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 hybrids
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
Ford case
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.
Ursula Zerilli contributed to this report.
