Prost Dissents from CAFC’s Denial of New Trial on Damages for Google
“If the standard for admissibility is raised too high, then the trial judge no longer acts as a gatekeeper but assumes the role of the jury.” – CAFC
The U.S. Court of Appeals for the Federal Circuit (CAFC) on Monday, June 3, issued a precedential decision affirming a district court’s orders in favor of EcoFactor, Inc. against Google, whose appeal in part asked for a new trial on damages due to prejudicial error. Judge Prost dissented-in-part.
EcoFactor sued Google for infringement of its U.S. Patent No. 8,738,327 relating to smart thermostat technology. EcoFactor said Google’s Nest thermostat products in particular were infringing. Google moved for summary judgment that certain claims of the patent were invalid as abstract under Section 101 but the district court denied the motion, and also denied Google’s Daubert motion to exclude the opinion of EcoFactor’s damages expert, Mr. Kennedy, whose testimony Google argued was “unreliable and therefore prejudicial,” according to the CAFC.
A jury ultimately found that Google infringed claim 5 of the ’327 patent and awarded EcoFactor damages, and the court denied Google’s renewed motion for judgment as a matter of law of non-infringement as well as its motion for a new trial on damages.
On appeal, Google argued the district court erred in: 1) denying the motion for summary judgment of patent ineligibility; 2) in denying Google’s JMOL motion for non-infringement; and 3) in denying Google’s motion for a new trial on damages.
As to the denied motion for summary judgment on Section 101, the CAFC said that Google cannot appeal a denial of summary judgment after a trial on the merits. The opinion said:
“We have explained that an order denying summary judgment is ‘not a judgment’ and ‘does not foreclose trial on the issues on which summary judgment was sought;’ rather, it is ‘merely a judge’s determination that genuine issues of material fact exist.’”
Since the jury heard testimony at trial about whether the elements of claim 5 were well-understood, routine, or conventional, and determined they were not, Google’s appeal of the summary judgment motion, rather than the verdict, failed, said the CAFC. “As the Supreme Court has explained, ‘the full record developed in court supersedes the record existing at the time of the summary-judgment motion.’”
The CAFC also rejected Google’s bid to overturn the jury’s verdict on infringement, explaining that substantial evidence supported the jury’s finding. While Google alleged its products could not infringe because they “are designed to be completely enclosed in metal, plastic, and/or glass housings,” and cannot therefore “directly measure the surrounding ambient temperature ‘inside the structure’ like other thermostats,” as required by claim 1 of the ‘327 patent, the CAFC said “[t]he expert testimony from both parties, documentary evidence, and source code information demonstrating that the accused products measure temperature of the surrounding structure (and not just the housing) is substantial evidence.”
Finally, Google said the district court abused its discretion by denying its Rule 59 motion for a new trial on damages, which it argued was warranted because EcoFactor’s expert, Kennedy’s, damages opinion “lacked any reliable methodology or underlying calculations” and because it lacked comparability and apportionment. The CAFC found that Kennedy’s reliance on three license agreements and the testimony of EcoFactor’s CEO, Mr. Habib, which ultimately resulted in a damages award by the jury of $20,019,300—significantly less than Kennedy proposed—was sufficient and admissible. It also said Kennedy sufficiently showed, “for purposes of admissibility, that the three license agreements were economically comparable to the hypothetically negotiated agreement,” and that his apportionment opinion, based on underlying internal profit and survey data from Google, was sufficient for the issue to be presented to the jury. Google’s argument “loses sight of the issue on appeal and the applicable standard of review,” wrote the CAFC. The court explained:
“Our focus is on the admissibility of Mr. Kennedy’s damages testimony, and we assess the district court’s determination of this issue under the highly deferential abuse of discretion standard. ‘Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts’ are jury functions, not those of a trial judge, and certainly not of an appellate judge…. If the standard for admissibility is raised too high, then the trial judge no longer acts as a gatekeeper but assumes the role of the jury.”
Writing in partial dissent, Judge Prost said the majority’s opinion with respect to damages “at best muddles our precedent and at worst contradicts it.” In Prost’s view, Google’s arguments that Kennedy’s analysis was unreliable and did not reflect the value of the ‘327 patent were correct, and Kennedy’s failure to properly apportion met neither the requirements of the law nor “the baseline standards of admissibility.”
Image Source: Deposit Photos
Author: ridofranz
Image ID: 670920458
Eileen McDermott
Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at […see more]
