Sonos v. HEOS – War is Over, Peace Has Come

hippie family w/peace signOn Friday last week, we learned that Sonos and D&M Holdings have settled their litigation, first begun in October 2014. Although the terms of the settlement are confidential, all actions taken by each party are now moot.

It is likely that the parties now enjoy some form of licensing arrangement that put all adversarial issues behind them.

See more on what we know about the end of the Sonos and D&M patent war…



We first heard from Sound United, the new home of all things D&M Holdings-related, including the HEOS wireless multi-room music system, the subject of a patent infringement lawsuit brought by Sonos back in late 2014. On Friday, the same day a document notifying the judge of a joint stipulation of settlement was filed with the court, Sound United put out a brief two-paragraph statement saying all litigation between that parties has been settled.

The Sound United statement says that the terms of the agreement are confidential. No other information is given. However, in a quote from Sound United CEO Kevin Duffy, he says, “Our direction with HEOS is unchanged, and we’ll continue providing amazing sounding solutions globally while furthering our vision of delivering joy to the world through sound.”

We Can Only Conclude a Royalty Fee for HEOS is the Result

While not explicitly articulated, one only conclude from this statement that D&M must now pay royalties on each HEOS product shipped that contains basic technologies patented by Sonos that a jury had determined D&M had violated with their HEOS line. This could mean that HEOS prices will rise, or perhaps the company will seek to “hide” the royalty in newly designed models which will delete certain features to reduce the cost such that the addition of a royalty fee will be invisible to the consumer.War is Over graphic for Sound United

Later, Sonos posted a statement on their blog which also announced the agreement and also included the language, “The terms are confidential.” The blog  post, penned by Mark Triplett, VP, Intellectual Property, did go on to say, however, that when Sonos first sued D&M, the action  was taken with the “firm belief in genuine innovation and mutual respect for intellectual property as a basis for healthy competition.”

Sonos: ‘Denon’s Intentional and Blatant Copying’



The statement went on to add: “At the time, it was our view that Denon was simply copying the work we spent years creating for its own HEOS product line. The litigation against Denon brought validation to our beliefs – most notably in a December 2017 jury trial. In that trial the jury affirmed the validity of three of our foundational patents. The jury also, when presented with overwhelming evidence of Denon’s intentional and blatant copying, found that Denon willfully infringed our patents.”

D&M, the Sonos statement says, has approached Sonos “with what we believed was a fair and favorable resolution.”

Jury Found in Favor of Sonos

So it doesn’t take much reading between the lines to guess just what this outcome was. It is pretty clear that this language suggests that HEOS will pay a royalty fee or license fee to Sonos.

As we reported in December when the first of what was expected to be three trials – a bellwether trial no less – was over, Sonos won their case on all counts, without reservation by the jury. It was an ominous sign for D&M – especially when you consider the judge set this first trial as a bellwether trial, or a trial designed to help clarify issues that would be decided in additional trials – using the results from the first trial as guidance for how future juries should view the remaining issues.War is Over - Sonos

D&M Ordered to Pay Millions to Sonos



Although D&M would ultimately file a countersuit, alleging that Sonos had violated D&M patents…this appeared to be more of a retaliatory action, rather than a serious threat in the eyes of Sonos’s attorneys. The jury in the first trial had awarded Sonos just under $2,000,000. In post-trial motions, Sonos appeared to be poised to get those awards increased, perhaps dramatically.

Now, this is all water under the bridge and the parties move forward. Sonos, however, is apparently feeling vindicated…perhaps ready to pounce on the next perceived violator of its foundational patents.

We reached out to both sides for additional comment, D&M did not respond, and Sonos chose to let their written statement be the last word on this matter.

FULL SOUND UNITED STATEMENT

VISTA, Calif., May 18, 2018  — Sound United, parent company to leading audio brands Denon, Marantz, Polk Audio, Definitive Technology, HEOS, Boston Acoustics and Classé Audio, announced today that it has reached a settlement with Sonos, resolving all patent infringement litigation between the two companies including the upcoming case filed against Sonos by Denon. Terms of the agreement are confidential.

“Today’s agreement demonstrates our belief in moving the industry forward and removing barriers for both parties to deliver products that delight customers,” said Kevin Duffy, CEO of Sound United. “Our direction with HEOS is unchanged, and we’ll continue providing amazing-sounding solutions globally while furthering our vision of delivering joy to the world through sound.”

See more about Sound United at: www.soundunited.com.

FULL SONOS STATEMENT

Today, Sonos and Sound United signed an agreement to resolve all patent infringement litigation between the two companies. The terms are confidential.

When we embarked on this effort back in October 2014, we did so out of a firm belief in genuine innovation and mutual respect for intellectual property as a basis for healthy competition. At the time, it was our view that Denon was simply copying the work we spent years creating for its own HEOS product line.

The litigation against Denon brought validation to our beliefs – most notably in a December 2017 jury trial.  In that trial, the jury affirmed the validity of three of our foundational patents.  The jury also, when presented with overwhelming evidence of Denon’s intentional and blatant copying, found that Denon willfully infringed our patents.

Subsequently, D&M approached us with what we believed was a fair and favorable resolution. We’re excited to close this chapter successfully with this settlement.  This litigation affirmed our belief that our patent portfolio is foundational, and enables Sonos to continue to invent, inspire the industry, and delight our customers.

Mark Triplett
VP, Intellectual Property

Learn more about Sonos at: www.sonos.com.


About Ted

A sales and marketing specialist - primarily in the technology industry - I've experienced a sort of "circle of life" in business. I've been a mass merchant retailer, a specialty retailer, a specialty manufacturer, a large volume manufacturer, a distributor, and even represented sales representatives. Now the owner of a marketing company that works with a variety of businesses on improving their strategic marketing and business development - I analyze issues from all angles to develop holistic solutions.

Comments

Sonos v. HEOS – War is Over, Peace Has Come — 1 Comment

  1. Not too surprising since Sonos has acted to bring themselves public, and legal issues are not welcome at that stage. Also smart for Sound United as they seem to have moved at the best point in time to make a reasonable settlement. Even better is that both firms can now focus on what they do rather than on time in court which serves no one. Now, will we see “works with Sonos” as we did at Onkyo? I don’t think so, but perhaps.

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