Apple alumnus to help Nest fight backApril 12, 2012: 9:47 AM ET
The maker of an innovative thermostat is turning to Apple's former intellectual property chief in its battle with technology giant Honeywell.
By Richard Nieva, contributor
FORTUNE -- Nest Labs, the company that makes the wifi-enabled, self-adjusting Nest Learning Thermostat -- and was founded by two Apple alumni -- today added one more former Apple employee to the roster. Embroiled in a patent lawsuit with technology giant Honeywell, Nest brought in Chip Lutton, Apple's former intellectual property chief, as the startup's general counsel.
Lutton's welcoming committee includes Nest CEO Tony Fadell and vice president of engineering Matt Rogers, two of the top executives on Apple's (AAPL) original iPod team. Today Nest filed a lengthy document in court responding to the lawsuit that Honeywell (HON) filed against the company in February. The document also demands a jury trial, according to information provided to Fortune. Honeywell, a veteran in the market with its iconic round thermostats, claims Nest infringed on seven of its patents, including technology that lets the thermostat take power from another energy source.
The most resounding theme in Nest's counterclaim is that Honeywell is stifling innovation by what is a "meritless" claim. "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's counterclaim reads. Naturally, Honeywell doesn't see it that way. "Honeywell stands by its claims alleging infringement of seven patents related to thermostat technology," a company spokesperson told Fortune. "We are an innovation-driven company, and as such, our IP is a prized business asset that we protect vigorously."
But while the startup is on the defensive end of this suit, Lutton also knows quite a bit about being on the aggressor's side. During his time there, Apple famously went after Android-oriented companies that Steve Jobs felt overstepped Apple's intellectual property -- namely Google (GOOG), HTC and Samsung. Lutton left Apple last year after ten years, right in the middle of one of those patent battles.
Still, Lutton says this is unlike anything he dealt with at Apple. He described some of the "different flavors" of patent issues: big, innovative companies intending to carve out their space, and "trolls" who develop patents without making products themselves, while taxing those who do. Then there are the business transactions, like the deal Microsoft (MSFT) made with America Online (AOL) earlier this week, buying 800 of its patents for over $1 billion. Lutton claims Honeywell belongs to a fourth category, leaning on "older patents that aren't directly connected to modern technology," and using them to hamper progress. "This is a little different animal than anything I directly saw before," Lutton says.
As is standard, Honeywell now has twenty-one days to respond to the counterclaim. There is no timeline yet, but Lutton says it will likely take at least a year to go to court. In the meantime, neither company has slowed down on the household gadget front. Last week, Nest Labs released Nest 2.0, a software update that allows a user to access his energy history from a smartphone app. And last month Honeywell unveiled a bevy of new home devices, including new heaters and purifiers.
Nest will likely try to draw on Lutton's Apple experience as the case moves forward, which seems customary at the company. Even in court documents, Nest appears to channel the Apple way, either consciously or subconsciously. In the counterclaim, the company hashes out positive product reviews one-by-one, including quotes from the New York Times and the Wall Street Journal. Introducing the last news source, USA Today, the document seems to evoke Steve Jobs and his familiar keynote tag. "But there's one more thing," it says. For both companies, the punch line will have to wait until court day.