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Court Orders Prolific Patent Troll Shipping & Transit LLC To Pay Defendant’s Legal Bill

DEEPLINKS BLOG
July 7, 2017

Shipping & Transit LLC, formerly known as Arrivalstar, is one of the most prolific patent trolls ever. It has filed more than 500 lawsuits alleging patent infringement. Despite having filed so many cases, it has never had a court rule on the validity of its patents. In recent years, Shipping & Transit’s usual practice is to dismiss its claims as soon as a defendant spends resources to fight back. A district court in California issued an order (PDF) this week ordering Shipping & Transit to pay a defendant's attorney's fees. The court found that Shipping & Transit has engaged in a pattern of “exploitative litigation.”

Shipping & Transit owns a number of patents that relate to vehicle tracking. We’ve written about its patent trolling on numerous occasions. In many cases, Shipping & Transit asserted its patents against businesses that simply sent email to customers with a tracking number. In other cases, it has sued municipal transport agencies and logistics companies.

The recent fee award is from a case called Shipping & Transit LLC v. Hall Enterprises, Inc. After getting sued, Hall told Shipping & Transit that it should dismiss its claims because its patents are invalid under Alice v. CLS Bank. Shipping & Transit refused. Hall then went to the expense of preparing and filing a motion for judgment on the pleadings (PDF) arguing that Shipping & Transit’s patents are invalid. In response, Shipping & Transit voluntarily dismissed its claims. Hall then filed a motion for attorney’s fees (PDF).

In considering the motion for fees, the court first considered the merits of Hall’s judgment on the pleadings. The court found that the asserted patent claims were directed to the abstract idea of “monitoring and reporting the location of a vehicle” and that they do not contain an inventive concept sufficient to transfer the abstract idea into a patent-eligible invention. The court also concluded Shipping & Transit’s legal arguments in defense of its patents were “objectively unreasonable in light of the Supreme Court’s Alice decision and the cases that applied that decision to invalidate comparable claims.”

The court also considered Shipping & Transit’s litigation history. It wrote:

Although the Court agrees that filing a large number of cases does not necessarily mean Plaintiff litigated in an unreasonable manner, it nevertheless finds troubling that Plaintiff has repeatedly dismissed its own lawsuits to evade a ruling on the merits and yet persists in filing new lawsuits advancing the same claims. …

Plaintiff’s business model involves filing hundreds of patent infringement lawsuits, mostly against small companies, and leveraging the high cost of litigation to extract settlements for amounts less than $50,000. These tactics present a compelling need for deterrence and to discourage exploitative litigation by patentees who have no intention of testing the merits of their claims.

In the court’s view, the combination of Shipping & Transit’s unreasonable legal arguments and its history of exploitative litigation justified an award of fees.

Shipping & Transit could appeal this decision but we believe the appeal would be unlikely to succeed. Any appeal would be decided under an “abuse of discretion” standard that makes reversal less likely. Also, the Federal Circuit has recently shown increased willingness to impose fees on abusive patent litigants.  

Because Shipping & Transit dismissed its complaint, the court did not have jurisdiction to formally invalidate the patent claims. Nevertheless, the court clearly would have ruled in Hall’s favor on the motion for judgment on the pleadings had it decided that motion. Shipping & Transit is therefore on notice that these patent claims are invalid and, in our view, any subsequent litigation asserting these claims would warrant sanctions.

We hope this ruling will finally put an end to Shipping & Transit’s massive patent trolling campaign. The fact that Shipping & Transit was able to file more than 500 cases with almost-surely invalid patents shows that further reform is needed to slow down patent litigation abuse.

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