Nest Labs, a start-up that makes energy efficient equipment, will license patents from the portfolio of Intellectual Ventures in a move that appears intended to 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.
The deal will improve Nest’s position in the ongoing litigation with Honeywell, and is likely lead to a truce, or some sort of licensing deal between the two companies.
In the bigger picture, the deal could be bad news for start-ups 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 start-up and a patent troll to make the news thisweek. Earlier, Wired reported how a glasses start-up 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 start-ups is that money that could flow to research or hiring instead gets channelled into dead weight costs of litigation and administration.
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