Nest Labs, a startup that makes energy efficient thermostats, will license patents from the portfolio of Intellectual Ventures in a move that may help stave off a lawsuit from thermostat giant Honeywell.
In a deal announced on Wednesday, Intellectual Ventures said it is giving Nest non-exclusive access to its patents, including those related to the “automatic registration of devices.” Nest’s general counsel explained the deal as follows:
“To date, we’ve filed almost 200 U.S. and international patent applications and we have hand-picked and acquired more in key areas, including the patents acquired from Intellectual Ventures. Our patents allow us to defend our innovative products in the market.”
The statement did not explain if Nest is paying money or is instead giving Intellectual Ventures equity in exchange for the patent license. Update: It also did not say if the deal includes provisions that allow Nest or Intellectual Ventures to assert the patents (h/t to keninca in the comments).
The deal may improve Nest’s position in the ongoing litigation with Honeywell, and could lead to a truce, or some sort of licensing deal between the two companies. Nest CEO Tony Fadell will again be appearing at our RoadMap conference in November, where we might be able to ask him more about the deal.
In the bigger picture, the deal could be bad news for startups and the innovation economy because it confers resources and, possibly, more legitimacy, to Intellectual Ventures. The Seattle company, run by former Microsoft executive Nathan Myhrvold, does little actual inventing, but instead amasses old patents in order to file lawsuits and demand licensing fees from thousands of productive companies — a practice known as patent trolling. Intellectual Ventures is in the midst of raising another $3 billion to expand its trolling activities.
The Nest and Intellectual Ventures arrangement is the second deal between a startup and a patent troll to make the news this week. Earlier, Wired reported how a glasses startup had turned to the notorious troll lawyer Eric Spangenberg, who makes $25 million a year and likes to “go thug,” to protect itself from a questionable lawsuit.
The overall result of the deals between trolls and startups is that money that could flow to research or hiring instead gets channelled into dead weight costs of litigation and administration.