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• Transcore v. Electronic Transaction Consultants (Court of Appeals for the Federal Circuit, 08-1430)

Transcore, LP v. Electronic Transaction Consultants Corporation

Overview

In Transcore v. Electronic Transaction Consultants (08-1430), the Court of Appeals for the Federal Circuit affirmed a district court's holding that a patentee's covenant not to sue authorized otherwise infringing sales that, as a result, exhausted the patentee's rights vis-a-vis the covenantee's customers. On review, the court viewed the broad an unrestrictive language of the covenant as determinative - the patentee agreed that it would not bring suit "for future infringement." In the absence of a limitation on this authorization, to "making" and "using" for example, the court viewed the covenant as a promise not to sue for any infringing act. As a result, otherwise infringing sales by the covenantee were authorized sales and, as such, operated to exhaust the patentee's rights. The court extended the exhaustion to a later-issued, procedurally-related patent that included broader claims but that was not listed in the covenant. Legal estoppel prevents the patentee from derogating the right it granted, and the covenantee has an implied license to the later patent because "it must be permitted to practice [the later patent]" in order to obtain the benefit of its bargain with the patentee. This implied license is coextensive with the rights granted in the covenant not to sue, rendering the patentee's rights in the later patent exhausted by the same authorized sales.

Keywords

estoppel - The court held that a patentee was estopped from asserting a patent that was procedurally related to, but that had issued after, several patents subject to a covenant not to sue.

evidence - Evidence of patentee's intent not to provide downstream rights to convenantee's customers is irrelevant in a patent exhaustion analysis; the only relevant issue is whether sales between the covenantee and its downstream customer were authorized.

exhaustion - A patentee's unconditional covenant not to sue authorizes sales of otherwise infringing devices by the convenantee for purposes of patent exhaustion.

exhaustion - An agreement that waives a patentee's right to sue for infringement, without restriction or limitation on the types of infringement covered (make, use, sell, offer for sale, import), authorizes all acts that otherwise would constitute infringement, including sales that exhaust the patentee's right to exclude.

exhaustion - The court found an implied license for a patent that was procedurally related to, but that had issued after, several patents subject to a covenant not to sue and determined that the implied license carried the same rights granted in the covenenant not to sue, including the authorization of otherwise infringing sales that exhausted the patentee's rights.

Detailed review

No detailed review written.

Patent documents

• 5805082 - Electronic vehicle toll collection system and method [.pdf]
• 5289183 - Traffic monitoring and management method and apparatus [.pdf]
• 5406275 - Object location process and apparatus [.pdf]
• 6653946 - Electronic vehicle toll collection system and method [.pdf]

Representative figure(s)

[click to enlarge]

Representative claims(s)

• 1. A method for automatically collecting tolls from a vehicle moving along a roadway having a plurality of entrances and exits, wherein the toll to be charged to a vehicle varies with an entrance point of the vehicle to the roadway, an exit point of the vehicle to the roadway, and a vehicle class, the method comprising the steps of

  providing at least a exit toll facility through which the vehicle can pass for toll collection,

  providing an entrance toll-facility-identification site corresponding to said entrance point of said vehicle to said roadway,

  providing in a vehicle a vehicle transponder having storage for storing toll-money-available information representative of a monetary quantity available for debiting in a toll transaction at an upcoming toll facility,

  loading the transponder with electronic gross-toll-amount information representative of an initial toll-money-available value,

  storing a toll schedule, indicative solely of exit toll facility tolls corresponding to said entrance point of said vehicle to said roadway, in said vehicle transponder in response to a transmission from said entrance toll-facility-identification site,

  transmitting, from a exit toll-facility-identification site corresponding to the exit toll facility, a exit toll-facility-identifier signal for reception by said vehicle transponder,

  said vehicle transponder being receptive to receive said exit toll-facility-identifier signal,

  said vehicle transponder being arranged to determine, in response to the exit toll-facility-identifier signal, a toll amount from said schedule to be debited against the value of the money available at the exit toll facility, and

  transmitting, from the vehicle transponder, as the vehicle proceeds through the exit toll collection facility, data identifying the in-vehicle toll processor and toll balance information from storage.

About Promote the Progress

Started in January, 2004 by J. Matthew Buchanan, Promote the Progress was one of the first blogs dedicated to patent law issues. The site now provides the web's first patent education portal dedicated to helping professionals digest, understand, and use the latest information from the courts, Congress, and the Patent and Trademark Office in their daily practices. The original blog still lives on as part of the exciting new portal format.

A detailed history of the site is available on the About page.

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