Practice Tips: En Banc Ruling Sets Higher Threshold for Expert Testimony

Posted by: Dariush Adli on Mar 21, 2026

An en banc decision by the Federal Circuit has reinforced the conclusion among some patent practitioners that the court implemented a higher standard of scrutiny for expert opinions, raising concerns that the higher standard may empower district courts to rule on matters formerly considered the realm of juries and fact finders.[1] The case, EcoFactor, Inc., v. Google LLC, involved plaintiff EcoFactor, the owner of a patent related to smart thermostats in computer-networked heating and cooling systems, which sued Google for infringement [P]

To prove damages at trial, EcoFactor offered the testimony of its expert, David Kennedy, who opined as to a reasonable per-unit royalty rate for each allegedly infringing item sold by Google. The royalty rate proposed by Kennedy was based on three existing licensing settlements involving related technology between EcoFactor and third-party licensees, as well as testimony by EcoFactor’s president, who signed the licensing agreements on the company’s behalf. Kennedy testified that he was familiar with the licensing market for the technology at issue. The proposed per-unit royalty rate was also supported by other evidence presented at trial, though not relied upon by Kennedy to support his opinion.[4I Kennedy opined that, in a hypothetical negotiation between EcoFactor and Google, the two sides would likely have agreed to a certain “$X” reasonable royalty rate for each infringing item sold by Google. On that basis, Kennedy proposed a reasonable total damages amount based on the number of infringing units Google had sold and was projected to sell, multiplied by $X.[⁶]

The jury found Google had infringed EcoFactor’s patent and awarded $20 million in total damages, which was a significantly smaller amount than it would have been had the jury applied the royalty rate used by Kennedy. Google objected to the admissibility of this expert opinion and moved to exclude Kennedy’s testimony under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, inc. The district court judge denied Google’s motion and admitted the testimony. Google appealed the judgment, but a three-judge panel of the Federal Circuit affirmed the trial court’s decision to allow Kennedy’s expert testimony.

Google subsequently filed a rarely granted petition with the Federal Circuit seeking review of the panel’s decision by the full appeals court, which was granted. The en banc appeals court stated that the review would 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 royalty rate to the three licenses in evidence in this case.”[8]

Majority Opinion Focused on Judges’ Gatekeeping Role

The en banc decision focused on judges’ “gatekeeping role” under Daubert, which requires “that any and all scientific testimony or evidence admitted is not only relevant, but reliable.”[9] The majority opinion also attempted to distinguish questions of admissibility From questions of weight and credibility. Citing the advisory committee notes on Rule 702, the majority opinion asserted that questions regarding the sufficiency of an expert’s basis and methodology are questions of admissibility, not weight.[10]

Kennedy’s reasonable royalty opinion relied in part on three licenses between EcoFactor and third parties involving related technologies. The en banc court found these licenses relevant to determining a reasonable royalty, explaining that they were “probative not only of the proper amount of a reasonable royalty, but also of the proper form of the royalty structure”; i.e., whether the royalty is in the form of a lump sum or a recurring payment amount.[11]The three licenses in EcoFactarwere in lump-sum form.[12] In addition to the licenses, plaintiff’s expert relied on testimony by EcoFactor’s CEO, who claimed that the lump-sum payments for each of the three licenses were calculated by multiplying the licensee’s past and future projected sales by the reasonable royalty rate ($X). Based on his years of industry experience, the CEO explained that $X was a reasonable per-unit royalty rate for the technology at issue.[13]

The EcoFactormajority held that the three licenses did not sufficiently support the opinion that parties to those licenses had agreed to an $X per-unit royalty rate. The majority also found that the corroborating testimony of EcoFactor’s CEO was insufficient because it was based on his general understanding of the relevant industry, not on evidence.[¹⁴]

The majority opinion pointed to the judge’s obligation to “ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable.”^[15]At the same time, the majority recognized that the “question of whether the expert is credible or the opinion is correct is generally a question for the fact finder, not the court. Indeed, vigorous 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.'”[16]

While it found that the expert’s opinion was “undoubtedly prejudicial” due to the possibility of Kennedy’s opinion influencing the jury, the majority conceded that it “cannot be sure that the error did not influence the jury or had but a very slight effect on its verdict.” The decision conceded the existence of “other evidence that supported the jury verdict”[17]which would arguably have supported affirming the district court’s decision to include Kennedy’s testimony as a harmless error. Nonetheless, the majority opted against that approach and instead Found the district court’s denial of Google’s motion an abuse of discretion.[18]

Dissent Focused on Threshold Inquiry and Standard of Review

The dissent concluded there was no dispute that all three licenses bound the contracting parties to a lump-sum amount, and opined that the correct threshold question should have been “whether, even though the three parties are not legally bound to the $X rate, there are sufficient facts or data to support testimony that $X is a reasonable royalty rate.”[19]The dissent also took issue with the majority’s framework and Found the initial announcement by the en banc court as to the scope and standard of review inconsistent with the explanation provided in the decision itself.^[20]

In particular, the dissent noted that the en banc court had initially announced that it would apply an abuse of discretion standard, but it then “pivoted” and proceeded on a contract-interpretation path, which is reviewed de novo with no deference.[21]The dissent implied that the majority changed its focus to a contract-interpretation path because they could not have justified their decision under the deferential “abuse of discretion” standard. This “sudden shift” had effectively deprived EcoFactor and some 21 amicus briefs of the opportunity to appropriately address whether the contracts supported the testified-to reasonable royalty rate, according to the dissent.[22] Instead, the dissent contended that the review should have been about “the extent to which district courts have discretion to decide Fact-based questions of admissibility under Rule 702 and Daubert.”[23]

The dissent also criticized the majority’s Failure to conduct a “harmless error” analysis, stating that, even assuming that the majority’s contract interpretation focus was correct, the district court’s decision denying Google’s motion For a new trial on damages should have been affirmed as a harmless error due to the presence of other supporting evidence, which had been properly presented and admitted at trial. [24] In particular, the dissent pointed to language in each of the licensing agreements in which EcoFactor affirms its belief that the lump-sum amounts are based on an $X royalty rate. The dissent also pointed to the testimony of plaintiff’s CEO, who testified that he was familiar with that area of the patented technologies and that, based on his professional experience and input from non-attorney advisors with access to his competitors’ confidential data, the $X royalty rate was reasonable.[25]

Another conclusion reached by the majority that the dissent Found problematic was the majority’s assertion that plaintiff’s expert testimony was prejudicial, while acknowledging that it could not identify if the testimony had made any impact on the jury’s damages award. In the dissenters’ view, this conclusion was particularly noteworthy because “under its logic, even when improperly admitted evidence is wholly duplicative of properly admitted evidence, the district court has no discretion but to decide that the erroneous admission was per se prejudicial.”[26]

Crucially, the dissent also disagreed with the majority’s conclusion that the three existing licensing agreements did not support Kennedy’s opinion. The dissent noted that all three licenses were lump-sum licenses, each of which was attested to by EcoFactor as being based on a reasonable royalty, supported by EcoFactor’s CEO and by the relative market shares of Google compared to the three licensees. From these, the dissent noted, the jury could have based its sum total damages award on Google’s market share by reference to what the three licensees had paid. The dissent also posited that the jury could have calculated its damages number From the market share of the three licensees, which was not in dispute, and determined For itself whether the lump sum amount was calculated based on the $X rate, on which plaintiff’s expert and CEO had relied.[²⁷]

The dissenting opinion characterized the issue with Kennedy’s testimony as a factual dispute based on properly admitted testimony, not as a baseless opinion by an expert, which would have justified exclusion. In particular, the dissent pointed to the testimony of the CEO, who testified, based on his years of industry experience, that $X was a reasonable per unit royalty rate for the infringing products. By finding error in including the expert’s testimony, the dissent concluded that the court had impermissibly involved itself in assigning credibility and weighing facts, which are a function for the fact finder and not the court. In the dissenters’ view, Rule 702 “does not require that expert opinion be based on undisputed or dispositive Facts or data. Rather, Rule 702 recognizes that there may be multiple versions of the Facts and does not authorize a trial court to exclude an expert’s testimony on the ground that the court believes one version of the Facts and not the other.”[28l Citing Fifth Circuit precedent, the dissent pointed to the “broad discretion” courts possess and noted that finding error is not warranted absent “manifest error,” which the dissent stated the majority had not established.[29]

Prejudicial or Harmless Error

A primary dividing line between the majority and dissenting opinions was whether Kennedy’s opinion on a reasonable per-unit royalty rate of $X was prejudicial, as the majority had concluded, or harmless, as the dissent advocated. The en banc court initially announced that it would apply Fifth Circuit precedent, under which 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 “influenced the jury or had more than a very slight effect on its verdict.”[30] According to the dissent, Fifth Circuit precedent holds 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:·[³¹]

Key Issues Raised by the Decision

The EcoFactor decision has the potential to impact several aspects of the law related to expert opinion, ushering in a new era of higher scrutiny for expert opinion testimony. It remains to be determined how courts will resolve these issues.

Scope of the Decision

Questions raised by the decision are primarily focused on how the lower courts will extend or limit the scope of the decision beyond patent cases. In that regard, the decision seems to suggest the scope of the decision may be limited to patent cases, stating that distinguishing “the gatekeeping role of the judge” under Rule 702 from the fact finder’s role “is particularly essential in the context of patent damages.”[32] This, the decision explains, is because determining reasonable royalty is an estimation, which, by its nature “necessarily involves an element of approximation and uncertainty.”[33] However, a fair reading of the decision makes it hard to limit its holding to patent expert damages because the basic premise of the decision-emphasizing the judge’s gatekeeping role-remains viable in any area where expert testimony is offered.

The dissent was concerned that the decision may have “opened the door” to a broad interpretation and application of the courts’ gatekeeping function, which, in turn, would cause judges “to invade the province of jurors and resolve fact disputes.”[34] At the same time, the dissent made an effort to limit the reach of the decision to times when unreliability of the expert’s opinion is beyond debate, stating “today’s decision only governs where an expert’s testimony 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 considering can support competing conclusions, the Majority Opinion is inapplicable.”[35] Despite some language in the decision suggesting otherwise, it is doubtful that courts will limit the scope of the decision to patent damages.

Standard of Review: “Prejudicial” or “Harmful Error”?

Another noteworthy aspect of EcoFactor is the standard of review that was applied by the en banc majority. Since the majority could not identify what impact Kennedy’s testimony had on the amount awarded by the jury, and the amount awarded by the jury was far lower than the amount that would have been calculated under Kennedy’s suggested methodology, the majority arguably had no reliable basis for its conclusion that the testimony of EcoFactor’s expert had been prejudicial to Google. The dissent picked up on this infirmity and focused its analysis on the “harmless error” standard of review in effect in the Fifth Circuit, under which the en banc court had initially announced it would conduct its review, noting that “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.”[36] Going forward, courts will now have to clarify the facts and circumstances under which an expert testimony would be considered prejudicial or merely a harmless error.

Appropriateness of the Prescribed Remedy

Another area of potential contention in applying the EcoFactorholding to future disputes is the remedy that courts will choose for resolution. In EcoFactor, having found the expert testimony to be unreliable, the majority chose to vacate the jury verdict on damages and send back the case for a new trial on damages. The dissent challenged that remedy and suggested that one way to resolve the situation would have been to “vacate the judgment and remand for the district judge to fulfill his gatekeeping responsibility. He might on remand choose to do so by providing sufficient explanation of his prior ruling or re-doing his analysis, potentially by conducting an evidentiary Daubert hearing, making findings of fact, and interpreting the license agreements.”[37]

New Law Created?
The majority decision may have even created new law by stating that “an absence of reviewable reasoning may be sufficient grounds for this court to conclude the district court abused its discretion.” This conclusion is significant because it only cites a treatise, Weinstein, rather than controlling case law authority for its position.[38] The statement, although not part of the holding of the case, nonetheless provides fertile ground for interpretation and application by courts in future cases since many court decisions involve little or no explanation. The dissent considered this part of the ruling, stating, “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…To the contrary, some of the cases cited in Weinstein determined that an explanatory deficiency was harmless error, warranting no further proceedings whatsoever; others remanded for a district court to again exercise its discretion in a manner to be determined by the district court itself.”[39]

Looking Forward

Once again, it remains to be seen how these aspects of the ruling will be interpreted and applied by lower courts. Questions regarding scope, standard of review, court remedies, and the creation of new law remain unresolved. What is clear, however, is that lawyers should prepare for heightened scrutiny of expert opinions from courts, as the balance between judges· gatekeeping responsibilities and juries’ fact-finding functions evolves.

Dr. Dariush Adli is the President of ADU Law Group, P.C. He specializes in Patent, Trademark, Copyright and Trade Secret Litigation and Acquisition. He can be reached at adli@adlilaw.com.