Amidst the launch of its second-generation smart thermostat, Nest Labs, the startup founded by Apple alums, has been defending itself against the February patent infringement lawsuit filed by arch-rival Honeywell.
Richard Lutton, Nest’s general counsel, told the San Jose Business Journal on Tuesday that the U.S. Patent Trade Office has rejected six of the seven patents at the heart of Honeywell’s lawsuit. Those include claims that Nest infringed on Honeywell’s IP with the round shape of the Nest thermostat, as well as some of the internal workings of the technology.
UPDATE: Honeywell has responded by pointing out that the USPTO has accepted all 7 of its patent claims for re-examination, not rejected them. As a Honeywell spokesman pointed out in an email, 94 percent of all re-examination requests are granted, which puts a decidedly different cast on the legal ramifications of Nest's announcement.
It’s all part of the Palo Alto, Calif.-based startup’s strategy of challenging Honeywell’s legal claims prior to trial. Nest fired back against Honeywell’s lawsuit in April, saying that the thermostat kingpin’s claims were meritless and that it would defend itself vigorously against them.
Hiring Lutton was part of that strategy. Prior to joining Nest in April, he managed the patent portfolio of Apple, which just won a $1.05 billion jury award against Samsung over patent infringement claims regarding the iPhone and Samsung’s Galaxy Tab smartphone.
Of course, Samsung has countered with infringement claims against Apple over its iPhone 5 design, as well as getting a judge to overturn an injunction on the sale of Samsung’s Galaxy Tab. It’s hard to predict how these court battles are going to turn out.
Honeywell did not immediately respond to requests from reporters for comment on Lutton’s statement Tuesday. Keep an eye out for official announcements from the USPTO for more developments on this matter.
In the meantime, Nest has been selling its thermostat online, where it’s garnered a “top ten in Amazon home improvement" ranking and a "bestseller" at Lowe's online store. Nest is also selling via the Apple Store, and has started giving away free thermostats under a program being run by Texas utility Reliant Energy.
The New York Times quoted a spokesperson for the 136-employee Nest who said the startup has sold “in the mid-hundreds of thousands” of units to date, though Nest spokespeople would not provide details on unit sales in a briefing last week. The company also declined to comment on the startup's Series C funding round. While Nest has declined to say how much money it has raised to date, reports place the likely amount at between $50 million and $80 million.
In the meantime, it’s far from alone in trying to turn the much-ignored smart thermostat into a device that people will want to interact with. Honeywell, which has some sort of thermostat or energy control in about 150 million homes around the world, also has a line of programmable controllable thermostats, including its latest UtilityPRO thermostats, capable of two-way ZigBee communication, with some 400,000 units deployed as of early this year.
On the utility front, smart thermostats are an integral part of home energy management projects around the world. Canadian startup Energate’s smart thermostats are connecting to utility variable pricing and energy saving programs in Oklahoma and Ontario. Brooklyn-based startup EnergyHub is providing its Mercury software platform for Radio Thermostat of America (sold as 3M) thermostats, which sell for just $99. Arlington, Va.-based startup Opower is working with Honeywell on a next-generation thermostat that combines Opower’s data analytics and behavioral science smarts with Honeywell’s market heft.
That’s only a short list, by the way. Startups like Ecobee, iThermostat, Alarm.com, and many more are also trying to combine smart thermostats with home security and automation systems, utility incentive programs and other paths to market. Whether patent infringement lawsuits will start to impact the broader smart thermostat rollouts going on around the country remains to be seen.