Antitrust Law Daily Wrap Up, ADVERTISING—W.D. Tex.: Smart thermostat manufacturer presses forward with Lanham Act claims, (Jul 7, 2015)

By Greg Hammond, J.D.

A designer and manufacturer of smart thermostats could move forward with claims that a competitor impermissibly used the manufacturer’s patented technology and falsely advertised it as its own. The federal district court in Austin denied the defendant’s motion to stay pending inter partes review of the asserted patents, finding that the harm to plaintiff far outweighs any simplification of the issues a Patent Trial and Appeal Board (PTAB) determination might have (Allure Energy Inc. v. Honeywell International, Inc., July 2, 2015, Pitman, R.).

Allure Energy Inc. and Honeywell International, Inc. are both in the business of designing, manufacturing, and selling home environment and energy products, including smart thermostats with proximity control. Allure filed suit against Honeywell, alleging that Honeywell’s Lyric thermostat infringes certain of Allure’s patents and that Honeywell was promoting Allure’s protected technology as its own in order to unfairly compete and gain advantage in the emerging market of smart thermostats. Consequently, Allure brought claims for patent infringement and false advertising under the Lanham Act. Honeywell filed three petitions for inter partes review with the U.S. Patent and Trademark Office, challenging the validity of the asserted patents, and moved the district court to stay Allure’s suit until the PTAB resolves the petitions.

The court declined to stay the case, ultimately finding that any simplification of the issues a Patent Trial and Appeal Board determination may offer would be far outweighed by the undue prejudice a stay would cause Allure. Specifically, Allure contended that Honeywell’s continued impermissible use of Allure’s patented technology, combined with Honeywell’s false advertising, severely undermined Allure’s ability to compete in the very small marketplace for smart thermostats, and could force Allure out of the market. The court noted that it could be six months before the U.S. Patent and Trademark Office even considers whether to grant inter partes review, and it could be an additional year after, or longer, before any determination is made. Delaying the suit for that period of time would provide Honeywell with a tactical advantage while greatly prejudicing Allure, according to the court.

The case is No. 1-15-CV-079 RP.

Attorneys: Bahrad A. Sokhansanj (McKool Smith PC), and John S. Artz (Dickinson Wright PLLC) for Allure Energy, Inc. Michael J. Newton (Alston & Bird LLP) for Honeywell International Inc.

Companies: Allure Energy Inc.; Honeywell International, Inc.

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