TransCore to appeal legal defeat on ORT patent

TransCore plan to lodge an appeal against the May 22 US District Court's dismissal of their complaint against ETC on patent infringement in Illinois. An official said: "I don't think you'll find this is the end of the story."

TransCore lawyers believe there is a good chance that a higher court will find pertinent the lack of any explicit protection for Mark IV customers in the 2001 TransCore-Mark IV settlement. The judge said in his ruling last week that the law is "well settled that an authorized sale of a patented product places that product beyond the reach of the patent."

He granted summary dismissal of the TransCore case and awarded ETC's costs against TransCore.

There is bad feeling at TransCore against ETC for using the ticker symbol "NYSE:ROP" (Roper Industries) in their press releases and in public statements on the case. They see this as an assault on the capitalization of their parent company.

TransCore has made no official statement on the case.

Tim Gallagher managing director of ETC says the case has significant implications for the toll industry: "While ETC was no doubt the first test case for TransCore, the dismissal of the lawsuit was an important victory for our industry as a whole."

He says a TransCore win in the case would leave all customers of Mark IV equipment open to demands for license fees or legal action. Moreover he says it would have "dire implications" for the E-ZPass recompete currently being conducted by the Inter Agency Group for E-ZPass.

Third, ETC says a Transcore victory would throw major obstacles in the way of many planned ORT conversions.

Complaint made during procurement

By ETC's account, TransCore first claimed that its patents covered open road tolling (ORT) equipment during the bid process in response to the Illinois Tollway’s January 2005 request for proposal for a new toll system on all four of its tollways. The project included the conversion of about 100 toll lanes at 20 mainline toll plazas to ORT.

ETC says that during the RFP selection process, TransCore formally notified the Illinois Tollway that other proposers would be infringing on their patents. In spite of TransCore’s claims, the Illinois Tollway proceeded, contracting with ETC in July.

TransCore sued ETC for patent infringement in November 2005.

TransCore sought over $20m in simple damages and $60m in punitive triple damages in the Illinois Tollway case.

ETC officials said today they don't see any validity to the claim that AT/Comm patents cited by TransCore are infringed by modern Open Road Tolling (ORT) regardless of the Mark IV-TransCore settlement of 2001.

Old AT/Comm patents cited

TransCore cites patents it obtained when it purchased AT/Comm, a litigious but near bankrupt company that never implemented, or so far as we know ever designed or tested open road tolling. Since then open road tolling has been implemented by Hughes/Raytheon,, Worldcom/MFS, ACS, Combitech/Kapsch, Cofiroute, United Toll Systems and many others. And not least ORT has been implemented by TransCore itself using their own designs.

The AT/Comm patents going back to the early 1990s describe open road tolling in quite general terms as using signal strength and directional antennas to track vehicles in an open road environment. At the time most electronic tolling was conducted in retrofitted single toll lanes with the concrete curbing clearly separating vehicles going through the toll plaza under the canopy during electronic transactions.

In an open highway environment special methodologies are needed to track vehicles and distinguish one from another so that tolls are appropriately debited, while correctly identifying any vehicles photographed as lacking a transponder for a video toll.

However the judge in TransCore vs ETC did not hear substantial argument on the merits of the open road toll patents, dismissing the case on the basis that any patent regardless, of its validity, was effectively sold to Mark IV and to its customers in the $4.5m 2001 settlement between Mark IV and TransCore.

IBM too

The other patent issue generating uncertainty is IBM's late 2007 patent for variable pricing. Like the AT/Comm patent on ORT the IBM patent seems to simply describe and claim intellectual property rights for a methodology that IBM, unlike several others, has never engineered or implemented - which seems to us like the AT/Comm ORT 'patents' a travesty of the intentions of the patent system.

see our earlier report

http://www.tollroadsnews.com/node/3554

TOLLROADSnews 2008-05-27