On October 22, the ITC received a new Section 337 complaint captioned Smart Thermostats, Smart HVAC Systems, and Components Thereof. The complainant is EcoFactor, a software company that, according to its website, “uses data collected from Internet-connected thermostats to run patented energy algorithms, and automatically minimizes homeowner energy consumption.” Rather than offer these services directly to consumers, EcoFactor primarily contracts with energy retailers, utility companies, and HVAC installers.

The complaint alleges infringement of four patents related to internet-connected thermostats that monitor and automate air conditioner usage. For example, one of the patents describes the use of a smart thermostat to adjust temperature automatically in conjunction with weather forecasts and data about the efficiency of a home’s air conditioning unit.

Six respondent companies are named in the complaint, including three smart home device brands, two multinational industrial giants, and Google. Google’s Nest thermostat is far and away the most popular device in the market. According to public interest comments submitted to the ITC, approximately 90% of all smart thermostats sold in the United States are made by Google or fellow respondent Ecobee.

The ITC has yet to institute the investigation, but respondents have already raised the argument that EcoFactor’s patents are invalid for covering ineligible subject matter. More specifically, respondents argue that each of the asserted patents “is directed to the abstract idea of receiving, storing, and comparing data and lacks any inventive concept that could arguably reduce this abstract idea to a patentable invention.”

They have requested that agency designate the case for early disposition to address their validity argument. The ITC has the option, when instituting an investigation, to instruct the administrative law judge to make an early determination within 100 days of institution on a single issue in order to “limit unnecessary litigation, saving time and costs for all parties involved.”

The early disposition process can keep a vexatious patent holder from abusing U.S. trade remedy laws with a clearly deficient Section 337 complaint that merely serves to embroil respondents in expensive litigation. It enables the ITC to consider a threshold legal question that could negate the entire complaint before needlessly forcing the parties to produce extensive discovery evidence and testimony in order to hold hearings on claim construction, infringement, importation, domestic industry, and the public interest.

Since establishing the process in 2013, however, the ITC has rejected most requests for early disposition, stating that the issue in question was either not dispositive of the entire complaint or too complex to adjudicate effectively within 100 days. And in most cases where the ITC has agreed to use expedited procedures, the early determination went in the complainant’s favor or the case was settled or withdrawn before the process was completed.

The Smart Thermostats investigation looks like an ideal candidate for early disposition—respondents’ ineligible subject matter claim is certainly dispositive and fairly simple and straightforward to adjudicate.

But it’s also true that EcoFactor’s complaint, like so many others at the ITC, is a waste of agency resources even if the patents are not invalid. That’s because there is simply no practical need to invoke the power of a trade agency to block almost all imports of a consumer product made by American companies over a patent dispute that can be effectively adjudicated in federal court.

Image Credit: Dan Machold

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