Toyota settles infringement case over hybrid patent
July 19, 2010 - 11:31 am ET
WASHINGTON (Bloomberg) -- Toyota Motor Corp. has settled a
patent-infringement dispute that had threatened imports of its newest hybrid
vehicles, including the Prius.
The agreement was announced today as a hearing was set to begin on a claim
by Paice LLC, founded by Alex Severinsky, against Toyota before the U.S.
International Trade Commission. Terms of the settlement weren't disclosed.
Ford Motor Co. also settled patent litigation with Paice on Friday -- terms
were not disclosed in that case either.
Severinsky, a Soviet emigrant who began his career developing
antitank-warfare instrumentation, had said his 1994 patented system for a
high-voltage method to power gas-electric hybrid cars was used by Toyota
without permission. Severinsky, 65, spent years trying to get the automaker
to pay royalties.
"Finally people understand the merits of what I invented and give it the
proper value," Severinsky said today in an interview. "Toyota is the leading
technology company and finally appreciates the value of the invention."
The patent covers a way to supply torque to a car's wheels from both an
electric motor and internal combustion engine using a combination of high
voltage and low current.
Toyota, which was found to have infringed the patent in an earlier case, had
said its hybrid vehicles are the result of its own research and asked the
trade commission to deny Severinsky's latest claims.
The ITC is an independent agency set up to protect U.S. markets from unfair
trade practices. When a violation is found, it has the power to block
imports of products and typically sides with patent owners unless there are
health or public-policy issues.
Toyota is the biggest seller of hybrid vehicles in the U.S. In June, the
company sold 14,639 hybrids in the U.S., including 1,933 Lexus hybrids,
about 10 percent of its total sales. The ITC's case related to the company's
current, third-generation Prius as well as the Camry hybrid, Lexus HS250h
and Lexus RX450h.
Toyota was found in a 2005 trial to have infringed Severinsky's patent on
torque technology used in earlier versions of the Prius, Lexus RX400h and
hybrid Toyota Highlanders. A federal jury awarded $4.27 million to
Severinsky's company, Paice, which is based in Bonita Springs,Fla.
The judge declined to halt sales of the hybrids, and instead told the
automaker to pay Paice $25 for every car. He later raised the amount to
about $98 after an appeals court ordered a recalculation. Toyota was
appealing that decision.
If the $98 rate were applied to all of Toyota's hybrids now on sale in the
U.S., the company would have to pay $1.43 million in royalties for June
alone. The company reported fourth-quarter net income of 112 billion yen
In the Ford patent case with Paice, both companies filed lawsuits against
the other regarding a patented technology used in hybrid versions of the
Ford Fusion sedan and Escape crossover.
The dispute surrounded the same patent -- U.S. Patent No. 5,343,970 -- that
Paice and Toyota were litigating over.All told, Paice holds 11 U.S. patents
related to hybrid-vehicle technology.
Paice is an acronym for Power-Assisted Internal Combustion Engines.