Toyota U.S. Patent Trade Case Over Hybrid Considered

By Susan Decker and Alan Ohnsman

Oct. 5 (Bloomberg) — A patent-infringement claim against Toyota Motor Corp. that may result in an import ban on its Prius and other hybrid models will be investigated by U.S. trade officials.

The U.S. International Trade Commission in Washington today said it would investigate a claim by closely held Paice LLC that some of Toyota’s vehicles infringe its patent for a way to supply torque, or force, to a car’s wheels from both an electric motor and internal combustion engine.

Paice won a civil suit against Toyota in a case over the patent that was upheld on appeal. A federal judge in that case rejected Paice’s request to halt sales of the cars and instead ordered royalty payments. That isn’t an option at the ITC, where the only power of the agency in patent cases is to block imports.

The earlier Paice verdict related to the Prius, hybrid Highlander and Lexus RX400h sport-utility vehicles. The new ITC complaint claims the hybrid Camry, third-generation Prius, Lexus HS250h sedan and Lexus RX450h SUV infringe the same patent.

Toyota, based in Toyota City, Japan, is the world’s biggest seller of autos powered by a combination of gasoline and electricity. Since 2000, when Toyota introduced the Prius in the U.S., the company has sold more than 1.1 million hybrids in the market, including more than 750,000 units of Prius.

‘Materially the Same’

In the complaint, Paice said Toyota is precluded from arguing that the additional vehicles don’t infringe the patent or challenging its validity because of the 2005 verdict, which was upheld on appeal. The hybrid drive trains of the vehicles in the ITC case “are materially the same” as those in the Lexus and Toyota models in the civil case, Paice said in the complaint.

Paice claims in lawsuits in federal court in Marshall, Texas, that the Camry infringes the patent. That case may go to trial in January. A second case involves claims of infringement of another patent by the Highlander and Lexus models.

To be able to win at the ITC, Paice must show that it has a market to protect. In the complaint, Paice says it has made “substantial investments” in vendors and suppliers and in research and licensing.

The company is based in Bonita Springs, Florida, and has offices in Maryland, Michigan and Virginia, according to the complaint.

Considering Standard

The ITC, in an unrelated case, is currently considering the standard that must be met before patent owners who don’t make products can file complaints.

Mike Michels, a spokesman for Toyota’s U.S. sales unit in Torrance, California, wasn’t immediately able to comment.

In the earlier case, the jury awarded $4.3 million in damages and the verdict was upheld on appeal. U.S. District Judge David Folsom in Marshall rejected Paice’s request to issue a court order to halt sales of the Toyota vehicles.

Instead, in April he ordered Toyota to pay royalties based on the wholesale prices equal to 0.48 percent for a second- generation Prius, 0.32 percent for each Highlander and 0.26 percent for each Lexus RX400h. Toyota is appealing that order.

The ITC case is In the Mater of Hybrid Electric Vehicles, 337-688, U.S. International Trade Commission (Washington). The civil cases are Paice LLC v. Toyota Motor Corp., 04- cv-211; 07cv180 and 08-cv-261, U.S. District Court, Eastern District of Texas (Marshall).

To contact the reporters on this story: sdecker1@bloomberg.net; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net.