It’s a process most of us are familiar with, by now: you buy something online, and you get two emails from the site you bought it from. The first is an order confirmation, with an invoice, order number, or order summary in it. The second, a few hours or days later, is a shipping notification: a heads’ up that the package is coming your way, with info about what carrier is bringing it and when you can expect your goods to land at your doorstep.
Sending you a shipping notice may seem like a basic, common-sense thing that basically any business with an interest in customer service could independently come to the idea of making a part of its process. But one company claims to have patented it, and is suing anyone who resists demands to pay up for infringement.
As the Wall Street Journal reports, Shipping & Transit LLC has sued more than 100 small companies this year for infringing on patents it claims to own: namely, the idea that you can notify customers when their stuff has shipped.
If it seems a little suspicious to you that a company you’ve never heard of is holding small businesses over a barrel and demanding remuneration for doing something sensible, well, you’re right. Trust that instinct, and hold onto it, because Shipping & Transit is, in fact, a notorious patent troll.
Back in August, EFF did a deep dive on some of the many (many) suits involving the Shipping & Transit currently in progress. The long and the short of it is, Shipping & Transit’s entire business model is that of the classic patent troll: claim you own a thing, and threaten to sue people who probably can’t fight back.
This year alone, the WSJ reports Shipping & Transit has been the largest filer of patent lawsuits in the country, with 101 on the books. (The runner-up has 85.) That number doesn’t include businesses that paid up when they first received a threat, instead of waiting to be sued.
The majority are small companies like the Spice Jungle, featured in the WSJ’s story. The Michigan-based company, which has 15 whole employees, was shocked when one day it received a demand to pay up $25,000 for the continued right to send shipping notices to customers. When it didn’t pay, it shortly found itself on the receiving end of a lawsuit from Shipping & Transit.
“We have studied every line of every patent they claim we infringe on and we clearly do not,” one of Spice Jungle’s co-owners told the WSJ.
That’s not to say that Shipping & Transit isn’t also going after the big guys; it is. The WSJ reports that it has indeed sued major retailers as well as UPS and FedEx directly, claiming the same violations of patents for “providing status messages for cargo, shipments and people.”
The CEO of another small business told the WSJ they were “iterally losing sleep over this,” adding that the $25,000 demanded by Shipping & Transit is equivalent to an employee’s entire salary. That Connecticut-based business gave up and settled with Shipping & Transit, because “to fight it would have cost more than settling.”
That’s exactly what Shipping & Transit is banking on, the WSJ explains: fees between $25,000 and $45,000 are big enough to hurt small businesses, but not so large that most will find it economical to fight it out in court. Lawyers, after all, are expensive, and filing fees add up.
The American Intellectual Property Law Association told the WSJ that in these instances, just getting trough discovery — the phase of evidence- and testimony-gathering that comes before any court date happens — costs an average of $358,000. Even taking the lower-cost option of going directly to the new Patent Trial and Appeal Board costs $23,000 just to file a claim.
Shipping & Transit claims to have received all its patents between 1993 and 2006. A co-owner told the WSJ that 29 of his original 34 patents have expired, but that anyone using the last five, or that used the others when they were still active, owes him money.
He also strongly rejected the “patent troll” moniker, when the WSJ asked him about it. “Most of the time a troll is somebody who has bought somebody’s patents,” he told the paper. “Because I am the inventor of these patents and have been involved in it, it is a stretch to say that I am a troll.”
So is he actually legit? Well, legally speaking, it’s not quite clear.
The Supreme Court ruled unanimously in 2014 that you cannot just patent the idea of doing a thing. In order to be awarded a patent, you actually need to be patenting the mechanism for doing that thing. So you can’t patent the idea of using an algorithm or piece of code to handle your process (the issue in the original case), but you can patent the specific code you have written in order to do that.
Several of the cases the EFF is tracking involve counterclaims, called Alice motions, based on that ruling (the case was Alice Corp. v. CLS Bank International). In the meantime, though, no court has actually yet ruled on the merits of any of Shipping & Transit’s many cases. So far they have all been settled or dismissed before any judge had to decide if the patent claims are legitimate.
by Kate Cox via Consumerist