CAFC Reverses EDTX Infringement and Damages Rulings, Upholds Denial of JMOL on Section 101

Last week, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a precedential decision in Ollnova Technologies Ltd. v. ecobee Technologies ULC vacating judgments entered by the Eastern District of Texas and remanding to determine patent-eligibility issues under 35 U.S.C. § 101. The Federal Circuit remanded primarily due to the district court’s erroneous jury instructions regarding the subject matter eligibility test under Alice, and dismissed ecobee’s patentability challenge to Ollnova’s patents directed to building automation systems (BAS) that address technical challenges present in wireless networks.

Jury Verdict Form Erred in Failing to Identify Abstract Idea, Posing Single Question on Infringement

Ollnova sued ecobee in March 2022 alleging that ecobee’s smart thermostat products infringe on claims of three patents held by Ollnova: U.S. Patent No. 7860495, U.S. Patent No. 8264371, and U.S. Patent No. 7746887. The ‘495 patent describes a dual wireless network architecture for BAS applications providing redundancy so that building components like Bluetooth networks or air quality control systems can be maintained if one network fails. The ‘371 patent claims techniques for wirelessly communicating change-of-value (COV) information, such as temperature changes away from a set point, in ways that mitigate communication failure. The ‘887 patent claims a system for monitoring building systems that addresses bandwidth and power issues by using defined polling intervals instead of continued monitoring.

After ecobee filed a motion to dismiss all patent claims for subject matter ineligibility under Section 101, the district court found that the asserted claims of the ‘495 patent were directed to the abstract idea of “controlling generic ‘components’ using information from two separate sources,” but factual disputes remained as to whether the claims survived Alice step two. The district court also found that the ‘371 and ‘887 patents were directed to patent eligible subject matter at Alice step one. After trial, while the jury’s verdict form asked invalidity questions on a patent-by-patent basis, the form asked a single question as to whether ecobee infringed Ollnova’s patents.

On appeal, the Federal Circuit agreed with ecobee that the jury verdict’s infringement question was improper for allowing the jury to find liability without unanimous agreement that ecobee infringed any particular patent claim. The appellate court found the verdict form to be materially identical to the jury’s form in Optis Cellular Technology v. Apple (2025), which was also appealed from the courtroom of U.S. District Judge Rodney Gilstrap. In Optis, the CAFC had already rejected arguments raised by Ollnova in this appeal that the form’s claim-by-claim assessment of infringement resolved the error, reiterating that the jury’s damages verdict does not establish unanimity that the same patent was infringed.

The Federal Circuit also agreed with ecobee that the jury’s instructions as to the ‘495 patent’s validity were erroneous. Although the district court reserved Alice step two for the jury to resolve factual disputes, the verdict form never instructed the jury that the ‘495 patent was directed to any abstract idea, let alone what that idea was, or that the abstract idea itself could not supply the inventive concept at Alice step 2. The proper analysis under Alice required the district court to instruct the jury on that underlying abstract idea to properly frame the legal analysis of whether the inventive concept identified at step 2 provides significantly more than the abstract idea identified at step 1.

In a footnote, the CAFC opinion, authored by Circuit Judge Raymond Chen, noted that an abstract idea may be identified in several ways via a ruling, a stipulation, an assumption, or otherwise. “Thus, nothing in this opinion should be taken to cast doubt on district courts’ practice of denying motions… based on the existence of fact disputes at step two, without definitively ruling as to step one.” The footnote further clarified that district courts have discretion to determine the abstract idea before proceeding to step two, which can avoid the possibility that an after-trial resolution of step one would require a new trial if a different abstract idea were identified than the idea reflected in the jury’s instructions.

CAFC Affirms Denial of JMOL on Section 101 for Each BAS Wireless Network Patent

Although the Federal Circuit remanded the case for a new trial on infringement and damages with orders to properly instruct the jury on the application of Alice, the appellate court dismissed ecobee’s challenges to the district court’s denial of judgment as a matter of law (JMOL) that each of the asserted patents are invalid under Section 101. Because Ollnova did not argue that the ‘495 patent was valid as a matter of law, the Federal Circuit only needed to decide whether the jury had a legally sufficient basis for finding the challenged claims eligible, which was provided by Ollnova’s expert witness identifying the inventive concept as modes of wireless network control preventing loss of functionality during communication failure.

As to the ‘887 patent, the Federal Circuit likened the patent’s claims to those upheld by the CAFC in Packet Intelligence v. NetScout Systems (2020), another appeal from Judge Gilstrap’s courtroom. In that case, claims directed to classifying computer network traffic were patent eligible at Alice step one because they addressed a challenge unique to computer networks. Likewise, the ‘887 patent’s claims are directed to the specific technology-based improvement of using a “wireless automation device” to monitor and transmit parameters during set polling and transmission intervals. As such, the claims recite a specific technique governing when and how data is transmitted instead of merely describing data collection in the abstract, according to the appellate court.

The CAFC also found the claims of the ‘371 patent directed to specific improvements in the operation of components automated within a wireless network. The specific manner in which data is transmitted within a BAS system addresses issues of limited bandwidth in conventional BAS systems by ensuring that COV information is pushed by peripheral components instead of pulled by centralized components of the network. Citing to Uniloc v. LG Electronics (2020), the appellate court noted that the ‘371 patent’s challenged claim created a similar functional improvement to communication within BAS systems. The Federal Circuit also noted that it dismissed ecobee’s human-driven analogies with respect to the ‘887 and ‘371 patents for failing to account for the claimed improvements to wireless networks.

Finally, the Federal Circuit dismissed ecobee’s argument that it was entitled to JMOL of noninfringement as to the ‘371 patent, finding that Ollnova’s expert witness provided testimony on how COV updates are transmitted on ecobee products that the jury was entitled to credit. In remanding, the Federal Circuit avoided remaining challenges on the district court’s evidentiary and prejudgment interest rulings.