This morning, intelligent thermostat company Nest struck a patent licensing deal with notorious patent hoarder Intellectual Ventures. There are a variety of reasons for the deal but the primary purpose seems to be industry protection against patent hunters like IV and Nest legal opponent Honeywell.
Nest has been battling Honeywell over patents related to thermostats in the courts. This deal grants Nest two things. First, it gets access to a product that IV calls “IP For Defense” (it’s trademarked). Essentially this is a “use as needed” subscription to IV’s portfolio of over 40,000 patents. They can dip in and use them when they need to in court battles (ahem) or in counter-suits.
Second, Nest is also outright acquiring an unspecified “number of patents in areas of interest to Nest, including systems and methods for automatic registration of devices.”
“The licensing agreement avoids potential infringement suits between IV and Nest, but does not mitigate any potential legal liability/risk that Nest has with respect to Honeywell’s portfolio,” says Matt Mitchell, a patent attorney specializing in startups. “Practically, however, use of the patents in the agreement may give Nest the opportunity to counterclaim against Honeywell. This possibility could deter Honeywell from asserting future claims against Nest , encourage them to settle existing suits, or enter into more licensing agreements with Nest.
“Simply put, the agreement enhances Nest’s bargaining position against Honeywell.”
So the licenses don’t necessarily have a direct bearing in the Honeywell case, but the deal is definitely in response to the suit and threats of others. Indeed, Nest has already filed a counter-claim against Honeywell, and these patent agreements could add clout to that.
TechCrunch’s Matt Burns dove into the patents involved in the case:
The suit alleges Nest Labs infringes on several of Honeywell’s patents involving thermostats. Several, like 7159789 and 7159790, involve the round hardware mechanism, rotating dial and center screen placement. Others, namely 7142948 and 7634504, covers the user interface.
There is also a “natural language installer setup for controller” (7634504) patent asserted.
Notably, Intellectual Ventures’ business is predicated on the fact that it owns patents that can be exercised in lawsuits or claims against companies just like Nest.
Richard Lutton, Jr., vice president and general counsel at Nest, had the following to say about the deal:
Nest is very aggressive in bringing new technologies to market and our patent strategy – including the decision to acquire patents like those from Intellectual Ventures – is designed to keep pace. To date, we’ve filed almost 200 U.S. and international patent applications and we have hand-picked and acquired more in key areas, including the patents acquired from Intellectual Ventures. Our patents allow us to defend our innovative products in the market.
Buy in or die is quickly becoming the byword when it comes to companies developing heavily integrated devices like smartphones or smart thermostats. Companies like Apple, Google, Microsoft, Samsung and others file and hoard patents to protect their product portfolio and litigate with. And another whole layer of players like IV skip the whole product part of the equation and simply use a portfolio of acquired patents to squeeze money from the industry.
A Honeywell representative had not delivered a statement at time of publishing.