A Delaware judge has blocked Ring.com, the Santa Monica, Calif. home-automation developer backed by blue-chip venture capitalists, from selling its Z1 security system.
The order is a victory for security giant ADT, which alleges that the Ring software utilizes software built by Zonoff Inc. founder and CEO Michael Harris and his Malvern-based software team before they joined Ring this past March.
The two-page Nov. 2 order by J. Travis Laster, an appointed vice chancellor of Delaware’s business-friendly Court of Chancery— Corporate America’s favorite legal arena for ownership fights — stops Ring from using the Z1 platform and its software code “pending further order of the court.”
ADT sued Ring last spring, after Harris led his team to join Ring. Zonoff raised $32 million in venture capital in 2014, but ADT had contributed more than $30 million of its own to develop Zonoff’s sensor-based system for checking what’s going on at home, starting appliances, and setting and changing timing instructions through users’ cell phones.
ADT was purchased last year by Apollo Global Management for $6.9 billion. Apollo is the hedge fund cofounded by Sixers lead owner Josh Harris (no relation to Michael).
Ring raised $109 million in January from DFJ, Goldman Sachs, Virgin Airways founder Sir Richard Branson, and other venture investors.
But ADT said in court that the system Ring bought was effectively the same one ADT owned after financing Zonoff. ADT also blamed Michael Harris for the departure of the Zonoff team, alleging he had been disappointed that a $40 million offer by industrial-controls maker Honeywell Inc. to buy Zonoff would pay off Zonoff investors but leave Harris with little profit.
Now, Laster says Ring can’t sell Z1 until the dispute is resolved. ADT turned down previous Ring settlement offers.
Staff reached at Ring’s customer-service center said they have other systems for sale. Ring attorneys didn’t immediately respond to queries.