If you were wondering if smart thermostat startup Nest was going to roll over to be squashed by the Honeywell thermostat gorilla, the answer is a resounding no. On Thursday Nest announced that it has officially denied Honeywell’s patent infringement claims in court, and has brought on Apple’s former Chief Intellectual Property Officer Richard “Chip” Lutton as its new vice president and general counsel.
Nest in its court filing says it hasn’t infringed on Honeywell’s handful of patents, says those patents in question are invalid, and says it intends to stop, and seek compensation for, the Honeywell lawsuit. Honeywell filed the lawsuit in February and this is the first time that Nest has fought back.
Honeywell has long dominated the thermostat market and has a $47 billion market cap, compared to Nest’s tens of millions of dollars in venture funding and months in commercial production. But bringing on top legal counsel and defending itself in court, won’t exactly be cheap.
Nest, who’s founding team hails from Apple, only started selling its learning thermostat — which is a connected, smart thermostat with a sleek design — in November. While the company doesn’t disclose sales volumes, a Nest spokesperson told me they’ve done a recent survey of 10,000 customers (so they have at least that amount).
The lawsuit could potentially stifle innovation in the space, as I’ve pointed out. And Nest says in its court filing that:
The lawsuit is a bald effort by Honeywell to inhibit competition from a promising new company and product in a field that Honeywell has dominated for decades. . . Honeywell has a track record of responding to innovation with lawsuits and overextended claims of intellectual property violations.
Nest says the patents in question are “hopelessly invalid.,” and are “retreads—already invented by others years before, and in some cases by other teams at Honeywell that Honeywell hid from the Patent Office when pursuing the patents in this lawsuit.”
Honeywell’s suit is a misuse of intellectual property intended to harass Nest Labs and interfere with its commercial activities and relationships. Consistent with Honeywell’s pattern of past behavior, Honeywell’s motives are clear from a review of the merits and scope of the patents selected by Honeywell. Honeywell wants to use this lawsuit to scare a new competitor—and its customers, retailers and installers—out of what Honeywell believes is its space. But it will not work.
Lutton had been providing counsel to Nest, but has now joined the company full time. Lutton was Apple’s Chief Intellectual Property Officer for a decade, and left Apple last Summer. It’s fair to say that Lutton’s history at Apple indicates that he could bring an offensive-minded approach to litigation. He was the man in charge of fulfilling the late Steve Jobs’ vow as told to his biographer, Walter Issacson: ” I’m going to destroy Android, because it’s a stolen product.
However, Apple has little to show for that offensive. Despite forcing Android partners like HTC and Samsung to play spirited defense, no significant court ruling has been leveled against those companies. In fact, new Apple CEO Tim Cook has been reportedly willing to entertain settlement talks with Android vendors.
We conducted a survey on what our readers thought would come out of the potentially nasty legal tussle between Nest and Honeywell, and you can find those results here (subscription required). The biggest take aways from that survey were: readers think that Nest could be toast, and Honeywell is the new bully. What do you think now that Nest has responded?