tes-

timony does not provide a sufficient basis for Mr. Ken-

nedy’s testimony that Daikin, Schneider, and Johnson

agreed to pay a royalty of $X per unit.

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 Dai-

kin license); J.A. 5668–69 at 532:23–533:2 (Habib testi-

mony 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 sup-

ported 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 Eco-

Factor 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 predic-

tions 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 re-

garding calculation of the lump-sum license payments, but

that he relied on Mr. Habib’s testimony that the calcula-

tions 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 eviden-

tiary 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 fur-

ther 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 as-

sertion on behalf of EcoFactor that the $X rate was applied

to calculate the lump-sum payment amounts. Mr. Habib

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 refer-

enced no evidentiary support. It did not include actual,

projected, or even estimated sales figures. He relied en-

tirely on his asserted “general understanding of the space,”

J.A. 5670 at 534:22–23, without ever explaining how a gen-

eral understanding informed him as to the missing sales

data. In the absence of any evidence, Mr. Habib’s testi-

mony amounts to an unsupported assertion from an inter-

ested 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 testi-

mony, 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 pro-

vided to advisors: “anything that the Plaintiff’s expert

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 simi-

larly 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 dis-

pute for the jury to resolve. Stark Dissent at 4–8. Respect-

fully, 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 li-

censees 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 – en-

compasses what I did.”). Mr. Kennedy used the market

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 evi-

dence on which the expert purports to rely. Rule 702 re-

quires 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” (empha-

sis 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 ad-

missible. Not so, even apart from the fact that Mr. Ken-

nedy 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 tes-

timony 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, Schnei-

der, and Johnson licenses in his analysis of Georgia-Pacific

factor 1). Mr. Kennedy did not suggest that any single li-

cense 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 suf-

ficient facts or data, as required by Rule 702(b). Mr. Ken-

nedy’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.

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 dis-

trict 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 can-

not 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 rea-

sonably support competing conclusions. Whether prior li-

censees 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 in-

volving 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 unit-

based rate. Without this fundamental premise, Mr. Ken-

nedy’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 out-

come of a hypothetical negotiation between EcoFactor and

Google. J.A. 5778 at 642:13–15 (“One of the key [Georgia-

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 be-

lieve 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 Pe-

troleum Servs., Inc., 61 F.3d 350, 361 (5th Cir. 1995)). Eco-

Factor 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 in-

fluence 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 preju-

dicial error, the district court abused its discretion by deny-

ing 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 pro-

ceeding. 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.

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 author-

ized such a remedy to include en banc cases. En banc re-

hearing 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 excep-

tional 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 anom-

alous 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 dis-

trict court’s denial of summary judgment and affirmed the

24 ECOFACTOR, INC. v. GOOGLE LLC

district court’s denial of Google’s motion for JMOL of non-

infringement.

AFFIRMED-IN-PART, REVERSED-IN-PART, AND

REMANDED

COSTS

No costs.

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 Eco-

Factor’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 Evi-

dence 702 and Daubert v. Merrell Dow Pharmaceuticals,

1 I join the parts of the en banc court’s opinion (1) re-

instating portions of the June 3, 2024 panel opinion and

(2) holding that this en banc proceeding is proper.

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 exclu-

sively on its new theory that this case is about contract in-

terpretation 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 ad-

missibility under Rule 702 and Daubert. And after only

finding fault with a narrow point of Mr. Kennedy’s testi-

mony on contract interpretation grounds, the en banc court

appears to inexplicably rule that Mr. Kennedy’s entire tes-

timony 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 interpreta-

tion is correct, Fifth Circuit law requires us to affirm under

the harmless error doctrine. The en banc court’s one con-

clusory 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 dis-

trict court has no discretion but to decide that the errone-

ous 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

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 con-

duct any meaningful harmless error analysis.

I. Admission of Expert Testimony

A

The issue before the en banc court is whether the dis-

trict court abused its discretion in ruling that Mr. Ken-

nedy’s expert testimony is supported by sufficient facts or

data under Federal Rule of Evidence 702. Mr. Kennedy of-

fered 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 ap-

proach, well supported in our precedent.” Maj. Op. 11.

Mr. Kennedy’s testimony is supported by license agree-

ments between EcoFactor, Inc. (“EcoFactor”) and Johnson

Controls, Inc. (“Johnson”), Daikin Industries, Ltd. (“Dai-

kin”), 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 in-

cludes 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 testi-

mony from EcoFactor’s Chief Executive Officer and signa-

tory to all three licenses, Mr. Habib. Mr. Habib testified

extensively about the $X rate, including the following ex-

change:

Q. Could you explain to us where the $[X] per-unit

royalty rate came from that we are seeing in each

of these agreements?

4 ECOFACTOR, INC. v. GOOGLE LLC

A. Sure. So it comes from my general understand-

ing 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 it-

self 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 undis-

puted 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’ con-

fidential 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.

ECOFACTOR, INC. v. GOOGLE LLC 5

again did not challenge this data or Mr. Kennedy’s testi-

mony. 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 ev-

idence of the undisputed market share of the three licen-

sees 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 follow-

ing 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 sup-

ports Mr. Kennedy’s testimony by serving as a reasonable-

ness check on both the $X rate and his ultimate damages

opinion.

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 undis-

puted or dispositive facts or data. Rather, Rule 702 recog-

nizes that there may be multiple versions of the facts and

does not “authorize a trial court to exclude an expert’s tes-

timony 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 admissi-

bility, especially on fact-intensive questions such as this,

and appellate courts should not find error “unless the rul-

ing is manifestly erroneous.” Guy v. Crown Equip. Corp.,

394 F.3d 320, 325 (5th Cir. 2004) (citations omitted); Ro-

man 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 testi-

mony 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.

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 allow-

ance of testimony from EcoFactor’s damages expert assign-

ing 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 con-

tract 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

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 con-

tracting 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 suffi-

cient 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 anal-

ysis, the en banc court mishandles or ignores evidence

other than the terms of the three licenses that inde-

pendently 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 rea-

soning 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 con-

stituting 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.

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 be-

fore 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 wit-

ness 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 cho-

sen 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 un-

disputed 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 propor-

tionate on a market share basis to the total amount John-

son, Daikin, and Schneider paid EcoFactor; and second, the

5 Available at https://oralarguments.cafc.uscourts.

gov/default.aspx?fl=23-1101_03132025.mp3.

10 ECOFACTOR, INC. v. GOOGLE LLC

undisputed market share data allowed Mr. Kennedy to de-

termine 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 dis-

trict 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 exclu-

sion 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-Pa-

cific 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. Ken-

nedy’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 Eco-

Factor would agree to as the willing licensor.”6 Maj.

Op. 13–14. This is exactly what Mr. Kennedy did—he re-

lied on the Johnson, Daikin, and Schneider licenses as evi-

dence 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 ap-

pears 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.

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, “influ-

enced 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. Mani-

towoc 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 sub-

ject -- or post litigation. And it’s a settlement agree-

ment where we agreed to a reasonable royalty

calculation of $[X] per unit for estimated past and

Daikin’s projected future sales of the accused prod-

ucts. . . .

Q. Can you tell me how [the Schneider lump sum]

was derived?

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 roy-

alty 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 pro-

jected 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 mar-

ket share was also properly before the jury. As were all

three licenses that recite the $X rate, which were intro-

duced 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 li-

cense agreements and the $X rate can once again come into

evidence. Oral Arg. 7:55–8:00, 8:45–9:15. As will the tes-

timony 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 Eco-

Factor and Johnson during the time they negotiated the

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 li-

censees. [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 pre-

trial decision on admissibility, we are reviewing Google’s

motion for a new trial and thus as Google conceded, the en-

tire trial record may be considered. Oral Arg. 19:52–20:51;

Foradori v. Harris, 523 F.3d 477, 506 (5th Cir. 2008) (cita-

tion omitted). Thus any prejudicial error analysis must ad-

dress other record evidence, including EcoFactor’s

negotiation correspondence with Johnson. We err if we fail

to consider all relevant record evidence.

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 [undis-

puted 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 ad-

mission of expert] testimony affected its substantial rights.

Even without [the] testimony, [the appellee] presented suf-

ficient evidence for a reasonable jury to find [for the appel-

lee].”). 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 ques-

tions at hand, at times it unjustifiably and improperly ex-

ceeds the scope of our appellate review of the district

court’s gatekeeping role by choosing to “believe[] one ver-

sion of the facts and not the other,” and fails to engage in

any meaningful prejudicial or harmless error analysis. I

respectfully dissent.

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 Ma-

jority 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) reinstat-

ing 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) hold-

ing that our proceeding is a “Proper En Banc.”

2 ECOFACTOR, INC. v. GOOGLE LLC

Order, ECF No. 76 at 2. Surprisingly, however, the Major-

ity Opinion has very little to say about Rule 702 and Daub-

ert. 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 ex-

perts in a manner not called for by either Rule 702 or Daub-

ert. 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 rea-

sonably 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. Ma-

jority 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 Ma-

jority Opinion. I agree that a district court should not

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 Eco-

Factor’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 re-

ality: today’s decision only governs where an expert’s testi-

mony 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 consid-

ering 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 re-

sponsibilities, 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 judi-

cial resolution of fact disputes, at least with respect to dam-

ages experts. My concern is grounded in the Majority’s

apparent conclusion that the district court abused its dis-

cretion 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 reli-

able 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 ex-

pert’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

4 ECOFACTOR, INC. v. GOOGLE LLC

the necessity for a reliable foundation in principles and

method, and end up complaining that [the expert’s] testi-

mony was not based on ‘reliable facts.’”); Pipitone v. Bioma-

trix, 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 Cir-

cuit 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 in-

tended to authorize a trial court to exclude an expert’s tes-

timony 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 amend-

ments 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. Ra-

ther, 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. Ken-

nedy’s interpretation of the disputed facts and, thereby,

find as a fact that EcoFactor entered into lump-sum settle-

ments with licensees who agreed to payments based on an

$X rate. Mr. Kennedy’s interpretation is supported by lan-

guage 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. Ken-

nedy had made up the $X figure himself, solely for the pur-

pose of litigation. J.A. 10389, 10400, 10411. More support

is found in the Schneider Agreement, which includes a pro-

vision – “nothing in this clause should be interpreted as

agreement by Schneider that [$X] per unit is a reasonable

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 tes-

timony 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 advi-

sors, who (unlike him) had access to his competitors’ confi-

dential 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 support-

ing Google’s contrasting belief that none of Schneider, Dai-

kin, 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, Ma-

jority 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 consult-

ing with advisors”). The jury could reasonably infer that,

consistent with standard practice, these advisors had ac-

cess 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 con-

fidential 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.

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 Ma-

jority now decides, as a matter of law, that all three agree-

ments 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) (explain-

ing “it was error for the judge to rule as a matter of law” on

“meaning of [an unambiguous] provision,” as this “pre-

sented 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 deter-

mination 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 “vi-

able” interpretations exist, and so reversing summary

ECOFACTOR, INC. v. GOOGLE LLC 7

Because the jury could reasonably have credited Eco-

Factor’s interpretation of the disputed evidence, that evi-

dence 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 actu-

ally agreed to an $X rate does not make Mr. Kennedy’s tes-

timony 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 insuf-

ficient individually or in combination” to support Mr. Ken-

nedy’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 tes-

timony 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, ei-

ther in the district court or on appeal, that Mr. Habib lacks

sufficient personal knowledge to testify as a fact witness on

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 Ma-

jority 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 like-

wise predicated on Mr. Kennedy’s testimony, it again is-

sued 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. Major-

ity 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

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 bind-

ing precedent, in arriving at its conclusion that “[a]n ab-

sence of reviewable reasoning may be sufficient grounds for

this court to conclude the district court abused its discre-

tion.” Majority Opinion at 6; see also id. (citing 4 Wein-

stein’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 deter-

mined that an explanatory deficiency was harmless error,

warranting no further proceedings whatsoever; others re-

manded 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 appel-

late 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 is-

sue is the sufficiency of the explanation, not whether the

judge’s words are spoken instead of written.

10 ECOFACTOR, INC. v. GOOGLE LLC

remanding for further proceedings, including a determina-

tion 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 responsibil-

ity. He might on remand choose to do so by providing suf-

ficient explanation of his prior ruling or re-doing his

analysis, potentially by conducting an evidentiary Daubert

hearing, making findings of fact, and interpreting the li-

cense agreements.

IV

For the reasons set out above, I would affirm the dis-

trict court. Accordingly, I respectfully dissent.