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Fadell knows a thing or two about patent lawsuits — as the former head of Apple's iPod and iPhone programs, he says he faced "an infringement letter probably every week." So it's no surprise he and the Nest team have turned to former Apple chief patent counsel Richard "Chip" Lutton Jr., who is joining the company as VP and general counsel today after having served as an advisor to the company for the past several months. Lutton says he thinks Honeywell's patents are "not very impressive" and "not very relevant" to what Nest is doing. "We think there's an answer to why Honeywell would do this... they jump in and try to scare new entrants back out of the market." Indeed, Fadell says Honeywell never called Nest prior to filing the lawsuit, and thus far has "rebuffed all attempts" to discuss the pending litigation.

""They're trying to strangle us, and we're not going to allow that to happen.""

"They are not trying to get money out of us," says Fadell. "They are trying to maintain the status quo." That status quo is pretty sad, according to Nest's filing: "In seven decades, there appears to be little more technological improvement to the flagship Honeywell thermostat than the replacement of a mechanical display with an LCD." And the programmable thermostats sold by Honeywell have failed to find favor with consumers, leading the company to enter what Nest calls "damage control mode" after reviewers heaped praise on the Nest thermostat.

Nest's full answer to Honeywell's lawsuit reveals the same arguments in greater detail. (It also contains amazing legal zingers like "Nest denies that Honeywell is an innovator in the area of thermostat technology.") According to the filing, "Honeywell has a track record of responding to innovation with lawsuits and overextended claims of intellectual property violations," and the patents in question should all be invalidated by prior art — even, in some cases, by previous Honeywell patents Nest claims the company hid from the Patent Office. What's more, Nest claims that some of Honeywell's patents require mechanical components like a potentiometer, which the computer-controlled Learning Thermostat doesn't have. According to Nest's filing, all of this leads to "the inescapable conclusion that Nest Labs does not infringe a single valid claim from any of the asserted patents." Here's the full list of Honeywell's patents Nest thinks are invalid or irrelevant, and why:

(See article for Honeywell patent by patent analysis)

Those are certainly compelling arguments, especially given Nest's claims that it doesn't even use the mechanical components required by some of these patents. But from a legal standpoint, the combination of noninfringement and invalidity defenses isn't generally as strong as countersuing using your own patents — think of how Apple and Samsung keep suing each other using different sets of patents to up the game. As a new startup, Nest doesn't have a patent portfolio to hit Honeywell back with — and given that Honeywell isn't even trying to negotiate, it appears the larger company is content to sit back and try to bleed Nest dry through months of litigation. Then again, Nest isn't exactly the usual small company, and Fadell says his investors — which includes players like Google Ventures and Kleiner Perkins — are "totally behind us, and actually helping us in many ways as well."

""We don't believe we should be changing the product whatsoever.""

Although Nest is insistent that Honeywell is abusing bad patents to maintain its dominance in the thermostat market, Fadell is pragmatic about getting things resolved. "We'd be more than happy to have a professional discussion with Honeywell to understand what their issues really are" he says, adding that the company is open to all options "if there's something that makes business sense to our investors, our employees, and our consumers." But on one point Fadell draws the line: "We have multiple defenses against those seven patents, and we don't believe we should be changing the product whatsoever." Thousands of happy Nest owners undoubtedly agree.

All the greats have been ruined. HP, Honeywell.... I grew up with their equipment back in the tube days when it was industry standard.

Now? Crap equipment. Litigations.

/johnny

Honeywell’s patents and other IP are all owned by a separate corporation called Honeywell Intellectual Property Inc. Ever wonder why companies do things like this?

Ever wonder why you can’t adjust or check your thermostat from your phone or the web? Nest allows you to do that. And now you know why HON is so worried by it.

Thanks for posting this. I am in the market for a thermostat and am not at all impressed with the honeywell. I’ll be checking out the Nest stuff.