Palm Beach News

If Your Company Ever Tracks Packages, Beware of Lawsuit from Alleged "Patent Troll"

Jason Cugle owns the Maryland company, a small business selling accessories for electronic cigarettes. In the normal course of business, Cugle had shipped a package to a customer; he then emailed the tracking number so the customer would know when the box would arrive.

He was surprised at what came next: a demand from a Boynton Beach-based company, Shipping and Transit, LLC, alleging that Cugle must pay $25,000 for a license fee to use its services. The company claimed to own the patents to the technology that enabled Cugle to track the package. It alleged that Cugle had committed patent infringement. 

No way would Cugle pay the $25,000. He refused and sought out help from the Electronic Frontier Foundation (EFF), which sued Shipping and Transit in the U.S. District Court for the Southern District of Florida on May 31 for filing a frivolous patent claim against Cugle. 

The San Francisco-based digital rights advocacy nonprofit says Shipping and Transit is a "patent troll" that files lawsuits against companies, hoping they'll quickly pay to settle the suits rather than have them drag out in court. 

According to EFF staff attorney Vera Ranieri, who is representing Cugle, Shipping and Transit "leverages the cost of litigation in order to extract a settlement that's based primarily on the cost of litigation rather than the merit of the claim." She says her client is among more than 500 hapless companies that have received infringement notices from Shipping and Transit in recent years. Shipping and Transit filed six lawsuits in federal court just this week. 

In recent years, Ranieri says, the average costs of the company's demands have been in the range of $25,000-50,000. She speculates the company could have made at least $15 million through this method.

"Shipping and Transit claims to own the various technologies relating to clicking a link to a tracking number that provides you a web page that shows you where your package is," Ranieri told New Times, adding that they've asserted their claim more than 300 times in the state of Florida alone. "What they claim to own — what they've accused our client of infringing — is essentially, he sends an email with a tracking number in it which allows people to figure out when their packages are arriving, and that's what they claim is infringing."

Shipping and Transit accuses Cugle of infringing on its patents numbered 970, 359, 299, and 207 — the latter for which license fees are sought. The company seeks damages for past usage of the other patents. 

Raineri  isn't sure how Shipping and Transit discovered Cugle, but she believes the company searched Cugle's website looking for violations. 

A person named Martin Kelly Jones is listed as the inventor of the 970 patent, which "covers a multitude of open architecture arrival and status messaging systems and methods," the demand letter states. Filings with Florida's Secretary of State indicate that Jones and another man, Peter Sirianni, are the principal members of Shipping and Transit.

Ranieri says their patents are vague — maybe purposefully so — and represented by nothing more than a flow chart and a brief abstract. She noted that Shipping and Transit is related to several other litigious companies, including Luxembourg-based ArrivalStar S.A. and Melvino Technologies, which is based in the British Virgin Islands.   A court filing from 2015 shows that Shipping and Transit's relationship with ArrivalStar goes back several years, and the company is now the owner of the patents previously owned by ArrivalStar. 

New Times couldn't reach Sirianni or Kelly but spoke with Jason Dollard, the attorney for Shipping and Transit, who said he wasn't able to comment on the case because he hasn't seen the lawsuit. He added that he believes his client's patents are valid. 

Kelly has been tied to alleged patent trolling in the past, his related companies having sued hundreds of public transportation systems throughout the U.S. for infringement claims before reaching a settlement with the American Public Transit Association in 2013. 

In a story about that case, ArsTechnica reported that Kelly claimed to have invented software that tracked buses and trains and filed the patents for it.
ArrivalStar claims that its patents covered the basics of vehicle tracking, across a huge array of different software and systems used. The company's founder and inventor, Martin Kelly Jones, says he thought up the basics of vehicle tracking and notification with a telephone-based system in the 1990s; now he and his lawyers believe every company using online vehicle-tracking owes him a royalty.
The story says that Seattle's transit agency forked over $80,00 to ArrivalStar for license fees and that the company had received settlements from more than 180 companies including Nissan, Volvo, United Air Lines, Chrysler, and FedEx.  It also noted that Arrival Star had never actually taken a case to trial; such court cases can cost up to $2 million to fight.
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David Minsky is U.S. Navy veteran and Tulane graduate who has experience reporting on stories from California, South Florida, and the Deep South. He also won some journalism awards. Email or tweet David with story tips and ideas.
Contact: David Minsky