Patent Challenge to Ride-Sharing Technology

May 2, 2017

Hailo Technologies, LLC, a subsidiary of Red Dragon Innovations LLC, which is an arm of a patent monetization firm founded by IP lawyer Daniel Cotman called 2S Ventures LLC (not affiliated with the British cab service of the same name), filed separate suits in the Central District of California against both Uber Technologies, Inc. and Lyft, Inc. Both suits involve a claim that mobile phone applications published by both companies infringe on a patent for an automated vehicle dispatch and payment honoring system held by Hailo.

The patent, granted in 1999 (originally assigned to Florida-based inventor and entrepreneur Alexis Paredes), uses specialized software to enable users to select a taxi or particular vehicular transport from a menu, along with the desired destination which can be graphically selected on the screen and allows the customer to designate the number of passengers traveling. The system then displays the approximate fare and provides alternative forms of payment which are honored by that particular transport company. The dispatcher can then route the appropriate vehicle to the requester’s location while providing an estimated time of arrival to the customer.

Uber and Lyft are the top ride sharing companies in the United States, an industry that allows drivers to use their personal vehicles to taxi customers between destinations. The industry has exploded since coming on the scene in 2012. Industry value as of 2015 is estimated at 16.5 billion dollars. Uber’s program extends to more than 70 countries, and Japan is considering introducing a similar program.

In mirror complaints, attorney Rasheed McWilliams of Cotman IP alleges the similarities between the claimed invention and the mobile applications in question. Focused on the first claim of the patent, complaint highlights both the customer facing mobile application as well as the one for drivers. The action seeks both damages and injunctive relief.

The fight is the second major challenge Uber is facing this year, coming off the heels of allegation of trade secret theft from self-driving car competitor Waymo. Waymo, Google’s self-driving car arm, alleged that lead developer Anthony Levandowski stole 14,000 documents which make up the core of current self-driving technology.

Uber, in particular, has been fighting to grow its intellectual property portfolio to head off these sorts of lawsuits, both through rapid hiring to boost internal product development and aggressive purchase of third-party patents. To this end, Uber has launched a patent purchase program (known as UP3) which is an in initiative developed by the company to speed up the acquisition of secondary patents which are often bought and sold through intermediaries. The traditional process can be a lengthy and resources intensive process.

The program aims to cut out all negotiation and create a marketplace for Uber to acquire several patents by the end of the year. The program is focused only on purchase and does not include an option to license technologies. Uber hopes this will help accelerate its intellectual property library grown and help it avoid similar litigation in the future.

Neither Uber nor Lyft have yet responded to either the lawsuits or made a public comment about the litigation.

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Photo: REUTERS/Lucy Richardson