Engineers, marketers and lawyers are equally hard at work on Dana Corp.'s disputed Hydra-Lok differential as the company prepares to broaden sales of the device.
Last week, Dana rolled out a glossy advertising campaign for the Hydra-Lok in automotive trade magazines. The campaign debuts as the clock winds down on Dana's one-year deal to supply Hydra-Lok exclusively to DaimlerChrysler. Hydra-Lok is a key component of the Jeep Grand Cherokee's Quadra-Drive all-wheel-drive system.
That agreement expires in August. After that, Dana hopes to supply other automakers with Hydra-Lok, a power coupling in the axle that transfers torque from one wheel to the other by pumping oil against clutch plates.
Dana, which is based in Toledo, Ohio, is working with automakers to adapt Hydra-Lok to sport-utilities, pickups and even cars, said William Carroll, president of Dana's Automotive Systems Group. The company also plans to offer the device to the aftermarket.
'It will be on another vehicle within two years,' Carroll said.
Also busy are Dana's lawyers, who are preparing to defend Hydra-Lok against two patent-infringement lawsuits.
The McLaren Automotive Group, a small research and development company specializing in powertrain technology, has pursued its lawsuits with little fanfare until now.
But the Livonia, Mich.-based company is rethinking its legal strategy.
'It's time for us to stop throwing spitballs and start throwing cannonballs,' said McLaren board member Robert Sinclair, a longtime president of Saab Cars USA Inc. who retired in 1991.
Sinclair hinted that McLaren -formerly known as ASHA Corp. - may subpoena top Dana executives to testify.
So far, McLaren has not tried to use its biggest weapon, a request for a temporary restraining order. If granted, such an order would shut down Dana's production of Hydra-Lok.
'We decided that we'd be cutting our nose off to spite our face,' Sinclair said.
Lawsuits filed in California and Michigan claim Dana reneged on an agreement to pay royalties for a coupling design McLaren licensed to Dana in 1994.
According to Sinclair, Dana agreed to pay McLaren $2 million for the design of the Gerotor coupling, plus $2.50 for each unit supplied to DaimlerChrysler. Sinclair says Dana also promised to share any design changes with McLaren.
Last July, one month before the launch of the redesigned Grand Cherokee, McLaren claims Dana broke the agreement by declaring that it had changed the Gerotor's design. Dana claims the new design excuses it from paying royalties.
The dispute centers on a small valve in the Gerotor that compensates for fluctuations in oil viscosity caused by temperature. McLaren's patent includes one design, while Dana uses another.
'We know we're a very small company and Dana is a giant, but we feel we've been wronged,' Sinclair said.
Carroll responds that Dana's production Hydra-Lok is unique. 'It's our design; we manufacture it,' he said.