Why Is a Patent Troll in Luxembourg Suing U.S. Public Transit Agencies?
Dowell Baker, a law firm specializing in patent litigation in Lafayette, Indiana, finds companies to target in a couple different ways. The firm’s client, ArrivalStar, holds 34 U.S. patents, all related to the idea of tracking a vehicle in motion and then alerting people, through some communications device, of when it may arrive or whether it’s running late. As you might imagine, many entities – airlines, school buses, freight-tracking services, package-delivery companies – do something quite similar to this. And Dowell Baker believes they’re all infringing on these patents.
The firm scours for potential infringers on the Internet. Sometimes, companies that have already been sued by ArrivalStar – and now license its patents – will tip off the firm to its competitors. And then there are the really easy targets: public transit agencies. They’re quite public about the cell phone apps and notifications that you can sign up for, as a rider, to keep tabs on buses and trains. And so Dowell Baker signs up for them, too.
“We had to get a separate phone account,” says partner Anthony Dowell, “because no one wanted to get all these notifications on their phone.”
This is a strange story. And this detail probably conveys that best: There is a dedicated cell phone sitting in a law office in Indiana pinging at all hours of the day with alerts about bus delays and approaching trains in cities across the country.
The case is particularly odd given that ArrivalStar sells no product or service. It isn’t really competing with any of these companies, certainly not the transit agencies. When the Greater Cleveland Regional Transit Authority texts its riders about a waylaid train, that service doesn’t cut into ArrivalStar’s profits. But the company, while it makes little else, controls these patents.
Some of them date back to the mid-1990s, when an inventor named Martin Kelly Jones initially filed them. Today, a company called Melvino Technologies Limited, which is registered in the British Virgin Islands, owns all of his patents. And ArrivalStar, registered in Luxembourg, has the exclusive rights to license them.
Together, Melvino and ArrivalStar have sued at least 10 public transit agencies and threatened legal action against at least eight others. Noticing the pattern, tech and transit advocates have begun to flag ArrivalStar as a “patent troll,” a company that exists solely to sue supposed patent infringers for financial gain. Most perplexing to the many people involved is this question: How does anyone own the rights to the obvious idea of alerting people when their train, or bus, or plane might pull in?
“It’s a very old conflict in the U.S. patent system,” Dowell says. “The Wright brothers never manufactured an airplane, but they filed for and obtained the first patent and engaged in litigation for years about it.”
ArrivalStar’s critics frame this a little differently.
“It’s kind of like a hostage situation,” says Julie Samuels, a staff attorney with the Electronic Frontier Foundation. “Because settling it is always going to be cheaper than litigating. When you start suing cash-strapped local governments, they don’t have the resources to fight back.”
Fighting a suit like this can run into the millions of dollars. So far, every transit agency ArrivalStar has sued has settled, as have more than a hundred private companies. No one has ever taken one of these cases all the way to trial, where a judge might begin to sort out exactly what the broad language in these patents truly means.
“It’s a mess,” Samuels says. “Not to sound glib, but you’re talking about taxpayer dollars when these cities have no money to start with. And that’s not what we want our cities focused on now – or ever. But right now, it seems especially egregious.”
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The Georgetown Climate Center backed into all of this unintentionally. It facilitates the Transportation and Climate Initiative, which brings together officials from 11 Northeastern and Mid-Atlantic states, as well as the District of Columbia, to collaborate on reducing greenhouse gas emissions, creating green jobs and improving transit. These lawsuits caught the center’s attention in a roundabout way: Transit apps can help increase or maintain ridership, which helps reduce automobile traffic, which is a major source of emissions.
Several of the partnering agencies, though, brought up fears in developing such apps due to the legal threats from ArrivalStar.
“What they would do is pick off some transit agencies, sue, get a recovery,” says Vicki Arroyo, the executive director of the Climate Center. “They might sue for six figures, settle for five figures, and go on to the next one. As a result, nobody was really stepping back and seeing how big the picture was.”
As Arroyo sees it, this is ArrivalStar’s whole business plan. All of its revenue derives from suing private companies and public agencies to license an idea they were surely capable of coming up with on their own. About 65 percent of the national transit fleet now contains “automatic vehicle location” technology, most of it paid for by the federal government. These systems now enable transit agencies to track in real time most of their buses and trains. And as a logical next step, over the past few years they have begun turning over this tracking data to developers to create free user applications.
Arroyo and Samuels suspect a concerted conquer-and-divide campaign on the part of ArrivalStar. It never sues too many agencies at one time, preventing them from realizing their common cause. And it always asks for a licensing fee that’s just big enough to hurt, but small in comparison to the cost of litigation. (Dowell counters: “I think they may be giving us more credit than we deserve.”)
The Climate Center and EFF have now taken up the task of trying to coordinate some solution. Georgetown has compiled a file of all the relevant patents and known lawsuits, as well as potential legal defenses that might be used to counter them. EFF is leading the hunt for “prior art” that might be used to invalidate some of the patents, proving that Martin Kelly Jones’ ideas were around before he had them. The American Public Transportation Association is also now following the suits, as is the federally funded Center for Urban Transportation Research at the University of South Florida.
James P. LaRusch, APTA's chief counsel, said in a statement that these suits against its members "continue to be a financial and administrative burden for those agencies, diverting precious resources from the important business of providing service to the riding public." APTA is now also working with the U.S. Department of Transportation on the problem.
“It’s a rabbit hole that just keeps getting deeper,” says Sean Barbeau, one of the researchers at USF.
Barbeau has developed some of these prototype apps, including one that helps riders with intellectual disabilities navigate public transit. That’s one of a wide range of publicly beneficial tech tools that could be at risk here.
“One of my concerns is that there has been a lot of progress in terms of convincing agencies that it’s in their own best interest to share their information,” Barbeau says. “That was an incredibly long process, and there’s been a lot of progress there.”
Public agencies release their data in part because app developers can give that data value.
“These aren’t huge companies rolling out mobile apps. They’re individuals, or very small businesses,” Barbeau says. “If those businesses or individuals are served with cease-and-desist letters, or they have to purchase licenses, it’s most likely they’re just going to fold up shop and go home.”
If that happens, Barbeau worries, public agencies may no longer have a reason to release their data at all. And that’s a threat to innovation at its core, as well as to the open-data, open-source movement, in which all of these tools are publicly shared, not proprietary. Already, Barbeau and others say they’ve begun to witness a chilling effect from the ArrivalStar suits. People are afraid to develop ideas. New apps aren’t coming out. It’s impossible to quantify the effect, though; you can’t count things that haven’t been made.
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Dowell blames tech startups and app developers for “raging forward” without researching what has come before them.
“In our view,” he says, “Martin Kelly Jones did invent the technology, he did spend the time and money to patent it, and we just believe that anyone that’s using it, any company that is deriving a profit from the use of it in one way or another – even if they don’t charge for the service – we feel that they need to compensate the inventor for the invention.”
Dowell says that Jones is still involved with both ArrivalStar and Melvino, although he no longer personally holds the patents. Asked where he lives and whether he’s an American, Dowell demurs: “He doesn’t like me to talk about that.”
Jones’ 34 patents cover a variety of riffs off his main idea: alerting someone when a vehicle is delayed, alerting someone when it’s within a certain arrival time, alerting someone when it’s within a physical distance from a given spot. His initial idea was to create a system that would alert families to an approaching school bus. Dowell says the company was ultimately unsuccessful in getting any such service off the ground. And so ArrivalStar evolved by the late 1990s into a company with only patents, but no products. Jones continued to file new ideas. The most recent patent that is commonly cited in the suits against public transit agencies was issued in 2006.
ArrivalStar has been licensing these patents to private companies for about a decade. Its focus on transit agencies has come mostly in just the last two years. It's sued the Massachusetts Bay Transportation Authority, the New York Metropolitan Transport Authority, Chicago’s Metra, the Port Authority of New York and New Jersey, and Seattle’s King County Metro Transit. Since February of this year, it has also sued transit systems in Cleveland, Monterey, California, and Portland, Oregon.
Dowell argues that ArrivalStar can’t distinguish between private companies and taxpayer-funded public transit entities, since many of them contract private firms to run their alert systems. “It’s kind of an equitable argument,” he adds. If one city has to pay ArrivalStar a licensing fee, is it really fair if other cities don’t?
It’s unlikely that the public agencies view the problem this way, especially now that they're talking amongst themselves. The agencies that have already settled are barred from publicly discussing the cases due to non-disclosure agreements, as several told The Atlantic Cities. But court records suggest that many of them tried to fight ArrivalStar before ultimately settling (a strategy that undoubtedly reduced some of those settlement amounts).
Lawyers for the Massachusetts Bay Transit Authority referred to the suit as a “shakedown” in moving to dismiss it. King County initially requested that the court invalidate all of ArrivalStar’s patents. And the Maryland Transit Administration tried to argue, as an arm of the state, that it had immunity from such suits under the Constitution.
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The irony here is that each of these agencies wind up settling for maybe $100,000 to avoid million-dollar litigation, while collectively they will spend much more than that.
“This is a hard problem,” says Daniel Ravicher, the executive director of the Public Patent Foundation. He has provided counsel to one of these sued transit authorities (which one, he couldn’t say). “Unless and until somebody’s willing to stand up and commit significant resources upon which everyone else will be able to free-ride, ArrivalStar will be able to continue to exploit the situation to get trivial settlements from a large number of parties.”
ArrivalStar may have just bumped up against one such opponent. Over the winter, it sued the U.S. Postal Service. (Asked whether the Postal Service was infringing by tracking its trucks, or by tracking mail that happens to ride on trucks, Dowell said, “We send out a lot of letters, and I just get them confused about what exactly each company we contact is doing at any moment.”)
The Postal Service has given no indication that it intends to settle, and Arroyo is hopeful that that case has now gotten the federal government’s attention. Ravicher suggests that there are a number of legal arguments that could be used against ArrivalStar. Its claims are overly broad (as Ravicher puts it: “you transit authority, me patent holder, you infringe,”). Government agencies have immunity from lawsuits in federal court under the 11th Amendment. And then there’s the argument that all these patents should never have been granted in the first place.
Other people must have had these ideas before Jones did. The U.S. Patent and Trademark Office, Ravicher says, merely rubberstamps patent applications. The hard work of really investigating them gets farmed out to the legal system. Dowell contends that that these patents are clearly valid because no one has been willing yet to meet ArrivalStar in court. But Ravicher flips this logic.
“If they were being candid, they would tell you ‘yeah, we know our patents are pretty much bogus,’” he says. “If they had really invented a cure for AIDS, why would they be settling for such trivial amounts of money? They know their patents are not worth very much, and that’s why they’re settling for not very much.”
Inherent in all of this is a much bigger problem with the patent system, a system that translates particularly poorly to modern software.
“ArrivalStar isn’t to blame for this,” Ravicher says. “ArrivalStar did not create a system of poor patent quality. ArrivalStar did not create a system that requires millions of dollars to be spent before someone knows exactly what a patent covers or not. ArrivalStar did not create a system that allows people to make flimsy claims for trivial amounts of money.”
ArrivalStar is just taking advantage of that system, he says. And then he offers this analogy: If a cockroach comes into your kitchen, that’s not really the cockroach’s fault. It’s yours for leaving out the crumbs.
Top image by Flickr user John Bracken, via Creative Commons.