Sidecar founder holds on to patent for ride app idea
What’s the value of a great idea?
This week a man sued Uber, saying the company stole his idea for a ride service that he hatched in 2002. The man says he spent years developing the idea, but it never came to fruition because he didn’t get funding .
While that case so far rests on flimsy evidence, another man may have a more legitimate claim. Sunil Paul says he had a similar idea even earlier, back in 1997. Paul developed his concept for mobile ride-hailing over a wireless network, applied for a patent in 2000 and was granted U.S. patent 6356838 “System and method for determining an efficient transportation route” in 2002.
Unlike the man with the lawsuit, Paul turned his idea into reality. He co-founded San Francisco startup Sidecar, which offers paid rides by private drivers in their own cars, summoned by passengers over a wireless network — just as he had envisioned. Sidecar, which now owns the patent, first tested giving the public rides in February 2012, shortly before larger rivals Lyft and UberX began offering similar peer-to-peer services (Uber already was offering black-car rides from professional drivers).
So why isn’t Sidecar suing Uber and Lyft for patent infringement?
Paul said his preference for now is to continue building up the company, which this year added deliveries of packages — hot food, groceries, shopping orders and even medical marijuana — alongside passengers.
“In the startup world, focus is everything,” he said. “A startup has limited time and limited money. We have been focused on this delivery business and now have amazing traction in that world.” Deliveries account for half the rides Sidecar provides in San Francisco.
However, he hasn’t ruled out taking action. “It doesn’t mean we won’t do something about it down the road,” he said.
Sidecar hasn’t licensed its ride-sharing patent either, although “we’ve had folks approach us about it,” Paul said, declining to name them.
‘Fundamental’ patent
“I consider this to be a seminal patent, very fundamental to the ridesharing car-service space,” said Maulin Shah, an attorney at Envision IP, a North Carolina firm specializing in patent research. “I find it interesting that there hasn’t been any public announcement of a licensing of the patent or litigating it against these major players” that are in the same space.
The patent has been cited in 137 subsequent patent applications, including ones from Apple, Cisco, Facebook, Google, IBM and Uber. Such citations are considered a strong indication of a patent’s relevance and stature as the first of its kind in an industry, Shah said.
But, he added, there could be a host of reasons why Sidecar wouldn’t want to go to court.
Patent battles can be costly and extended. “It is much more difficult for patent owners to go after defendants who are willing to fight and have the resources to drag it out,” Shah said. Witness the clash-of-the-titans patent war between Apple and Samsung over smartphone and tablet design, which lasted four years and expanded to 50 lawsuits worldwide. Uber and Lyft — which both declined to comment on the Sidecar patent — have considerably deeper pockets. Uber has raised almost $6 billion and is reportedly seeking more funding. Lyft has raised $1 billion, including $150 million announced this week. Sidecar has raised $35 million, according to CrunchBase.
Several recent developments create hazards for patent lawsuits, especially when the patent covers a method rather than an object or apparatus. “The America Invents Act of 2012 allows a new way for defendants to invalidate patents,” Shah said. That means if Sidecar sued Uber for patent infringement, Uber could go to the Patent & Trademark Office and dispute the legitimacy of Sidecar’s patent.
A broad-reaching Supreme Court ruling last year, in Alice Corp. vs. CLS Bank International, made it harder to defend patents of business methods. Essentially, the justices ruled that simply transferring an idea — in that case, a form of financial risk-management — to the realm of computers didn’t constitute a novel innovation worthy of a patent.
Justice Stephen Breyer made the point that even ancient technology could accomplish the same thing. “Imagine King Tut sitting in front of the pyramid where all his gold is stored and he has the habit of giving chits away,” he said. “He hires a man with an abacus” to keep track of his accounts.
Uber filings
Meanwhile, Uber has not been sitting still. It has filed 19 patent applications and just received patents on a method of “dynamic supply positioning for on-demand services” as well as a design patent, according to Envision IP. But seven of its patent applications have been rejected for being obvious or covering abstract ideas, according to Reuters. Still pending: A patent application for its much-reviled surge pricing concept. Uber’s pending acquisition of de Carta, a mapping-technology company, will also fatten its patent chest, because de Carta owns 25 patents and has six more pending, according to Envision IP.
Paul said he is confident that his idea continues to meet the basic bar for a patent: It is novel, has utility and is not obvious.
Even though in 2000, long before the advent of the iPhone, Paul saw significant hurdles — technology, regulation, consumer demand — to actually creating a ridehailing system, he spent tens of thousands of dollars of his own money to get the patent from application to completion.
“This was not a lark,” he said. “Clearly one day the technology would be ready. And I had a macro view that we were moving from a world of products to a world of services, and moving away from the need to own cars.”
The basic idea did prove valuable: It became the basis for Paul’s company, as well as a springboard for other companies’ patented innovations. But is it worth a court battle? Paul has decided — not now. Or at least, not yet. Carolyn Said is a San Francisco Chronicle staff writer. E-mail: csaid@sfchronicle.com Twitter: @csaid