Technology is a big part of how Carvana is changing the way people buy and sell cars. It drives every aspect of our uniquely vertically integrated experience, from the website our customers navigate to the internal tools that support our teams and operations.
Like any technology company, we build systems that combine principles and best practices used across the industry with proprietary components unique to us. Innovation takes effort, and we believe that companies have a right to protect their unique IP. To that end, Carvana has over 62 issued patents and 40 pending, and we expect to file more as our journey continues. Patents are designed to protect and encourage innovation.
It is ironic, therefore, that patent assertion entities, commonly known as “patent trolls,” pose a persistent threat to innovative e-commerce and technology companies. These entities treat acquiring and enforcing patents as a business in and of itself. They acquire broad, often dubiously granted patents on common digital and web-based processes not to protect R&D investment or proprietary technology, but to systematically squeeze settlement dollars or licensing fees from young companies that cannot afford to defend themselves.
This calculated pattern of attacks is a tax on innovation and an abuse of the patent system that stifles progress.
We consider this approach unacceptable and have decided to fight back. When patent assertion entities come to us with weak, opportunistic claims, we don’t settle; we go to court. And our track record is beginning to speak for itself.
Carvana’s dispute with one of the largest patent holders in the world is a case in point. After years of escalating threats from the company’s patent licensing arm, Carvana made the deliberate decision to go on offense, filing a declaratory judgment action rather than yielding to demands we viewed as disconnected from any legitimate business injury. Carvana challenged the asserted patents directly and pursued the case through several years of substantial litigation.
“We hope our approach in this case makes other potential enforcers think carefully before coming to us with weak patents. Carvana does not view litigation costs as a reason to settle; we view them as the cost of protecting our business.” – Paul Breaux, General Counsel, Carvana
Carvana will continue to meet patent aggression with the same resolve because the best deterrent is a willingness to fight back.
We encourage other companies to take a similar stance. The logic is clear: by refusing to settle, we can reduce the capital that sustains patent assertion entities. Settling sustains patent trolls; fighting back kills their business model. Patent trolls rarely target just one company. When organizations challenge a patent through district court litigation or with the USPTO, all companies facing that same troll benefit. Together, we undermine the troll’s overall enforcement strategy against multiple parties while simultaneously reducing its operational leverage. We appreciate the many other companies joining us in this fight, including Coinbase, Chewy, Shopify, and so many more.
“Carvana believes in intellectual property rights. Our substantial investments in proprietary technology have been and will always be essential to our success. But there is a clear distinction between legitimate enforcement of core intellectual property and opportunistic use of patents to squeeze ROI from companies that cannot afford to defend themselves. We will not be a soft target.” – Dan Gill, Chief Product Officer, Carvana
By choosing to fight back today, we are deterring this bullying behavior in the future and protecting our right to innovate for our customers.