Recently the Federal Circuit issued its opinion 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 district court’s denial of requested prejudgment interest, and the accused infringer, Ecobee, cross-appeals the district court’s decisions on jury instructions and multiple issues including eligibility, infringement, damages, and marking. In an opinion authored by Judge Chen and joined by Judges Cunningham and Stark, the panel affirmed-in-part, dismissed-in-part, vacated the judgment, and remanded the case. This is our summary of the opinion.
Judge Chen began by outlining the procedural and factual background:
Ollnova Technologies Ltd. (Ollnova) sued ecobee Technologies ULC d/b/a ecobee (ecobee) for patent infringement in the United States District Court for the Eastern District of Texas. Ollnova asserted U.S. Patent Nos. 7,860,495 (’495 patent), 8,264,371 (’371 patent), 7,746,887 (’887 patent), and 8,224,282 (’282 patent) (collectively, the Asserted Patents). The Asserted Patents are directed to improvements in wireless communications used in building automation systems [BAS]. Ollnova contends that ecobee’s smart thermostat products infringe the Asserted Patents.
The jury returned a verdict that (i) found ecobee infringed at least one of the Asserted Patents (but without identifying which patent or patents); (ii) found the ’495 patent’s asserted claims were not directed only to ‘well-understood, routine, and conventional’ technology; (iii) found the ’282 patent’s asserted claims were invalid; and (iv) awarded Ollnova lump sum damages of $11.5 million covering the life of the patents.
ecobee appeals the district court’s (1) denial of ecobee’s motion for a new trial based on the allegedly flawed jury instruction and verdict form as to ecobee’s challenge to the ’495 patent’s validity under 35 U.S.C. § 101; (2) denial of ecobee’s motion for judgment as a matter of law that the ’495 patent’s asserted claims are invalid under 35 U.S.C. § 101; (3) denial of ecobee’s motions to dismiss under 35 U.S.C. § 101 for the ’887 and ’371 patents; (4) denial of ecobee’s motion for judgment as a matter of law concerning non-infringement of the ’371 patent; (5) denial of ecobee’s motion for a new trial due to the verdict form’s inclusion of a single question covering infringement for all the Asserted Patents; and (6) denial of ecobee’s Daubert motions to exclude expert testimony related to damages and its marking defense. Ollnova appeals the district court’s order that prejudgment interest is limited to the time period allowed under 35 U.S.C. § 286.
Judge Chen then summarized the panel’s holdings:
For the reasons below, we vacate the infringement and damages judgments and remand for proceedings consistent with this opinion, including a new trial on infringement and damages. We vacate and remand for further proceedings under Alice step two of the 35 U.S.C. § 101 analysis as to the ’495 patent. We affirm the district court’s determinations that the asserted claims of the ’887 and ’371 patents are not directed to an abstract idea under 35 U.S.C. § 101. We also affirm the district court’s denial of ecobee’s motion for judgment as a matter of law concerning non-infringement of the ’371 patent. Because we vacate the damages judgment, we do not reach ecobee’s remaining arguments regarding its Daubert motions on damages and marking or Ollnova’s arguments regarding prejudgment interest.
In terms of explaining the court’s holding, Judge Chen turned to the merits of “ecobee’s challenges to the verdict form.” He agreed with ecobee’s argument “that the verdict form improperly combined all Asserted Patents into a single infringement question and permitted the jury to find liability without unanimous agreement that ecobee infringed any particular claim of any patent.” Judge Chen noted that in a previous case the court already “held that a materially identical verdict form constituted an abuse of discretion.” He explained that this “structure erroneously required a ‘Yes’ answer to the question of whether defendant infringed ‘ANY’ of the asserted claims even in a situation where all jurors did not agree that the same patent was being infringed.” As a result, he said, this “violated the defendant’s right to a unanimous verdict on each legal claim.”
Next, Judge Chen addressed the merits of “ecobee’s argument that the jury instructions and verdict form on the ’495 patent’s eligibility were erroneous.” He noted that, to “determine whether an invention claims ineligible subject matter, we engage in a two-step process established by the Supreme Court.” Judge Chen explained that the “district court held at step one that the ’495 patent’s claims were directed to [an] abstract idea,” but “neither the district court’s . . . step two verdict form nor the related jury instructions informed the jury that the ’495 patent’s claims were directed to an abstract idea.” He further explained the lower court did not “instruct the jury that the abstract idea itself could not supply the inventive concept.” Judge Chen concluded that “the district court’s instruction . . . effectively permit[ted] the jury to treat the abstract idea itself as supplying the inventive concept, contrary to” the court’s precedent.
Judge Chen then turned to the merits of “the district court’s denial of ecobee’s motion for judgment as a matter of law that the ’495 patent’s asserted claims are invalid under 35 U.S.C. § 101.” He noted that “[j]udgment as a matter of law is appropriate only when ‘a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.'” Judge Chen then explained that material factual disputes “foreclose judgment as a matter of law.”
Judge Chen next addressed the merits of the ecobee’s contention “that the district court erroneously concluded that the asserted claims of the ’887 patent are not directed to an abstract idea.” He disagreed with ecobee’s argument “that the claims are directed to ‘the abstract steps required to collect, analyze, and selectively communicate data.’” He found that “characterization oversimplifies the claims by ignoring their specific operational limitations.” Here, he said “the claims recite a particularized set of constraints that alters when and how data is collected and transmitted.”
Next, Judge Chen turned to the merits of ecobee’s contention that “the ’371 patent are not directed to an abstract idea.” He explained that, “[s]imilarly to the ’887 patent, the claims of the ’371 patent are directed to a specific improvement in the operation of automation components within a wireless communication system.” Judge Chen also noted how a particular claim “is similar to those held eligible” under a controlling case, where “a specific operational change resulted in a functional improvement.” He explained that, similarly here, the claim “improves communication within a BAS network” and is likewise “not directed to an abstract idea.”
Finally, Judge Chen turned to ecobee’s argument “that it is entitled to judgment as a matter of law that the ’371 patent’s asserted claims are not infringed because the accused products do not communicate the same COV update repeatedly.” He explained “ecobee argues that the claims require that the exact same message is repeated and that its thermostats therefore do not infringe because they do not repeat the same updates.” Judge Chen disagreed. He noted how “Ollnova’s expert explained when ecobee’s thermostats send information to a server, the server will reply with a message.” But, he continued, if “the server does not reply, then ecobee’s thermostat will send the same information again.” He concluded the “jury was entitled to credit that testimony and find that the same message was repeated.”
As a result of Judge Chen’s analysis, the panel affirmed-in-part, dismissed-in-part, vacated the judgment, and remanded the case.