U.S. Patent Damages: Constellation and EcoFactor

In the case of comparative licenses, the decisive factor is not merely whether another licensee has paid a certain amount. What matters is what technical use and what economic agreement that amount actually reflects. Two decisions highlight different aspects of this analysis: EcoFactor, Inc. v. Google LLC, dated May 21, 2025, and Constellation Designs, LLC v. LG Electronics Inc., originally dated April 28, 2026, amended and reissued on August 31, 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 licenses. Technical comparability was demonstrated, among other things, by similar decoding functions and technological advantages within the ATSC context. Economically, there were similarities in products, licensing structure, term, and U.S. relevance. The fact that the comparable licenses covered different patents was therefore not the sole determining factor.

Built-in apportionment is therefore not a substitute for a comparability analysis. Rather, this approach presupposes that the comparison used already includes a sound allocation of the value paid to the relevant technology.

EcoFactor: A one-sided „Whereas“ clause does not prove that a unit licensing rate was agreed upon

The en banc decision in EcoFactor, No. 2023-1101, concerns the underlying facts of the case. The damage expert had derived a per-unit licensing rate from three blanket licenses. However, the preambles cited reflected the licensor’s view, not a corresponding agreement among the licensees. Other contractual provisions contradicted the alleged pricing basis. The Federal Circuit therefore deemed the expert’s opinion unreliable and ordered a new damages proceeding.

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

What Documents Make the Comparison License Truly Useful

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

When structuring the expert opinion, it is therefore recommended to provide a clear step-by-step breakdown from the contract to the calculated license rate. The text of the contract, the rights for which compensation was actually paid, existing sales assumptions, and the adjustments applied should be documented separately. It should also remain clear which information is definitive and which is merely estimated.

In the case of cross-licenses, for example, an additional valuation question arises: Does the cash payment represent the full exchange value or only a net amount? When making comparisons, it is important to examine the significance of litigation risks that have already arisen for the payment. These points should not be obscured by the broad term „comparable license.“.

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

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 compensation is intended to reflect the technological contribution, not added value arising solely from inclusion in the standard. At the same time, abstract references to hold-up or royalty stacking are not automatically sufficient for corresponding jury instructions; a factual connection to the evidence is required.

A FRAND-based defense should therefore not merely criticize third-party license agreements. It should specifically identify which value component is being improperly compensated or which actual cumulative licensing burden is relevant to the case in question.

Ensure the admissibility, sufficiency of evidence, and alternative motions are addressed separately

A Rule 702 challenge to the reliability of the expert opinion and a Rule 50 motion based on insufficient evidence address different issues. They should be prepared with appropriate reasoning for each.

Footnote 5 of the amended Constellation decision is particularly instructive: The Regional Court did not request, until the oral appeal hearing, that damages be set aside for individual claims under § 101 in the event of a negative ruling. The court treated this foreseeable challenge—which had not been raised in the opening brief—as belated. This does not, however, establish a general legal principle that the dismissal of individual claims leaves a uniform amount of damages unaffected.

The practical implication is that the license comparison, the valuation method, and the procedural motion must be consistent with one another. A well-reasoned economic objection is of no help if it is based on an unsubstantiated price assumption or is raised at the wrong stage of the proceedings.

Legal Notice

These articles are provided for informational purposes only and do not constitute individual legal advice. They may contain errors or omissions and reflect the status as of the date indicated. We do not guarantee that they will be updated on an ongoing basis. Use of these articles does not create an attorney-client relationship.