The Federal Circuit “recently clarified the scope of Rule 702 and the district court’s gatekeeping role in assessing the admissibility of expert testimony in EcoFactor, Inc. v. Google LLC, 137 F.4th 1333, 1338-40 (Fed. Cir. 2025)” Willis Elec.Co., Ltd. v. Polygroup Ltd. 2026 U.S. App. LEXIS 4588 (Fed. Cir. 2026). In Willis, the Federal Circuit provided further insight into the assessment of the admissibility of expert testimony.
In EcoFactor, the Federal Circuit determined that the plaintiff’s damages expert’s testimony was “not based on sufficient facts or data, as required by Rule 702(b).” By relying on royalty rates stated in the whereas clauses of license agreements, unsupported by a royalty analysis using sales data or any evidence that both parties to those license agreements agreed to the whereas clause royalty rates, the plaintiff’s damages expert was found not to have provided a sufficient basis for his royalty rate testimony. As a result of this determination, the Federal Circuit’s decision was that the district court abused its discretion by denying the defendant’s motion to exclude the testimony of the plaintiff’s damages expert.
In Willis, the Federal Circuit reached a different conclusion, affirming the district court’s denial of a new trial on damages.
Willis’s damages expert used two methods to determine a reasonable royalty range that the parties to the hypothetical negotiation would have agreed to, and opined as to a specific reasonable royalty in that range using an analysis of the Georgia-Pacific factors. The first of these methods was an Income Approach apportioned to the patent claim at issue and the second was a Market Approach apportioned to the patent claim at issue. Polygroup contested the reasonableness of the application of these methods to the facts of the case, but not the approaches themselves.
Income Approach
Polygroup asserted that Willis’s damages expert’s income approach was unreliable because it used an averaging methodology to account for differences in profitability across accused products that offered a variety of features in addition to practicing the asserted patent claim. Polygroup also asserted that Willis’s damages expert failed to account for discounts regularly negotiated by customers and relied on quoted prices of the accused products rather than actual revenues and profit margins. The Federal Circuit found that Willis’s damages expert provided a sufficient basis for relying on the data used that could be assessed by the jury as to the weight that should be placed on the analysis. Similarly, the Federal Circuit found in Willis that:
Whether averaging was the best approach is a matter on which reasonable minds could differ, but it does not undermine the reliability of [Willis’s damages expert’s] methodology to the point of exclusion. Rule 702 does not require a damages expert to account for every conceivable variation among products, nor does it demand mathematical exactness in an area necessarily involving ‘approximation and uncertainty.’ Willis at *30 (citing to EcoFactor, 137 F.4th at 1340).
Willis’s damages expert relied on comparisons of profits and popularity based on sales volumes between accused and non-accused products as well as Polygroup’s own survey data on the popularity of the accused feature and Polygroup’s internal assessment of the benefits of the accused feature to perform an apportionment reflecting the benefits of the accused feature over the next best alternative. Again, the Federal Circuit found that Polymarket’s objection to inferences drawn from that data by Willis’s damages expert were objections that would go the weight the jury might place on the opinions of Willis’s damages expert from the “judgment calls, assumptions, and modeling choices” rather than the admissibility of the related testimony.
Market Approach
Willis’s damages expert considered five comparable license agreements under the Market Approach. One of these, characterized as most comparable by Polymarket, had a royalty rate lower than the royalty rate opined to by the expert and lower than the royalty rate determined by the jury. The Federal Circuit determined that the characterization of this license agreement as most significant was not supported by the record. In addition, Willis’s damages expert explained all five license agreements were important to the royalty opinion, and provided the expert’s reasoning in evaluating the similarities and differences between these agreements and the royalty rate that would have been agreed to in the hypothetical negotiation. The district court acknowledged that Willis’s damages expert could have provided more detail regarding the reasoning that the lower royalty in the license favored by Polymarket was not the rate the parties to the hypothetical negotiation would have agreed to, but the district court found there was not a basis to determine that Willis’s damages expert’s analysis of the license agreements was sufficiently “unreliable or prejudicial as to render the damages verdict improper.” The Federal Circuit agreed, contrasting this case to EcoFactor:
We believe the district court struck the correct balance. This case is materially different from EcoFactor, where we held expert testimony unreliable because it was predicated on an inaccurate characterization of the licenses (i.e., that the licensees in that case had agreed upon the rate.) EcoFactor, 137 F.4th at 1346 (holding that where “the relevant [record] evidence is contrary to a critical fact upon which the expert relied, the district court fails to fulfill its responsibility as gatekeeper by allowing the expert to testify at trial.”). The dispute here, in contrast, is one of fact over which reasonable minds can differ. Willis at *4
Georgia-Pacific Analysis
Willis’s damages expert used a Georgia-Pacific analysis to reach a royalty rate opinion from the appointment-based royalty rate ranges determined under the Income and Market Approaches. Polymarket argued that the Georgia-Pacific analysis could not overcome the flaws it identified in the Income and Market Approaches. In addition, Polymarket argued that Willis’s damages expert’s qualitative analysis of the Geogia-Pacific factors could not support a reasonable royalty award, which it claimed required numerical adjustments. The Federal Circuit disagreed with Polymarket, stating that the “Georgia-Pacific analysis necessarily permits qualitative analysis because multiple factors … do not lend themselves to mathematical precision, even in a hypothetical negotiation” and “[i]t is sufficient for an economic expert to explain how qualitative considerations influence where a royalty should fall within an already-apportioned numerical range,” noting that this is consistent with the “reality that, for several decades, reasonable royalty opinions have rested on experts applying qualitative Georgia-Pacific factors within the hypothetical negotiation construct.” Willis at *49-50.
Conclusion
In EcoFactor, the Federal Circuit determined that the plaintiff’s damages expert’s testimony was not reliable as it relied on a royalty rate as the hypothetical negotiation starting point and conclusion that was only identified in license agreement whereas clauses, with no analytical support from sales analysis or evidence of agreement to that rate by the licensees to those license agreements.
In contrast in Willis, the Federal Circuit determined that a jury could consider the opinions of Willis’s damages expert, finding that while there was a basis for disagreement over the expert’s analysis and conclusions, the objections to the methodology appropriately went to the weight to be applied to the expert’s testimony and not its admissibility.