Alarm.com & Vivint Settle Patent Dispute, Enter Into License Agreement

Smart home and security rivals Alarm.com and Vivint have resolved all outstanding litigation between the companies after signing a long-term intellectual property license agreement. 

In a joint announcement Thursday, the companies said the agreement calls for Alarm.com to license its intellectual property portfolio to Vivint. 

Except as required under the rules of the Securities and Exchange Commission (SEC), no other details about the settlement will be released, according to the announcement. 

Vivint is a unit of NRG Energy and serves more than 2 million customers in the United States and Canada. NRG acquired Vivint in March. 

On Nov. 1, 2022, Alarm.com announced that Vivint had notified the company it would stop paying royalty fees under a patent cross license agreement between the companies. Vivint had paid the required licensing fees to Alarm.com since the agreement was executed in 2013. 

Alarm.com filed for arbitration per the agreement and continued to evaluate additional legal remedies prior to the settlement announced on Thursday. 

The two companies have been embattled in patent disputes dating back to 2015 when Vivint sued Alarm.com in Utah federal court, alleging its security, automation and energy management products infringed four of its patents related to an electronic message delivery system. 

In 2018, Alarm.com prevailed in a patent dispute following a federal appeals court decision that invalidated claims by Vivint on technology for remotely controlling home appliances using a smartphone. 

During a Nov. 8, 2022, earnings call, Alarm.com CEO Steve Trundle said revenue under licenses from Vivint represented more than 90 percent of total revenue generated from Alarm.com’s global patent portfolio of over 600 issued patents and additional patents pending. 

Although financial terms of the agreement were not disclosed, the settlement eliminates a potential drag on Alarm.com’s stock, Raymond James Analyst Adam Tindle said in a client note. 

“While difficult to quantify without disclosures, we do note that Vivint’s prior refusal to pay created a $6 million-per-quarter headwind to SaaS (software-as-a-service) revenue beginning in fourth quarter 2022,” Tindle said via investor.com. “Additionally, this came with very little cost given the licensing nature of the agreement, meaning EBITDA (earnings before interest, taxes, depreciation and amortization) was also impacted by about $6 million per quarter.”