• Sep 17th 2009 at 6:01PM
  • 21
In a shocking development Toyota faces a lawsuit filed with the U.S. International Trade Commission that seeks to ban the import of all hybrids to the American market. Toyota is being sued by Paice LLC for patent infringement on its hybrid system.
Before you think this is just a frivolous lawsuit that has no standing whatsoever, consider the fact that Paice has already successfully sued Toyota on five counts of patent infringement, and won on three of them. In April of this year, Paice was awarded by the Federal district court in the Eastern District of Texas a future royalty of $98 for every Prius sold.

Toyota is appealing that verdict, but just to up the ante Paice decided to file its suit with the ITC and go for an all-out ban on all the hybrids the giant Japanese automaker brings into the U.S. market.


John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.

Paice's hybrid system is the brainchild of Russian inventor Alex Severinski who managed to emigrate from the former Soviet Union in the mid-1970s. He landed in the United States smack dab in the middle of the first oil embargo. The way he tells it he escaped from the Soviet system where people had to stand in line to buy food only to land in America were people were standing in line to buy gasoline. Being an electronics engineer he decided to design a series hybrid system based on low-cost, high-voltage electronics. Severinski then began the long, arduous effort to get the auto industry interested in his invention.

Toyota would certainly lose a lot of face if it turns out that it infringed on someone else's patents
Fast-forward a decade or so and an entirely chance encounter brought his invention to the attention of the late Bob Templin, the former chief engineer at Cadillac. Templin was retired at the time but became intrigued by the possibilities that Severinski's invention offered. Soon he recruited other automotive executives with extensive experience, including Ted Louckes, the former chief engineer of Oldsmobile, and Bob Oswald the former president of North American operations for the Bosch Company.

I mention their names because I've known each of these men for most of my career. They're honest, straight-forward executives who came up through the engineering ranks and really know technology. They're not the types who could get snowed by some pie-in-the-sky inventor.

The first thing they did was advise Severinski to get his invention patented. After that they joined Paice's board of directors. Then they too tried to get automakers interested in their hybrid system, but to no avail.

When Toyota came out with the Prius, Paice was pretty sure Toyota had infringed on its patents, so it sued the automaker. The lawsuit wound its way through the courts until they won this April's verdict.

Clearly Paice is more interested in getting Toyota to pay it royalties than in preventing the automaker from importing hybrids. And while Toyota can easily afford to pay them, it would certainly lose a lot of face if it turns out that it infringed on someone else's patents while trying to build its reputation as the world's leader in hybrid technology.


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    • 1 Second Ago
      • 6 Years Ago
      This isn't going anywhere, he has no chance.

      And why no coverage of the Ford SYNC lawsuit? A little biased?
        • 6 Years Ago
        @ zamafir,

        My apologies if you thought my comment was directed at you. My comment was directed at Brian.
        • 6 Years Ago
        Well, I haven't seen anything about the family killed in a Lexus because the accelerator stuck, which Toyota is blaming on the floormats, and the resulting "floormat recall".

        I doubt this will go anywhere also, but I find it amusing that you of all people would accuse anyone of being biased.
        • 6 Years Ago
        @Pokey - mine for ranting as well, :x
      • 6 Years Ago
      Let's hope this is true, so the resale value of my 2008 Prius will go up. It's lost 50% value in 2 years, no thanks to low gas prices. I hate the car, it's like driving a washing machine !!!!!!
      • 6 Years Ago
      Remember the Selden Patent scandal of the early 20th century, about who invented the automobile?? Ford broke that scam and I have a feeling Toyota will do the same for series hybrids. Same thing different century...
      • 6 Years Ago
      Silly season used to be so boring.

      First Toyota's in house attorney files charges regarding the roll over cases, the F1 Renault team scandal and now Toyota again.

      I know it will be a Green Christmas for the Lawyers!
      • 6 Years Ago
      Ruh roh Raggie...............
        • 6 Years Ago
        Thanks for making me almost choke on my apple juice.
      • 6 Years Ago
      The Federal Court in Eastern District of Texas is known for being a favorite for patent trolls. If you did some research, you'd see that it is the court where the trolls get their first blood. The juries there are KNOWN to favor these trolls. Why else would some big company sue in some podunk redneck town in Texas?? From Microsoft to Sony to Dish to IBM, they ALL have been sued there for supposedly 'Patent Infringement'.

      Mark my words, one of these days there's going to be a big scandal about the corruption in the Federal court system in that county. It is an open secret in the legal community in the country.
        • 6 Years Ago
        Always the one with the wise observations, wobbly.

        ps off topic, but good to see another Edmunds LTRTB commenter here! I'm dragonflight1 over there...
      • 6 Years Ago
      Does this effect the companies that have licensed the hybrid technology from Toyota, like Nissan, Ford, and also I think GM?
      • 6 Years Ago
      A recent article in the Economist has an article titled "Tolls for Trolls" about the growing presence of patent trolls. These folks are well organized and have an amazing amount of resources. In fact, many trust funds put money into these patent polls that have an army of lawyers. They may be sleazy, 'but they aren't lazy', as the Economist puts it.

      McElroy needs some basic lessons on journalistic fact-checking. While I'm sure McElroy has his heart in the right place, or perhaps its merely anti-import xenophobia. These patents infringement lawsuits have NOTHING to do with Toyota legitimately taking others ideas or infringing or willfully infringing on patents. In fact, any company of note has harassment from patent trolls.

      The fact that McElroy tries to manipulate this sleazy practice and use it as an instrument to attack an automotive brand that he has a negative bias towards makes him no better then these self-professing 'trolls'.
      • 6 Years Ago
      let's hope this is true so a bit of aesthetical pollution will be abated with the end of prius's sales.
        • 6 Years Ago
        You are my hero. :-)
      • 6 Years Ago
      "Clearly Paice is more interested in getting Toyota to pay it royalties than in preventing the automaker from importing hybrids. And while Toyota can easily afford to pay them, it would certainly lose a lot of face if it turns out that it infringed on someone else's patents while trying to build its reputation as the world's leader in hybrid technology."

      Hm, I mean, would Toyota really rather avoid "losing face" than avoid having to stop selling one of their best-selling vehicles?
        • 6 Years Ago
        Toyota refused to acknowledge the engine sludge issue, more than likely to "save face".
        • 6 Years Ago
        Losing face is a very big deal to Japanese people and therefore, Japanese companies. I've seen a Japanese company keep a poorly designed product on the market and *refuse to fix it* because the engineers didn't want to lose face by acknowledging the defects. The resulting furor from unhappy customers cost them at least one major distributor and damaged their reputation in the market. But the engineers saved face!

        Yes, if they have to choose between saving face and making money, they just might choose the former.
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