Supreme Court limits on patents bode ill for TransCore and IBM

A Supreme Court ruling this week in a patent case on mobile telephone chipsets - Quanta vs LG Electronics - deals with many of the same issues raised by TransCore in their litigation against ETC, and touches indirectly on the value of IBM's patent claim to variable pricing tolls.

The court upheld the notion of patent exhaustion, ruling that since Intel had licensed LGE patents, Quanta a customer of Intel's could not be required to obtain patents from LGE. Substitute ETC for Quanta, Mark IV for Intel, and TransCore for LGE, and you don't have the Supreme court looking favorably on TransCore's claim.

Lower courts had made a distinction between method patents and a claim that involved a combination of patent methodologies in the one product. But the Supreme Court has held: "The authorized sale of an article that substantially embodies a patent exhausts the patent holder's rights and prevents the patent holder from invoking patent law to control postsale use of the article."

Method claims are no different, the Supreme Court held in the June 9 decision. Judge Clarence Thomas delivered the opinion of the Court in his characteristically crystal clear prose.

http://www.supremecourtus.gov/opinions/07pdf/06-937.pdf

A Wall Street Journal report today ("High Court further limits scope of patents" WSJ 2008-06-10 pA4) notes that Circuit Court decisions to expand patent rights are being systematically rolled back by the US Supreme Court (incorrectly rendered in the WSJ as the "High Court" in capitals). Last year they report the Supreme Court struck down attempted patents on "obvious" inventions.

Nothing seems more obvious - to us anyway - as something already being widely implemented but not yet patented. That bodes ill for the IBM effort to sustain a patent earlier this year on variable pricing of toll facilities.

Variable pricing has been in operation almost long enough that if there had been patents on the early schemes, they would be only a few years from expiry by now.

TOLLROADSnews 2008-06-10