Honeywell's Lawsuit Against Nest: The Perfect Example Of Legacy Players Using Patents To Stifle Innovation

from the if-you-had-invented-nest,-you'd-be-making-nest-devices dept

I'd been meaning to write about this lawsuit ever since it was filed, but other stuff got in the way, so this is a bit of a catch-up post, to go along with Honeywell's response to Nest's counterclaims (which we'll get to in a bit). But the key to this highly questionable lawsuit is that electronics giant Honeywell wants to use the patent system to effectively kill off the well-hyped Nest thermostat. Nest, a company that launched just last fall, got some well-deserved attention for applying an Apple-like design sense to everyday gadgets -- starting with the lowly thermostat, a device that really hasn't seen that much innovation in quite some time. The product was, indeed, a pretty big leap forward, and I know a bunch of people who have Nest devices and love them.

But, of course, under a crony capitalist system, the incumbents can't have any of this nasty "disruption." Honeywell was not pleased. Bizarrely, just days before Honeywell filed the lawsuit, it had told GigaOm that it had built something similar to Nest but killed it off because consumers weren't interested. Yeah, this certainly sounds like a company jealous that Nest actually figured out how to truly innovate (bring something to market in a way consumers want) rather than just invent (create something new).

The simple fact here is that consumers really seem to like the Nest, and apparently Honeywell is ill-equipped to compete in the marketplace. So it's response is to sue and try to kill off the competition. It's a sickening display of a legacy company resting on its laurels afraid to actually compete in the market against a disruptive player that's younger and nimbler and actually in touch with what consumers want. Out of this, we get some absolutely ridiculous claims, such as the suggestion that Honeywell has patented the idea of a thermostat asking you what temperature you like, and only Honeywell could do such a thing:
Honeywell also seems to suggest that merely connecting a thermostat to the internet infringes on its patents, because, of course, no one else could have possibly thought of connecting home devices to the internet before Honeywell came along. While the filing also does highlight some evidence that Nest looked at Honeywell thermostats, isn't that how competition works? You look at what others are doing, and figure out how you can do it better? Basically, what Honeywell seems to be admitting is that it can't do it better, so instead it will sue.

Nest's counterclaim hit back pretty hard on a bunch of these points, stating upfront:

This 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. Nest Labs, with its Nest Learning Thermostat, has generated consumer and critical enthusiasm around the home thermostat -- a device that most people had long since written off as a bland, dumb appliance.... That "blah-looking controller" on the market today is very often from Honeywell, which has long dominated the thermostat market, but has yet to generate a device that offers ordinary consumers as much as the Nest Learning Thermostat. Instead of countering product innovation with its own new products, Honeywell has a track record of responding to innovation with lawsuits and overextended claims of intellectual property violations.

Nest also points out that Honeywell has lost previous lawsuits that similarly appeared to be bullying competitors. The Nest response doesn't just call out the company for what it's obviously trying to do, but further claims that all of the patents are "hopelessly invalid" and points to prior art that raises significant questions about the validity of the patents in play.

Nest also files some counterclaims for declaratory judgment -- which basically start out as a long commercial about Nest and how awesome everyone thinks it is. While this may seem out of place, there's a reason for this. The company is trying to demonstrate that it's not just a clone of Honeywell, but that it (not Honeywell) is the true innovator here. It not only pumps itself up, but provides plenty of evidence of Honeywell's own failures to innovate.

The latest news is that Honeywell has now filed its own response to Nest's counterclaims and (not surprisingly), Honeywell is not at all happy. It says that Nest's counterclaims are "self-serving characterizations based on Nest Labs' unfounded opinions and speculations that are irrelevant to Honeywell's valid claims..." These are legal filings, so I'm pretty sure that all of them are "self-serving." As for whether or not they're "unfounded opinions and speculations," that seems like a pretty big stretch from Honeywell, in an attempt to smear any competition making valid legal arguments against them.

Either way, it does not seem like either side is likely to back down any time soon. So, what remains is a classic case of a legacy industry player who failed to adapt reacting to the young upstart everyone likes by going legal, rather than actually competing. This is pretty short-sighted. If it actually competed in the market it might learn why people like the Nest device and why they're buying them instead of Honeywell thermostats. All I know is that my house has a Honeywell thermostat currently, and this lawsuit makes me much more interested in buying a Nest device to replace it.

Filed Under: competition, design, monopoly, thermostats
Companies: honeywell, nest labs