ArrivalStar SA and Melvino Technologies, the patent monetization companies run by Martin Kelly Jones, appear to have reached nuisance settlements with at least 2 of about 10 defendants accused of infringing on their patents for technology that allows for the tracking and messaging of the status of vehicles or packages.
The privately held companies, which in March assigned their patents to Shipping and Transit LLC, another privately-held firm, have filed stipulations of dismissal — some with prejudice and some without prejudice -- in patent suits against L’Oreal USA Inc., Alex and Ani LLC, Sole Technology Inc. dba Etnie, Golfknickers.com LLC, 800 Flowers Inc., Solstice Marketing Concepts, Atlas Van Lines, Zullily Inc., Dollar General and Urban Outfitters.
ArrivalStar and Melvino are actively bringing infringement claims against a number of other companies who so far at least have refused to settle including Demandware, Pizza Hut of America, Solmar-Universal Tanker Charters, Connected Telematics, Linea LA LLC, Dekkers, Oriental Trading Co., and Transporeon Group Americas.
Attorneys for the companies declined to comment on the record, because they said the settlements were governed by confidentiality agreements.
But a person familiar with two companies that settled, who asked not to be identified because of the confidentiality agreements, said they did so for “nuisance amounts” or less than $50,000, because it was cheaper to settle than litigate.
Jason Dollard, an attorney for ArrivalStar and Melvino, said he couldn’t comment on whether his clients had reached settlements with any of the companies mentioned above because of confidentiality agreements.
He noted, however, that ArrivalStar and Melvino had released 800 Flowers and Zullily from suits.
The dismissals and apparent settlements come as ArrivalStar, Melvino and other patent monetization companies are facing new obstacles to their businesses from patent reform in Congress.
Bills in the House and the Senate are expected to make it easier for defendants to seek legal fees from the most abusive non-practicing entities, who bring cases seeking nuisance amounts that are less than the cost of litigating rather than real licensing fees.
Asked whether the timing of the dismissals had anything to do with patent reform currently before Congress, he said it didn’t.
“I’m aware of patent reform and familiar with what’s in the bills,” Dollard said. “When and if it’s passed we’ll have to abide by whatever is put in place.”
Dollard said ArrivalStar and Melvino completed the assignment of its patents to Shipping and Transit LLC in March.
He said the new company is still run by Jones, but declined to comment on whether the same offshore backer for ArrivalStar and Melvino was also behind Shipping and Transit.
Michael Strapp, a partner with Goodwin Procter LLP in Boston, who represents Demandware, couldn’t be reached for comment.
In court filings, Demandware has stated that ArrivalStar and Melvino “have created a business model around knowingly filing frivolous and meritless complaints of patent infringement against businesses, municipalities and individuals with de minims or no pre-filing investigation, claim chart preparation, comparison of the accused products or services to patent claims or the like…
"ArrivalStar and Melvino have created such a business model with the malicious intent to extort a substantial amount of money from the accused defendants as a settlement or license fee; such substantial amount of money being carefully selected by ArrivalStar and Melvino to be significantly less than the average cost of hiring an attorney to file dispositive motions and argue the same.”
Goodwin Procter’s Strapp has said in a previous interview ArrivalStar and Melvino have a well developed business model of approaching companies with outrageous licensing demands and when defendants balk they immediately offer to settle for a fraction of the original demand.
Strapp said the typical demand letter from ArrivalStar asks for about $150,000 before offering to settle for half or a third of that.
“An unknown number of companies may have fallen prey to such tactics,” Strapp has said.
“It’s quite likely they’ve approached many multiples of the number of companies we mentioned in our amended complaint.
Demandware “is unwilling to lie down because we believe the case has no merit,” he said. “That’s a position Demandware feels strongly about.”
“ArrivalStar recognizes some companies will not pay. That’s why they’d rather extract quick settlements or quickly move on.”
Attorneys for the other companies still involved in litigation with ArrivalStar and Melvino, either declined to comment or couldn’t be reached for comment.
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