Keep an eye on Sidecar's patents

A day after the news broke that General Motors was picking up assets from failed Uber competitor Sidecar, today the startup's CEO finally confirmed the details directly in a blog post and provided a few more details about the deal.

A "key component to the transaction," writes CEO Sunil Paul, was Sidecar's patents, for which GM has taken a license, but "Sidecar retains ownership of those patents." In other words, it looks like Sidecar the business may live on a little longer.

A spokesperson for Sidecar tells us that the company is now "looking to monetize the existing assets," which include both the data and patents. She would not comment on whether that would include any legal actions against companies like Uber if they choose not to license or purchase them outright. "The company is open to licensing the patents but we don't have comment at this time about enforcement," she added.

The Bloomberg story that broke the news of GM's acquisition noted that while Sidecar believes the patent that it has been granted — US Patent #6356838 for "System and method for determining an efficient transportation route" — as well as other patents that are still pending were essential to the concept of ride-sharing. However, Uber and Lyft — collectively valued in the tens of billions of dollars in private valuations — did not respond to Sidecar's attempts to enforce the patent.

So what might happen next? One of three options, it seems.

The first is that Sidecar sells the patents to someone who might be more willing to enforce them. That could be to a patent entity who has the funds and interest in trying to enforce them through the legal system. Or, it could be to a strategic buyer: another ridesharing company; or another firm that has ambitions to try something out in ridesharing; or someone who may have a long term interest or something close enough that it makes sense to acquire them in a defensive move.

The tech industry is certainly no stranger to the latter kind of patent sale.

Remember Color, the photo sharing startup that rose up in a big, chromatic bubble when it raised a $41 million seed round, only to see that bubble spectacularly burst? When Apple acquired them, they left behind the patents. Those, it turns out, were eventually all acquired, very quietly, by LinkedIn.

No comment from LinkedIn about what it ended up doing with those, by the way. "We are a fast growing Internet company and it's not uncommon for us to expand our patent portfolio," was all the spokesperson said when I asked about the acquisition.

The second option is that Sidecar tries to enforce the patents itself. It seems unlikely that it would do this, however, given that even when it was an active company with funding it couldn't get the companies to budge and respond.

"Most companies know little about how difficult it is to monetize patents; you really need someone in-house to manage it," one patent specialist told me.

The third option might be to start a new company based around the assets. Paul confirms that he is not joining the rest of his team at GM and is taking a break before moving on to the next thing. As the person credited with being one of the first to think up the concept behind Uber before Uber, it will be worth watching to see if he decides to give transportation another crack.

This article by Ingrid Lunden originally ran on TechCrunch, a leading technology media property, dedicated to obsessively profiling startups, reviewing new Internet products, and breaking tech news.

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