One of the nation’s best-known patent enforcement entities has finally given up the ghost.
In September 2018, Shipping & Transit LLC (formerly known as ArrivalStar) filed for Chapter 7 bankruptcy—voluntary liquidation—but no one seems to have noticed until the Electronic Frontier Foundation pointed it out on October 31.
The company claimed that it held the patent on vehicle tracking and related alerts. But about 15 months ago, judges began to rule against Shipping & Transit for the first time. That seems to have put a damper on its entire business model.
As the EFF noted:
Consider US Patent No. 6,415,207. This patent claims a “system for monitoring and reporting status of vehicles.” It describes using computer and software components to store status information associated with a vehicle and communicate that information when requested. In other words: vehicle tracking, but with a computer. It doesn’t disclose any remotely new software or computer technology. Rather, the patent claims the use of computer and software components to perform routine database and communications operations. There is nothing inventive about it.
Each demand letter was structured more or less the same way: it tells of an inspiring story of inventor Martin Kelly Jones, who “observed a young girl waiting at a school bus stop on a rainy, foggy Atlanta morning.” Over the next several years, he developed a vehicle tracking system to “minimize wait times at bus stops.” Jones developed this into a service called BusCall, which had some modest success.
But due to a downturn in the economy and 9/11, Jones and his attorneys seemingly changed tactics. They began “negotiating” more than 600 patent license deals and suing more than 400 companies ranging from Radio Shack to Nissan to Nordstrom to JetBlue.
“There is no large retailer that is not a licensee,” Jones told two years ago.
But then, in mid-2017, Shipping & Transit started losing cases.
Florida-based US Magistrate Judge Dave Lee Brannon concluded in one ruling:
Perhaps most telling, when the validity of the patents was challenged, Plaintiff routinely and promptly filed a covenant not to sue to end any inquiry. Just so in this case. In this Court’s view, a plaintiff that genuinely seeks to invoke its protection rights under the Patent Act would eagerly litigate the validity issue, at least once, so a decision on the merits would emerge. That has not occurred in any of the hundreds of cases that Plaintiff has filed.
Now, according to Shipping & Transit LLC’s federal bankruptcy filings, its global patent holdings (34 in the United States and 29 elsewhere) are worth a whopping $2. Meanwhile, it owes more than $423,000 to numerous creditors, including banks, law firms, and something called the “West African Investment Trust,” based in Geneva, Switzerland.
The attorney listed on the bankruptcy filings, Stephen Orchard, did not respond to Ars’ request for comment.
Daniel Nazer, an EFF attorney, said that Shipping & Transit is part of a dying business model.
“Most of S&T’s patents are expired, and defendants had managed to get fees in a couple of cases,” he emailed Ars.
“I think the fact that they lasted 10 years before courts slowed them down shows that the business model can work. On the other hand, I do think the decision made things harder for S&T after 2014. This shows that recent Federal Circuit decisions watering down (like ) are important. If is undermined we could see a resurgence of patent trolling with these kinds of abstract software patents.”