Greater Greater Washington

Transit


Patent troll sues transit agencies who provide real-time info

Martin Kelly Jones doesn't make or sell a thing, but has made a living by suing transit agencies who use real-time tracking technologies that he says he owns. It's a practice known as "patent trolling."


Photo by Oran Viriyincy on Flickr.

Jones filed his first transit-related patent in 1993, securing rights to the idea of letting parents know when school buses were running late. More than 30 additional patents of similar ideas followed.

Jones doesn't actually develop or sell any technology relating to real-time vehicle tracking, but that hasn't stopped him (and his two offshore firms, ArrivalStar and Melvino Technologies) from punishing anyone who does. To date, he's filed more than 100 lawsuits against anyone who uses such technologyeveryone from Ford to Abercrombie & Fitch to American Airlines to FedEx. He's now one of the top 25 filers of patent infringement suits, according to PriorSmart.com.

Lately, Jones has focused his litigious impulse on transit agencies around the country.

According to a brief by the Georgetown Climate Center, "ArrivalStar has brought suit against at least ten transit entities, and at least eight more have received demand letters." GCC, which convenes the Transportation Climate Initiative, worries that the suits can create a chilling effect, discouraging agencies from employing vehicle tracking technologies. Real-time bus arrival information has been shown to increase ridership, taking cars off the road and reducing vehicle emissions.

Jones' strategy is not to sue transit agencies for all they're worth, but to offer them a relatively low-cost way to keep these cases out of court. In fact, not one of his lawsuits has gone all the way through trial. They always end up settling, usually for $50,000 to $75,000, though the demands can go as high as $200,000.

"That's $75,000 of taxpayer money that's going into ArrivalStar's pockets without the validity of the patent ever being challenged," said attorney Babak Siavoshy, who represents the Electronic Frontier Foundation. "If they make the settlement amount low enough, where the costs and benefits favor settling, then most municipalities are going to settle, and it costs them a lot of money, because the cost of litigation is a big stick."

Siavoshy and EFF want the US Patent and Trademark Office to review Jones' patents. EFF is looking for what's known as "prior art": examples of real-time vehicle tracking being discussed before Jones took out the patent, to show that he wasn't the first one with the idea. Advocates also think they can prove that the systems Jones patented were too "obvious" or "non-novel"that they were logical extensions of existing technology. Abstract ideas, with no technology or product attached, are not patentable.

ArrivalStar attorney Anthony Dowell contends that the patents are defensible and that Jones has the right to seek money from the agencies. "Just because an entity is funded with taxpayer dollars doesn't give them the right to steal property," said Dowell in a recent interview with ArsTechnica. "My client now owns 34 patents that are being infringed, and what else is he to do?"

The transit agencies I called couldn't comment, since the case was pending. But the general counsel of the Monterey-Salinas Transit Corporation, David Laredo, said that they're not challenging the validity of the patents. Their strategy is to assert that the vendor who sold the technology to the transit agency (Trapeze, a spinoff of Siemens) does hold a license from ArrivalStar, and if they don't, that's the vendor's problem, not theirs.

To date, ArrivalStar has reached settlements with the city of Fairfax, Virginia; Boston's MBTA; New York City's MTA; Chicago's Metra; and the Maryland Transit Authority. Suits are pending against the Port Authority of New York and New Jersey's PATH; King County, Washington; the Monterey-Salinas Transit Corporation; the Greater Cleveland Regional Transit Authority; and Portland's TriMet.

In the past, transit agencies may not have talked to each other about these lawsuits because Jones reportedly insists on a nondisclosure agreement as part of the settlement. He only brings a few suits at a time, using a divide-and-conquer strategy, taking care not to demand so much from these public entities that they would pursue litigation.

The recent focus of Jones' lawsuits on transit agencies has inspired Georgetown Climate Center and the American Public Transit Association to get these entities to communicate more and to develop a more cohesive strategy. So far, though, Jones' strategy has been working.

But since Jones brought a suit against the U.S. Postal Service last November, the federal government is now affected. His suit charges the post office with violating his patents with its package tracking services.

Since USPS is a federal agency, the Department of Justice is now involved, defending the post office against ArrivalStar's claims by saying the patents are invalid and that no infringement occurred. Advocates and attorneys are trying to persuade the feds to broaden their interest in ArrivalStar from just USPS to all the transit agencies that have been affected.

After all, the transit agencies, by and large, bought the GPS tracking devices with federal dollars, in pursuit of federal transportation goals. Publicly available real-time transit informationon smartphone apps, transit agency websites, or on screens in bus stops and train stationsmakes transit a more attractive option, with the potential to reduce congestion and pollution. SAFETEA-LU, the transportation authorization the country is still (amazingly) working under, specifically requires states to identify ways to deliver real-time transit information to the public.

Georgetown Climate Center Director Vicki Arroyo told Streetsblog that she's had some "early but hopeful discussions" with senior USDOT officials.

"Earlier, some of the more junior people within the federal government were not keen to take this on, saying they didn't have a dog in the fight. Now they do," she said, referring to the suit against the postal service. "We're hoping they won't just look at this as a one-off matter. There's a much higher public stake here."

A version of this article was originally posted at Streetsblog Capitol Hill.

Editor's note: The MBTA's response brief to ArrivalStar rebuts the company's actions with powerful rhetoric that's unusual for a legal filing:

This lawsuit offends any notion of justice. The mission of Defendant Massachusetts Bay Transportation Authority ("MBTA") is to transport its 1.1 million riders safely and on time every day. As a service to the riding public, the MBTA alterts riders via its website, text message or email whether one of its vehicles is running late or has otherwise encountered some difficulty or delay. Though the MBTA is a cash-strapped public entity, its notification service is free of charge to anyone who wishes to subscribe. The MBTA makes no money from this service. The service provides a benefit to the riding public, by whom it has been well received.

Plaintiffs ArrivalStar S.A. and Melvino Technologies Limited (collectively, "Plaintiffs" or "Arrivalstar"), two offshore companies, allege, in a conclusory and unspecified manner, that the technology underpinning the MBTA's alert system infringes on two patents that they claim to own. Plaintiffs do not allege they produce or manufacture anything. They do not allege they sell anything. The primary, if not sole, purpose of Arrivalstar is to exact tribute from any person that Arrivalstar asserts is using inventions claimed in patents that they purport to own, either in the form of royalties or a strike suit such as this one. The Court may take notice of the fifteen suits Plaintiffs, or a related entity, have brought in federal district courts involving the same two patents at issue in this dispute. ...

In any event, the practice of monetizing patents through serial litigation by "non-practicing entities" or "NPEs," as they are euphemistically known, is unseemly and inimical to the fundamental purpose of United States patent laws of encouraging innovation and its introduction into the economy. The business model of Plaintiffs is no less obvious than the patents themselves, and shakedowns such as this one should be outlawed.

Tanya Snyder is editor of Streetsblog Capitol Hill, which covers issues of national transportation policy. She previously covered Congress for Pacifica and public radio. She lives car-free in a transit-oriented and bike-friendly neighborhood of Washington, DC. 

Comments

Add a comment »

It's interesting that one branch of the gov't (USPTO) said that the patents are valid, while another (DOJ) is now saying they are not. That would seem to create an issue of estoppel, assuming estoppel can apply to the federal gov't. See https://secure.wikimedia.org/wikipedia/en/wiki/Estoppel

by Alan on Apr 16, 2012 3:41 pm • linkreport

Yeah, patent law. There is so much wrong with that. Here's another case that will blow your mind:
http://www.pcworld.com/article/251739/yahoo_sues_facebook_alleging_patent_infringement.html

by Jasper on Apr 16, 2012 3:45 pm • linkreport

Can a government use eminent domain to take a patent?

by Tim on Apr 16, 2012 3:55 pm • linkreport

The only two relevant questions here are 1. are the claims of the patent valid? and 2. if the claims are valid, are they infringed by the parties being threatened?

The odds of both answers being yes are likely low, and yet the MBTA chooses to rant against the patent system instead of attempting to show that the patent is not valid and/or not infringed.

by A on Apr 16, 2012 4:06 pm • linkreport

A: That wasn't the whole brief.

by David Alpert on Apr 16, 2012 4:10 pm • linkreport

Also, the 3rd relevant question is, since patents are a creation of Congress and software patents are a more recent creation of the Federal Circuit, does the patent law as written and as interpreted by the Federal Circuit achieve the desired public policy objectives, or should it be changed?

by David Alpert on Apr 16, 2012 4:11 pm • linkreport

Laywers who argue for public policy in front of a judge deserve to lose.

Is this a software patent?

Somehow, I doubt DOJ will be interested in a larger investigation. Do they get involved -- or does USPS defend itself in court?

by charlie on Apr 16, 2012 4:20 pm • linkreport

@Alan--

The PTO doesn't affirmatively assert these patents are valid, at least not in the sense you mean. They assert the patents were lawfully granted and non-obvious. This doesn't estop another branch of government from asserting the opposite. Otherwise, the government could never litigate patent cases in the first place.

@ Charlie--

The Department of Justice defends federal agencies in court. This isn't (necessarily, I guess) about any investigation; it reflects the fact that all federal agencies sued are defended by the DOJ.

by WRD on Apr 16, 2012 4:39 pm • linkreport

@ WRD; right, I am painfully aware of that fact. But I am not sure that applies to entities such as USPS or Amtrak.

by charlie on Apr 16, 2012 4:53 pm • linkreport

@ Charlie - Unlike Amtrak, the USPS is an independent Agency of the United State's Government, and as such; while it has its own legal staff, the Civil Division of the USDOJ can act as counsel in civil matters.

by Annon on Apr 16, 2012 5:10 pm • linkreport

@ Annon; thanks.

by charlie on Apr 16, 2012 5:11 pm • linkreport

Abstract ideas, with no technology or product attached, are not patentable.

Maybe I'm not understanding everything, but aren't MKJ's patents basically just abstract ideas? Sounds like he didn't develop any technology to make real time tracking possible, he just said "one day there will be real time tracking" and patented that idea. Somehow, for being the first to codify that statement with the authorities, he can now exact a toll on everyone who says it after.

The patent laws definitely need reform. It's a bubble, borne through obsolete legislation. Just like the financial bubble led to over-investment and over-concentration of our brightest minds in banking, way too much time, money, and effort is invested in creating and defending useless patents.

by Falls Church on Apr 16, 2012 5:55 pm • linkreport

The PTO doesn't affirmatively assert these patents are valid

@ WRD. The PTO actually does affirmatively assert that these are valid patents. This is called the Presumption of Validity - see 35 U.S.C. 282. And since the PTO is the only agency that can grant US patents, then by extension, the PTO is the only agency that can validate patents.

@ Alan. If a federal court invalidates a patent (which it does all the time), there is no estoppel issue, any more than there would be if one organization of government (e.g. Congress) passes a law that another organization of government (e.g., the Supreme Court) invalidates as unconstitutional. The PTO is an Executive branch agency. The Court functions as a check-and-balance to Executive power in being empowered to 1) uphold the validity of a patent, or 2) invalidate a patent. But any entity can seek to invalidate a patent, even an entity within the Executive branch, such as DOJ. There are even laws that allow the patent holder himself to invalidate a patent.

@ Falls Church. Most of the patents held by the patent owner are tied use with a tangible machine, such as a telephone system, a computer medium (hard drive, disc, etc, programming logic), etc. In the era that these patents were issued, that would have been a pretty black-and-white standard. However, in the current era, the issues are ever-evolving because of how technology is evolving. The analogy to the financial system is not so apt.

by Scoot on Apr 16, 2012 6:16 pm • linkreport

@Charlie: Public policy arguments are a crucial part of establishing common law, because statutes (including legislative history) and existing case law do not always provide judges with clear answers to specific legal questions.

by Evan on Apr 16, 2012 6:17 pm • linkreport

Thank you, this is a pretty well-written article that manages to consolidate a lot of complicated topics into digestible bits for laypersons. Most articles covering patent law written by publications that don't specialize in this type of law make all sorts of errors, some merely formal while others substantive.

While patent trolling is a huge issue today, it's a bit inappropriate to imply, as this article seems to, that an organization offering a service that benefits millions of people or does so for free or under financial constraints should be shielded or excepted from responsibility to intellectual property holders. (A patent would never be invalidated on that basis alone, anyway). It is deeply entrenched in patent law that inventors do not have to make or use their technology to be able to assert their patent rights against others.

The strength of the patent system, which has provided trillions of dollars in economic development in this country's history, relies on entities of all stripes (from large corporations to non-profit transit agencies) who want to use technology to do so legally by obtaining permission from the owner of the IP. Otherwise, patents would be useless. If these patents are determined to be valid, there are mechanisms to use this technology -- licensing, for instance -- that do not run afoul of the law.

by Scoot on Apr 16, 2012 6:33 pm • linkreport

@ Scoot: You are correct. However, and please correct me if I'm wrong, you can not just patent and idea. You have to have an embodiment with it, or a preferred process.

Also, IMHO, one of the largest problems with patents is that the bar for obviousness is so low. Patent reviewers really have a very limited imagination.

I'd ask everyone who's interested in this, to keep an eye open in your own life for items that are patented. You will be shocked to see which utterly normal things have patents on them. Try to identify the patented part and ask yourself if that part is worthy of 20 years of protection, or whether it really was pretty obvious.

by Jasper on Apr 16, 2012 8:09 pm • linkreport

In the era that these patents were issued, that would have been a pretty black-and-white standard. However, in the current era, the issues are ever-evolving because of how technology is evolving. The analogy to the financial system is not so apt.

@ Scoot

Actually, my reference to a bubble is more than an analogy. The patent-industrial complex IS itself in a bubbble, rather than merely being analogous to one. Millions of person-hours are being devoted to the fairly useless endeavor of developing harmful/useless patents, reviewing/approving them, wielding those patents as weapons, and then defending oneself from those weapons. No value is created by any of this activity.

The value of the patent system is in encouraging innovation by making it possible for small businesses to reap the benefits of their inventions the same way that large businesses harvest their inventions by maintaining trade secrets. To the extent that the patent system benefits that goal, it's productive. When it becomes an industrial complex who's purpose is to perpetuate itself, it creates over-investment which is the definition of a bubble.

The following industries all have something in common: finance/banking, dot.com 1.0s, housing, tulips, and the patent industry. Their commonality is the overproduction and overinvestment of their product/service when resources could be better allocated else where. In the case of patents, the reason the bubble has been created is that the patent legal framework has not evolved at the same pace as technology. On that point, I agree with you.

by Falls Church on Apr 16, 2012 9:41 pm • linkreport

Pretty clever...not cool..but clever.

[Deleted for violating the comment policy.] The lead sentence assertion that Jones "doesn't make or sell a thing" is totally irrelevant. Just like property, there is no requirement for a patent to be developed or sold.

The claim that "Jones doesn't actually develop or sell any technology relating to real-time vehicle tracking...but that hasn't stopped him from punishing anyone who does." has no bearing whatsoever since its totally legal, albeit selfish, for him to do this.

Also, its the Maryland Transit Administration, not " Maryland Transit Authority," which doesn't exist, something even the real media can't get right. The Maryland Transportation Authority is the state agency that operates all of MD's toll facilities.

If you really want to know about patent trolls look up Apple and their relentless, anti-competitive lawsuits against numerous competitors who produce touch screen phones or tablets. Those multi-million dollar suits (filed in many countries) have far greater economic repercussions than some selfish prick milking his supposed 'patents' for a few grand from transit agencies.

by King Terrapin on Apr 16, 2012 10:57 pm • linkreport

@ Scoot--

Right, there is a presumption of validity but that isn't a affirmative assertion of validity. The PTO is saying, in English, "The patent has met the statutory requirements and is presumed valid unless a contrary determination is made in court."

Whether or not the patent has met the statutory requirements is a question of law. The PTO plays no part beyond the initial determination.

by WRD on Apr 16, 2012 11:46 pm • linkreport

A is exactly right on whether a patent is valid and most of the blog post is someone screed against the patent holder.

The people crying "patent troll!" are generally big institutions that are being forced to pay money to small guys that come up with inventions that large companies never think about because they are so entrenched in their own products. The small inventor then meets the requirements of issuing a patent by the USPTO.

Most of the inventions done by small inventors never see the light of day because they do not have the ability to put forth a competitive priced product - you are going to be able to offer a real time tracking system at a price that an institution is going to buy when you are competing against Flour, GE, etc. that will undercut you - and maybe with an infringing product.

Large companies already have a huge edge in keeping barriers to entry high so that small companies can't compete. I see no reason to raise that barrier by stopping someone from patenting an idea.

Further, because you are unable to build the product goes to damages a patent holder is owed (you either get lost profits or reasonable royalty rate) and if you do not compete in the market you can't not get the usually more lucrative lost profits damage award.

Also, you see patent numbers on products because you are required to mark your product.

by Burger on Apr 17, 2012 10:17 am • linkreport

Also, IMHO, one of the largest problems with patents is that the bar for obviousness is so low. Patent reviewers really have a very limited imagination.

@ Jasper. As with most things, it's more nuanced than that. The standard for obviousness has been expanded significantly in the last 15 years, and enormously in the last 5 years (since the landmark supreme court case KSR Int'l Co. v. Teleflex, Inc (2007)). In contrast to your opinion, the PTO is actually rejecting more patents on the basis of obviousness than ever before. In addition, most patented products you see in the marketplace have a relatively narrow scope of protection that may not be apparent to a layperson. The PTO employs humans rather than machines to make the subjective determination of obviousness; what is obvious to one person or group of people may not be obvious to another. What is obvious to a PTO employee may be non-obvious to a federal judge, and vice versa.

Whether or not the patent has met the statutory requirements is a question of law. The PTO plays no part beyond the initial determination.

@ WRD. Perhaps we are getting into the realm of semantics here, but I don't see any practical difference between "presumption" and so-called "affirmative assertion". No other agency or court can grant a patent. The mechanism by which patents can be invalidated does not diminish the power of the PTO to grant patents just as the mechanism by which courts can invalidate laws does not diminish the power of Congress to pass laws.

The PTO also plays a significant part in patent disputes in court because in many cases, the PTO's reasoning for granting or denying a patent is picked apart word-by-word by litigating attorneys or judges or juries to arrive at a decision. Federal courts typically grant "deference" to the PTO, meaning that its authority carries a lot of weight during adjudication of patent disputes.

by Scoot on Apr 17, 2012 12:54 pm • linkreport

What amazes me is that even UPS who originally took on the fight against ArrivalStar ended up settling with them. I'd love to hear the opinion of UPS's lawyers on the case...

by Morris on Apr 17, 2012 2:11 pm • linkreport

I know patents are complicated and nuanced but this guy seems to have a business model more about suing than a product/service around the patent itself. So I don't know that calling him a patent troll is totally incorret.

I will say that I am not sure taking on the the federal government was the best strategy. Business will weigh the costs - which he is counting on - and pay because that is cheaper but I don't think that is the way the government works. The government will fight the case on principal and make that lawyer work for that money. And if the plaintiff doesn't win it may put his entire business model - suing - in jeopardy.

by ET on Apr 19, 2012 10:33 am • linkreport

"The people crying "patent troll!" are generally big institutions that are being forced to pay money to small guys that come up with inventions that large companies never think about because they are so entrenched in their own products."

Um, no. At least in the computer industry, the standard operating procedure with regards to patents is "don't you dare look at any patents." Which means all patent infringement must come from either inventing the idea independently, slavishly copying other products (if small inventors aren't capable of putting out other products, how can they be copied?), or maliciously patenting things that have already been done. Also, most patents are held by what many would consider large corporations--IBM, Google, Apple, etc.

Start doing research into companies claimed to be patent trolls, and you'll often find small shell corporations with multiple corporations assigned to a single office room (which physical evidence would suggest is actually unoccupied) somewhere in Texas. Sure, some companies probably have the "patent troll" label misapplied, but don't kid yourself that they aren't there.

Of course, the patent system is still horribly broken; many so-called "open standards" are actually, because of patents, pretty much enforced racketeering.

by Joshua Cranmer on Apr 22, 2012 12:20 am • linkreport

Add a Comment

Name: (will be displayed on the comments page)

Email: (must be your real address, but will be kept private)

URL: (optional, will be displayed)

Your comment:

By submitting a comment, you agree to abide by our comment policy.
Notify me of followup comments via email. (You can also subscribe without commenting.)
Save my name and email address on this computer so I don't have to enter it next time, and so I don't have to answer the anti-spam map challenge question in the future.

or

Support Us