Last week the Federal Circuit heard oral argument in Ollnova Technologies Ltd. v. Ecobee Technologies ULC, a patent case we have been following because it attracted an amicus brief. In this case, the patent owner, Ollnova, appeals a denial of requested prejudgment interest, and the accused infringer, Ecobee, cross-appeals the lower court’s decisions on jury instructions and multiple issues including eligibility, infringement, damages, and marking. Judges Chen, Stark, and Cunningham heard the oral argument. This is our argument recap.
Michael Sandonato argued first on behalf of Ecobee, the cross-appellant. He began by previewing a “number of issues” related to the cross-appeal, telling the panel he would start with “subject matter eligibility.” That issue was applicable, he said, “across all patents” and would “result in reversal without the need for a remand.” On the merits, Sandonato argued the asserted patents are “about nothing more than using well known networks to control components,” and that “none of the components,” “networks,” or “methodologies are new.”
Judge Chen pushed back. He suggested the subject matter eligibility analysis “can’t abstract the claim at too high a level of generality” and said Sandonato’s framing did not give “enough credit to each of the asserted claims.” Turning to a limitation requiring repetition of a message until acknowledgment, Judge Chen asked why that feature was not “a means of solving a technical problem that alters the way the communication system otherwise would work.” Sandonato answered by arguing that repetition “is an abstract idea” because the claim is “a result-oriented approach” that does not say “anything about how it’s done.”
Judge Cunningham asked whether Ecobee’s objection was really about specificity. Sandonato agreed “lack of specificity” was “part” of his argument, but stressed the “primary” problem with the patents is the absence of a description of “how it’s done.” He pointed the court to case law for the proposition that using ordinary components “as tools,” without describing the “how,” results in ineligibility.
With respect to the verdict form, Sandonato argued the dispute had “already been decided” by the court’s precedent.
Sandonato also told the panel Ecobee’s proposed instruction would have informed the jury that the court “made a legal determination” that the claims contain “an abstract idea,” and would have told the jury what the abstract idea is so it could “do its proper analysis.”
Lucas Walker argued on behalf of Ollnova. With respect to the verdict form, Walker conceded precedent “tells us what the verdict form should do now.” But, he argued, the “unanimity objection” was “waived by Ecobee” because it was not timely raised. Pressed by Judge Chen on whether anything else defended the verdict form on the merits, Walker admitted “it’s difficult,” but pointed to a damages instruction as “getting sufficiently at the idea that the jury all had to agree.”
Turning to a comparable-license damages theory, Judge Chen pressed Walker on how Ollnova’s expert could “credibly assert” that three patents in a 120-patent portfolio were at least equal in value to the other 117. Walker answered by suggesting the relevant negotiation “just had to do with smart thermostats” and that, “consistent with the estimation that’s inherent in damages analysis,” it was “fair” to assume “average” value. Judge Chen noted the underlying settlement agreement “rejects the notion that it represents a hypothetical negotiation.”
On prejudgment interest, the subject of the appeal, Judge Cunningham asked Walker for his argument that interest could “go back beyond the six year period.” Walker pointed to the relevant statute’s compensation requirement, arguing the “hypothetical negotiation” date in 2012 is when Ollnova “should have been paid.” Judge Stark questioned whether that squared with the statute’s text—“no recovery,” not “no damages.” Walker conceded prejudgment interest was not “fundamental” to the case and that Ollnova was “more interested in defending the judgment.”
In rebuttal, Sandonato returned to waiver, telling the panel Ecobee “did not use the word unanimity” but still objected to “jury confusion” and the absence of “patent by patent analysis,” which he said “subsumed” the concept of unanimity. He added that a single-question verdict form had also “deprived . . . adjudication of . . . non-infringement counter claims,” which he said serves as “separate, independent reason” for reversal.
We will continue monitoring this case and report on developments.