EcoFactor, Inc. v. Google LLC

104 F.4th 243

ECOFACTOR, INC., Plaintiff-Appellee v. GOOGLE LLC, Defendant-Appellant

2023-1101

United States Court of Appeals, Federal Circuit

Decided: June 3, 2024

Appeal from the United States District Court for the Western District of Texas in No. 6:20-cv-00075-ADA, Judge Alan D. Albright.

Brian David Ledahl, Russ August & Kabat, Los Angeles, CA, argued for plaintiff-appellee. Also represented by Minna Chan, Kristopher Davis, Marc A. Fenster, Reza Mirzaie, James Pickens.

Robert A. Van Nest, Keker, Van Nest & Peters LLP, San Francisco, CA, argued for defendant-appellant. Also represented by Kristin Elizabeth Hucek, Leo L. Lam, Robert Adam Lauridsen, Eugene M. Paige.

Before Lourie, Prost, and Reyna, Circuit Judges.

Opinion dissenting-in-part filed by Circuit Judge Prost.

Reyna, Circuit Judge.

EcoFactor sued Google in the Western District of Texas alleging patent infringement of U.S. Patent No. 8,738,327. After discovery and resolution of various motions, the case was heard by a jury. The jury found that Google infringed the asserted claim 5 of the '327 patent and awarded damages to EcoFactor. Google appeals three of the district court's orders: the denial of Google's motion for summary judgment that claim 5 of the '327 patent was invalid under 35 U.S.C. § 101; the denial of Google's motion for judgment as a matter of law of non-infringement of the '327 patent; and the denial of Google's motion for a new trial on damages. For the following reasons, we affirm.

BACKGROUND

A. U.S. Patent No. 8,738,327

U.S. Patent No. 8,738,327 ("'327 patent") relates generally to the operation of smart thermostats in computer-networked heating and cooling systems ("HVAC systems"). The primary recited purpose of the patent is to reduce strain on the electricity grid during a period of expected high demand through adjustments to the user's thermostat settings that reduce the electricity consumed by the user's HVAC system. '327 patent at 1:21-27, 9:46-54. Claim 1 of the '327 patent recites a system "for controlling the operational status of an HVAC system" where "at least one thermostat [is] associated with a structure that receives temperature measurements from inside the structure." Id. at 9:26-31. Claim 1 includes an "estimation" limitation where "one or more servers receive inside temperatures from the thermostat and compare[ ] the inside temperatures of the structure and the outside temperatures over time to derive an estimation for the rate of change in inside temperature of the structure in response to outside temperature." Id. at 9:38-45 (emphasis added). Claim 5 adds that "the estimation [limitation in claim 1] is a prediction about the future rate of change in temperature inside the structure." Id. at 9:65-67.

B. Procedural History

EcoFactor, owner of the '327 patent, sued Google for patent infringement over Google's smart thermostat products, particularly several Nest thermostats.¹ After discovery, Google moved for summary judgment that certain claims of the '327 patent (including claim 5) were invalid because they were directed to patent ineligible subject matter, an abstract idea, under 35 U.S.C. § 101. The district court denied the motion. J.A. 5046.

The district court also denied Google's Daubert motion to exclude the opinion of EcoFactor's damages expert, Mr. Kennedy, rejecting Google's argument that Mr. Kennedy's opinion was unreliable and therefore prejudicial. J.A. 2254.

Following a six-day jury trial, the jury found that Google infringed claim 5 of the '327 patent and awarded EcoFactor damages. J.A. 45-49. Google renewed its motion for judgment as a matter of law ("JMOL") of non-infringement of the '327 patent, arguing that the accused products do not measure, but rather, estimate the temperature inside the structure and therefore cannot infringe. Google also moved for a new trial on damages, arguing that the opinion of EcoFactor's damages expert, Mr. Kennedy, was speculative and unreliable such that it should have been excluded from trial. The district court denied both motions from the bench. J.A. 6662; J.A. 6688.

Google appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

DISCUSSION

Google raises three issues on appeal.² First, Google contends the district court erred in denying Google's motion for summary judgment that claim 5 of the '327 patent was directed to patent ineligible subject matter under § 101. Second, Google asserts the district court erred in denying Google's JMOL motion for non-infringement of the '327 patent. Third, Google contends the district court erred in denying Google's motion for a new trial on damages because Mr. Kennedy's damages opinion was based on unreliable methodology. We address each issue in turn.

I. Patent Eligibility

Google appeals the district court's denial of summary judgment that claim 5 of the '327 patent was patent ineligible under § 101.

Section 101 of the Patent Act provides that: "Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title." 35 U.S.C. § 101. The Supreme Court has articulated a two-step test, commonly referred to as the "Alice" test, for examining whether a patent claims patent-ineligible subject matter. Alice Corp. Pty. Ltd. v. CLS Bank Intern., 573 U.S. 208, 217-18, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014). At Alice step one, we review whether a claim is directed to a patent-ineligible concept, such as an abstract idea. Id. At Alice step two, we review whether the claim recites elements sufficient to transform the abstract idea into a patent-eligible application. Id. at 217-18, 221, 134 S.Ct. 2347.

Prior to trial, Google filed a motion for summary judgment, arguing that claim 5 of the '327 patent (among others) was invalid as directed to patent ineligible subject matter under § 101. The district court reviewed the motion, relying on the Alice inquiry. The district court denied the motion and submitted step two of the Alice inquiry to the jury. J.A. 5046.

At trial, the verdict form asked whether Google met its burden to prove by clear and convincing evidence that the elements of claim 5 of the '327 patent, when taken individually and as an ordered combination, involved activities or technology that were well-understood, routine, or conventional to a skilled artisan at the time of the invention. J.A. 47. After hearing testimony and receiving evidence from both parties, the jury answered "no" for claim 5 of the '327 patent. J.A. 47. Google filed a post-trial JMOL motion repeating its § 101 arguments, which the district court denied.

Google now appeals the district court's denial of summary judgment regarding patent ineligibility of claim 5 of the '327 patent, but we have held that a district court's denial of summary judgment is not appealable after a trial on the merits. Syngenta Crop Prot., LLC v. Willowood, LLC, 944 F.3d 1344, 1364 n.7 (Fed. Cir. 2019) (citing Ortiz v. Jordan, 562 U.S. 180, 183-84, 131 S.Ct. 884, 178 L.Ed.2d 703 (2011)); see also 10 Wright and Miller, Federal Practice and Procedure § 2715 (4th ed.) (explaining a denial from summary judgment is an order "from which no immediate appeal is available"). 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." Glaros v. H.H. Robertson Co., 797 F.2d 1564, 1573 (Fed. Cir. 1986) (reasoning that a denial of summary judgment "does not settle or even tentatively decide anything about the merits of the claim" (citation omitted)). Denial of summary judgment decides only one thing—that the case should go to trial. Id.

At trial, the jury heard testimony from various witnesses on whether the elements of claim 5 were well-understood, routine, or conventional. See, e.g., J.A. 5345-5346 (209:20-210:6); J.A. 6373-6374 (1237:15-1238:19); J.A. 6415-6416 (1279:1-1280:20); J.A. 6449-6451 (1313:17-1315:11). Google, however, appeals the order denying summary judgment but not the jury verdict of ineligibility. As the Supreme Court has explained, "the full record developed in court supersedes the record existing at the time of the summary-judgment motion." Ortiz, 562 U.S. at 184, 131 S.Ct. 884. Because trial on the merits of the § 101 issue was held, the court's denial of summary judgment is not appealable.

II. Infringement

For infringement, the only limitation at issue is claim 1's recitation of a system for controlling the HVAC system that includes a thermostat "that receives temperature measurements from inside the structure." '327 patent at 9:26-31. Google alleges that because the accused thermostat products are designed to be completely enclosed in metal, plastic, and/or glass housings, they cannot directly measure the surrounding ambient temperature "inside the structure" like other thermostats.³ Appellant Br. 41-44. Google argues that its thermostats can only derive an estimate of the ambient temperature by measuring only the temperature within the thermostat housing itself, which is not "inside the structure." See id. As a result, Google argues that the jury's verdict of infringement is unsupported by substantial evidence.

We review the disposition of motions for JMOL under the law of the regional circuit, here the Fifth Circuit. See Energy Transp. Grp. Inc. v. William Demant Holding A/S, 697 F.3d 1342, 1350 (Fed. Cir. 2012). The Fifth Circuit reviews de novo the grant or denial of a JMOL motion. ClearValue, Inc. v. Pearl River Polymers, Inc., 668 F.3d 1340, 1343 (Fed. Cir. 2012). Under Fifth Circuit law, a jury's verdict is upheld if supported by substantial evidence. Med. Care Am., Inc. v. Nat'l Union Fire Ins. Co., 341 F.3d 415, 420 (5th Cir. 2003).

We conclude that the jury's infringement verdict is supported by substantial evidence....