US patent damages: Constellation and EcoFactor

In the case of comparative licences, the decisive factor is not simply whether another licensee has paid a particular amount. What matters is what technical use and what commercial arrangement that amount actually reflects. Two judgements highlight different aspects of this assessment: EcoFactor, Inc. v. Google LLC of 21 May 2025 and Constellation Designs, LLC v. LG Electronics Inc., originally dated 28 April 2026, amended and republished on 31 August 2026.

Constellation: Other patents do not preclude comparability

In Constellation, No. 2024-1822, the Federal Circuit accepted the basis for a ‘built-in apportionment’ approach based on Zenith licences. Technical comparability was demonstrated, amongst other things, by similar decoding functions and technological advantages within the ATSC context. Economically, there were similarities in terms of products, licence structure, term and US relevance. The fact that the comparable licences covered different patents was therefore not the sole decisive factor.

Built-in apportionment is therefore no substitute for a comparability test. Rather, this approach presupposes that the comparison used already contains a sound allocation of the remunerated value to the relevant technology.

EcoFactor: A one-sided „Whereas“ clause does not constitute evidence of an agreed unit licence rate

The en banc decision in EcoFactor, No. 2023-1101, concerns the underlying facts of the case. The damages expert had derived a unit licence rate from three flat-rate licences. However, the preambles cited reflected the licensor’s view, rather than a corresponding agreement between the licensees. Other contractual provisions contradicted the alleged pricing basis. The Federal Circuit therefore considered the expert’s opinion to be unreliable and ordered a new damages trial.

The decision does not prohibit either blanket licences or settlement agreements as such. It takes issue with the treatment of an unsubstantiated factual premise as a technically sound basis for the calculation. In practice, this means that a known one-off payment must not be divided by sales volumes selected retrospectively without being able to reliably establish the volumes used and their connection to the pricing at the time.

Which documents make the comparative licence truly usable

Rule 702 requires sufficient facts or data, reliable methods and their reliable application to the case. The party offering the evidence must prove the conditions for admissibility with a preponderance of probability. The Committee Notes on the 2023 amendment expressly clarify that the sufficient factual basis must not be reduced, as a matter of general principle, to a mere question of the balance of evidence.

When structuring the expert report, it is therefore advisable to provide a clear step-by-step breakdown from the contract to the calculated licence rate. The text of the contract, the rights for which remuneration has actually been paid, any sales assumptions made and any adjustments applied should be documented separately. It should also remain clear which information is definitive and which is merely an estimate.

In the case of cross-licences, for example, an additional valuation issue arises as to whether the cash payment represents the full exchange value or merely a net balance. When making comparisons, it is necessary to examine the significance of litigation risks that have already arisen in relation to the payment. These points should not be obscured by the blanket term „comparable licence“.

In the case of FRAND, there is also the distinction between the value of the technology and the value of standardisation

Constellation does not determine a global FRAND rate. With regard to SEP damages, Ericsson, Inc. v. D-Link Systems, Inc., 773 F.3d 1201 (Fed. Cir. 2014), remains relevant: The remuneration is intended to reflect the technological contribution, not any added value arising solely from inclusion in the standard. At the same time, abstract references to ‘hold-up’ or ‘royalty stacking’ do not automatically suffice for corresponding jury instructions; a factual link to the evidence is required.

A FRAND-based defence should therefore not merely criticise third-party licence agreements. It should specifically demonstrate which value component is being remunerated unlawfully, or which actual cumulative licence burden is relevant to the case in question.

Ensure that admissibility, sufficiency of evidence and alternative claims are dealt with separately

A Rule 702 challenge to the reliability of the expert report and a Rule 50 application on the grounds of insufficient evidence raise different issues. They should be prepared with appropriate reasoning in each case.

Footnote 5 of the amended Constellation judgement is particularly instructive: it was only during the oral appeal hearing that the Regional Court requested that the damages awarded in respect of individual claims under section 101 be set aside in the event of a negative outcome. The court treated this foreseeable challenge – which had not been raised in the opening brief – as having been raised out of time. It does not follow from this, however, that there is a general legal principle to the effect that the dismissal of individual claims leaves a uniform amount of damages unaffected.

The practical implication is that the licence comparison, the valuation method and the procedural application must all be consistent. A sound economic objection is of no use if it is based on an unsubstantiated price assumption or is raised at the wrong stage of the proceedings.

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