A few years back, we challenged a patent belonging to ArrivalStar, the notorious patent troll that was sending demand letters to municipal authorities across the country for offering real-time updates on bus and train arrival times. We got many of ArrivalStar’s claims invalidated (or at least significantly narrowed) by the Patent Office—but that was just for one patent.

Unfortunately, ArrivalStar has over 30 patents on its “inventions,” giving it seemingly endless opportunities to make similarly frivolous claims. In fact, ArrivalStar was by some measures the most litigious patent troll in 2013, but despite that, it almost never had any of its claims actually decided. ArrivalStar behaves like the classic troll that uses the cost of defense to pressure settlements while avoiding decisions on the merits. Indeed, when the Public Patent Foundation challenged ArrivalStar on behalf of the American Public Transportation Association, the troll settled almost immediately rather than stand by the merits its claims.

We recently heard that ArrivalStar had moved on from municipal agencies and was now sending demand letters to new targets, specifically small businesses that email customers tracking information for packages.

Here’s a letter recently sent to TheRealReal, a luxury consignment online shop. In the letter, ArrivalStar claims that at least three of its patents (U.S. Patent Nos. 6,904,359; 6,952,645; and 7,400,970) are infringed when TheRealReal sends an email letting its customer know a shipment is on its way. This is what ArrivalStar characterizes as a “communication of a notification relating to the status of a mobile vehicle” (among other terms used by ArrivalStar) that it contends infringes its various patents. 

In its letter, ArrivalStar uses common patent troll tactics. The letter notes that it has licenses with “several hundred companies” and that “many of these licenses were granted in settlement of patent infringement actions.” In a later part of the letter, ArrivalStar states that “litigation can result in an enormous recovery after trial” and “the process generally proves to be extremely costly and time consuming for both parties.” In other words: pay up now, otherwise this will get really expensive.

ArrivalStar also marked its letters, in bold, underlined, and in all-caps, “FOR SETTLEMENT PURPOSES ONLY PURSUANT TO FRE 408" making it seem like the letters had to be kept confidential. (Many targets of letters like this may not realize that ArrivalStar’s claims of confidentiality are essentially bogus. Federal Rule of Evidence 408, or “FRE 408,” limits the use of certain evidence in court; it does not allow ArrivalStar to unilaterally impose confidentiality restrictions.)

In its letter, ArrivalStar also included a list of companies that have taken licenses to ArrivalStar’s patents. But what a small business on the receiving end of this letter may not realize is that one company is conspicuously absent: FedEx.

And this omission is extremely important.

The target of the ArrivalStar letter in this case, TheRealReal, ships everything via FedEx. In fact, ArrivalStar explicitly included a screen shot of TheRealReal’s letter, showing the FedEx tracking number, as evidence of alleged infringement.

Only one problem for ArrivalStar: FedEx has a license to the entire ArrivalStar portfolio of patents, meaning that ArrivalStar cannot assert patent infringement against a company simply using a FedEx feature (in legal terms, we call this “patent exhaustion”). FedEx, after learning of this claim, sent a letter to ArrivalStar ordering the troll to immediately stop harassing its customers.

Even though ArrivalStar was asserting claims that it almost surely couldn't assert, ArrivalStar sent another demand letter, this time related to U.S. Patent No. 6,317,060. In this letter, ArrivalStar seemed to argue that a claim term requiring “storing data associated with a plurality of vehicles” didn’t actually require any data relating to vehicles at all!  

Unfortunately for ArrivalStar, TheRealReal had lawyers—unlike many small businesses targeted by patent troll demand letters. And those lawyers pushed back. ArrivalStar initially asked for $45,000 to license patents that had already been licensed. TheRealReal’s lawyers replied with a scathing letter, and in a poetic turn, noted that the true value of ArrivalStar’s patents “is to hold a Damoclean sword of patent litigation defense costs over the heads of businesses, such as TheRealReal, that actually provide goods and services that consumers want.” TheRealReal offered them $5,000 instead. (To be clear, we think they offered more than what we think the troll’s patents are worth.) 

The two parties have apparently “settled.” We don’t know the details of that settlement, but we hope TheRealReal gave ArrivalStar exactly what it should have gotten: nothing.

But even if they didn’t hand over a single cent, TheRealReal had to spend time and money dealing with ArrivalStar’s frivolous claims. And countless other businesses, simply using FedEx services and receiving similarly duplicitous letters, may be caving to the troll’s demands. This is why we need patent reform. Until we get it, that “Damoclean sword” will continue to hang over small businesses that dare become successful enough to attract the attention of patent trolls. Take action today.