This patent infringement lawsuit puts Uber's future at risk
What's the story
Uber is embroiled in a patent infringement lawsuit filed by Carma Technology, a company founded in 2007 by Sean O'Sullivan.
The lawsuit alleges that Uber violated five of Carma's patents pertaining to the system of matching riders with vehicle capacity.
The patents are directly linked to ridesharing, which was Carma's business model for nearly a decade before it pivoted toward road-pricing services like GPS tolling and HOV verification.
Carma is now asking for jury trial and permanent injunction against Uber.
Legal demands
Carma seeks injunction, royalties from Uber
The company also wants future royalties on any Uber products that infringe its patents, as well as damages and other costs related to the lawsuit. The case has been quietly progressing through US District Court for the Eastern District of Texas since earlier this year.
Patent details
Carma's patents and Uber's patent applications
In a recent interview with TechCrunch, O'Sullivan claimed that the core service described by Carma's patents is exactly how modern-day ridesharing works.
He argued that Uber is infringing on these patents even if its business model resembles that of a taxi service.
The case has become complicated as each of the five asserted patents has multiple patent claims defining the legal boundaries of an invention, making it more difficult for Uber to defend against them.
Business evolution
Carma's history and current business model
Carma, originally known as Avego, was founded by O'Sullivan out of frustration with traffic congestion.
The first patent for a shared transport system was filed in 2007 and granted in 2010.
However, the company pivoted its business model to focus on toll management and express lanes in 2013.
Despite the lawsuit, Carma remains profitable but acknowledges that pursuing this legal battle will impact its bottom line.