Google Gets Second Shot in Smart Thermostat Patent Case After $20M Verdict Scrapped
Federal Circuit Finds Damages Testimony Flawed, Sends Case Back for New Trial
In a dramatic reversal, the U.S. Court of Appeals for the Federal Circuit has ordered a new trial on damages in the high-profile patent lawsuit between EcoFactor, Inc. and Google LLC. The case, centered on Google’s Nest smart thermostats and EcoFactor’s patent on networked HVAC control, initially ended with a jury awarding EcoFactor $20 million in lump-sum damages. That award is now off the table.
The court’s decision, released May 21, 2025, faulted the trial judge for allowing expert testimony that, according to the appellate judges, should never have reached the jury. The ruling stems from questions over how EcoFactor’s damages expert, David Kennedy, calculated a supposedly agreed-upon “$X per unit” royalty rate. As it turns out, that number lacked reliable evidence.
What Triggered the Retrial?
EcoFactor sued Google in 2020, alleging that the Nest thermostat infringed on its U.S. Patent No. 8,738,327. During the trial, Kennedy testified that Google should pay a royalty of $X per unit sold. He based that on three prior licensing deals EcoFactor had struck with other companies—Daikin, Schneider Electric, and Johnson Controls.
But according to Chief Judge Kimberly Moore, writing for the majority, Kennedy’s opinion didn’t hold water. The contracts he relied on didn’t actually prove those companies agreed to pay $X per unit. In fact, two of the agreements flat-out stated the opposite: the lump sums weren’t tied to sales volume and didn’t reflect a royalty.
The court emphasized that expert testimony must be grounded in facts—not just expert assumptions. Kennedy’s math, the court found, leaned too heavily on what EcoFactor’s CEO believed, not what the contracts or data showed. And the district court never gave a reason for allowing that testimony in the first place.
Why It Matters
The court took aim at the district court’s lack of explanation. Simply denying a motion without stating why—especially when it involves expert financial testimony—isn’t enough. A trial judge’s job, the court stressed, includes keeping unreliable opinions out of the courtroom.
The ruling also reinforces the importance of contract language in patent licensing. The court made clear that if a license agreement says it’s not based on unit sales or royalties, an expert can’t claim otherwise without additional, concrete proof.
What Stays, What Goes
The Federal Circuit didn’t toss the whole case. It affirmed the jury’s finding that Google did infringe claim 5 of the patent. And it agreed with the lower court that Google’s motion for judgment as a matter of law on noninfringement wasn’t persuasive.
What changes is the damages. Google now gets a fresh trial, where new damages will have to be recalculated—presumably without Kennedy’s prior method. It’s a reset, but not a full restart.
Pushback from the Bench
Not everyone agreed with the majority’s decision. Judges Reyna and Stark dissented in part, arguing that there was enough supporting evidence—especially from EcoFactor’s CEO and undisputed market data—to let Kennedy’s testimony go to the jury. They took issue with the majority reinterpreting contracts without the parties having briefed that issue as one of law.
In their view, the ruling crossed a line: replacing the jury’s role with judicial second-guessing. They also warned the decision could upend how damages experts use comparable licenses—an important tool in patent cases.
Legal Takeaway
This ruling highlights how the bar for expert testimony has been raised—again. Courts want math, not marketing. If a damages expert can’t show the math behind a licensing rate, or if that math rests on shaky assumptions, it’s getting tossed. It also means district courts must explain their decisions clearly or risk getting reversed.
For Google, it’s a chance to cut down the damages. For EcoFactor, it means proving its case all over again—this time with better receipts.
Looking Ahead
The case now heads back to the Western District of Texas for a new trial, limited to damages. It’s unclear whether EcoFactor will continue using Kennedy or pivot to a new strategy. Either way, the jury will be hearing a different story the second time around.
Google, meanwhile, dodges a multimillion-dollar payout—at least for now.
