U.S. Administrative Law Judge Paul Luckern said the Toyota Prius and Highlander hybrids did not infringe a patent held by Florida-based Solomon Technologies Inc., as Solomon had alleged.
Luckern said one of the claims in Solomon's patent was invalid and that "there is no domestic (U.S.) industry involving said patent."
Luckern's findings are subject to review by the full commission and could ultimately be appealed in federal court.
Solomon Technologies filed a complaint with the panel last year saying the hybrid transmission in the two popular vehicles infringed its patent related to motor and transmission systems.
If Solomon prevailed, Japan's top automaker could be banned from importing the systems and the Prius and Highlander hybrid models that they power.
A spokesman for Solomon said the company did not have an immediate comment but was expected to issue a statement later in the day.