Uber’s Business at Risk From Decade-Old Patent Battle
▼ Summary
– Carma Technology sued Uber for allegedly infringing on five patents related to ride-sharing technology, seeking damages, royalties, and an injunction.
– Uber had multiple patent applications rejected between 2016 and 2019 due to conflicts with Carma’s existing patents, leading to some abandonments.
– Carma’s lawsuit is complex because it involves a family of 30 interconnected patents, requiring Uber to defend against multiple individual claims.
– The lawsuit took nine years to file due to high legal costs and Carma’s focus on building its business before pursuing legal action.
– Carma shifted its business model from ride-sharing to toll and HOV lane management after Uber and Lyft redefined the term “ride-sharing” as taxi-hailing.
A decade-old patent dispute now threatens Uber’s core business model, with potential ripple effects across the ride-hailing industry. The legal battle centers on intellectual property claims from Carma Technology, a company founded by entrepreneur Sean O’Sullivan, which alleges Uber infringed on five patents covering vehicle capacity matching systems – the foundational technology behind modern ride-sharing platforms.
Carma’s lawsuit, filed in Texas federal court, seeks substantial damages, ongoing royalties, and a permanent injunction against Uber. While the case is recent, tensions trace back to 2016 when Carma first notified Uber of potential patent violations. What makes this litigation particularly challenging for Uber is Carma’s strategic patent portfolio – the disputed patents belong to a broader family of 30 interconnected filings dating back 18 years, each containing multiple enforceable claims.
Legal experts highlight the complexity Uber faces. “This isn’t just about five patents,” explains intellectual property attorney Larry Ashery. “Carma built a sophisticated defensive framework where each patent claim must be addressed individually.” Uber’s likely defense strategy – attempting to invalidate the patents – could prove difficult given the USPTO’s prior rejections of Uber’s own applications due to conflicts with Carma’s intellectual property.
The timing raises questions about why Carma waited nearly a decade to litigate. O’Sullivan cites financial constraints and operational priorities, noting that mounting a patent lawsuit against a tech giant requires millions in legal resources. Carma initially pursued licensing negotiations before concluding litigation was unavoidable. While Uber remains silent on the case, recent court filings reveal efforts to move proceedings to its home jurisdiction in Northern California.
At the heart of the dispute is Patent No. 7,840,427, granted in 2010 after O’Sullivan’s 2007 application. This technology enabled real-time matching of vehicle capacity with riders via smartphone – a system Carma demonstrated publicly in 2008, years before Uber’s rise. Originally branded as Avego, the company operated a carpooling service until 2016, later pivoting to toll management solutions after Uber and Lyft redefined “ride-sharing” as on-demand taxi services.
The outcome could reshape industry dynamics far beyond Uber. O’Sullivan acknowledges nearly 60 other companies may be infringing on Carma’s patents, though Uber remains the primary target as market leader. For Carma, now profitable in its toll technology business, the lawsuit represents a principled stand. “This tests whether patent protections matter when small innovators face deep-pocketed corporations,” O’Sullivan asserts, referencing Uber’s failed patent applications. The case’s resolution may determine how intellectual property law adapts to disruptive tech giants.
(Source: TechCrunch)
