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by Brett Davis

For the past several years, Alex Severinsky has been battling in court with Toyota over his claims that the hybrid design was his idea, and that Toyota has used his patent without permission.

In 2005, Severinsky took his patent on torque technology – used in earlier versions of the Prius, Lexus RX400h and hybrid Toyota Highlander – and Toyota to court claiming Toyota used his patent without permission. A federal jury ordered Toyota to pay Alex Severinsky’s company, Paice, $4.27 million.

Although the judge declined efforts to halt sales of the hybrids altogether, the judge ordered Toyota to pay Paice $25 for every model sold that used Severinsky’s patent. This amount was then recalculated after an appeal was made and changed to $98.

A recent report by Bloomberg said Severinsky is now aiming to stop all sales of the Toyota Prius in America on the grounds of Toyota, again, using his patent without permission. The only leeway Severinsky is offering Toyota is through another cash settlement, of course.

The Bloomberg report said the ITC – an independent agency set up to protect US trade policies – has to decide on what is more important; ‘Severinsky’s right to protect the millions of dollars invested in his invention or the potential economic harm of banning Toyota’s hybrid-vehicle imports’.

President of Toyota US sales unit in California, Jim Lentz, said in an interview,

“I don’t think it would be in the best interest of the American consumer to take the number one-selling hybrid off the market.”

The matter will be heard in court today and if the ban on sales goes ahead, US Toyota Prius imports will be stopped from April next year until the patent expires in September 2012.

  • TomJ

    Id be very surprised if the court upholds this, although it has duties to the individual, it has broader duties to society as a whole.

    Id say he would more likely be paid royalties for his patent.

  • Bezza

    If Severinsky designed the system, and no one is saying he didn’t, then how can it be in anyone ele’s “best interests” to allow the idea to be stolen?

    If this goes ahead then it will ALWAYS appear to be in the best interests to steal the property of others. Meaning that I can convince myself that it is in my best interests if the neighbour’s 5 Series wagon was actually mine. After all they have two expensive cars and I only have one cheap one.


    • jp

      poor exaple to demosntrate your point.

      Do agree though that it does set a dangerous precedent for future claims? does this mean that any big company can steal the ideas of the little man aslong as the resulting product benefits society…. Whilst toyota did invest the money in the development of the prius specifically, the amount they profit from it would be far greater than $98 per vehicle (i would imagine).

      • jp

        Also why is it that only toyota is mentioned or subject to a claim? havent honda got an identical system “in principle” in the the civic? surely more manufacturers liable for claims outside of toyota

        • Shak

          No Honda uses their own patented IMA system designed fully in house.

      • Bezza

        Hi JP

        How do you see my example to be poor?


        • Reckless1

          Dude, stealing a car from your neighbour is neither stealing an idea nor a benefit to society.

          It’s a theft of real property (as distinct from intellectual property) and it benefits only you (unless of course the BMW is due for a major service, in which case you’d be tempted to give it back)

          • Bezza

            So if someone can claim that the benefit is to “society” the theft is automatically correct?

            Having the BMW would indeed benefit me and I am a part of society (agreed on the servicing issue).

            IP is soverign property as much as your couch. Stealing is stealing. As soon as we start saying facts are relative then we are in deep trouble.

            My example was tongue in cheek and clearly not suggesting I should or would nick my neighbour’s lovely car. It is of course a warning to those who don’t realize that this is exctly what can and will happen if allowed. And before you think I am crazy read some about Nazis, Stalin, Mao and all the other feudal lords who did and do exactly that.


          • Rick

            How is the Prius a benefit to society ?

  • bigkid

    Is the guy already got paid after the 2005 court hearing, then he will not win

    • Reckless1

      Wrong – if Toyota stole it once and had to pay, why would they be able to steal it a second time and get off scott free?

      • G

        It’s so cool to see Toyota being sued.
        Just because they are big they think they can get away with anything (hidden quality issues, dangerous faults, stolen patents…)
        I hope Severinsky wins it!!

        • gazza

          Why should severinsky get paid twice? this is just pure greed i hope he loses everything! and he will!

  • MrQuick

    Righto, lets get the facts straight, the company here, Paice LLC is nothing more than a patent company.

    Paice LLC is one of many companies in the US who do nothing but get a bunch of intelligent people, develop ideas and then patent them with no intention to actually develop them, they just kinda sit on the ideas and wait. This is a highly lucrative business in the US.

    Despite what they have said about testing their ideas, which they have done, they have not at any point made an effort to use these patents to develop a product to make money.

    It has happened before and its happening again, these companies just wait for someone to come up with a similar idea and wait until it hits large scale production, in this case the Prius, and sue the manufacturer for infringement.

    There is no mechanism in patent law to stop this from happening.

    See how this guy doesn’t want a steady stream of income from every Prius sold, instead he wants a lump sum payment from Toyota.

    If anyones seen the actually patent drawings and the Toyota designs, they don’t even look similar.

    I’m probably the last person to defend Toyota, but this is nothing more than a scam.

    • noober

      I guess by the same logic, a university who gets a whole lot of smart people together to help cure a disease, then files a patent for it even though they have no intention of making the cure, is a scam as well? Maybe we should just give these new technologies to these large companies for free?
      Do the researchers work for free? Is the research free?
      It is not necessary or even always desirable for the inventor to work for a manufacturer. If you want the technology, then pay for it. The fact is that the settlement of a few million dollars is way cheaper than a manufacturer having to set up lots of R&D projects.

    • Mikey_94

      Surely these types of companies sell their ideas and patents to other companies for integration into their own designs? It would have to have a poor business plan to just rely on being paid royalties on the basis of stolen patents (as in the Paice – Toyota situation above)

      • MrQuick

        Funnily enough that ‘poor business plan’ is actually an excellent method of making money, as in this case, they don’t settle for royalties, they want a lump sum payment for their efforts, I remember RIM (blackberry manufacturer) had a massive payout to a patent troll like Paice.

        These companies have no intention to either develop or even sell their patents.
        What they spend their time on is looking at whether a company is making enough money off an idea similar to their patent and then whether it is viable to sue them, which is usually done towards the end of the patent.

        Look at this case again, the patent only lasts until 2012, and if the world doesn’t end by then, the patent will and this guy loses any chance he has to make money. So hes so desperate now that he is willing to take Toyota to the point of banning the sale of the Prius in the US in order get his money.

        If you actually look at the drawings of his patent, the only thing you can really see is that infringing is the general idea of parallel hybrid motors, which means that all parallel hybrids are infringing on the patent. This guy literally has a patent on a general idea.
        I know that Ford has already paid out to this guy to licence the patent.

        Oh and noober, universities are absolutely nothing like Patent troll companies, they actively take part in developing patents and licencing them to large companies. Most universities in Australia and around the world have partnerships with large companies because of the lack of governmental funding for research and to finally produce what ever they have come up with.
        Look at the Pharmaceutical industry for example, a lot of the drug development is done at universities by researchers, who in turn receive grants and awards from these large companies.
        The example you’ve given simply won’t happen, there is a system in place to make sure it never does.

        • noober

          I think you are not seeing what is happening here. There are legal tactics involved. In a patent lawsuit in the US you can litigate, but unless the infringement was willful (i.e blatant), only damages equivalent to reasonable royalties are awarded. So in effect, a large infringer can refuse to negotiate with the smaller inventor, and if the inventor wins, then the infringer only pays what he would have paid had he negotiated. Costs costs are rarely awarded in the US. There is the benefit for the infringer that patent litigation costs millions, so many smaller inventors cannot even afford to sue, and in some cases the infringer wins and doesn’t pay anything. To get around this problem the courts allow 2 advantages to the inventor: triple damages if the infringer knew it was infringing (which is why products are marked with patent numbers) and injunctions. Nothing makes an infringer sit up and take notice like a judge telling the infringer to stop selling.
          Your argument is that the option of the injunction should be taken away. If this happened then very few large companies would deal with inventors, you would just take your chances in court, knowing hey could never really hurt your sales.
          Oh, drawings in a patent do not represent the scope of the invention, the claims do. Also read the RIM case. Very interesting how they made up evidence and refused to pay royalties on the many cases they lost until a judge threatened them with an injunction. The award for damages would have been much smaller if they had of played it straight.
          There is no difference between Uni’s and smaller inventors, they both want a license and cash. Csiro had to sue all the big US players too. Csiro don’t make anything and couldn’t get licenses to get their cut of the wifi market as no-one would pay. Are they patent trolls too?

          • Tomas79

            MrQuick is right, Paice LLC is just a patent troll, just look up it’s history online!!

            Noober are you some U.S I.P law expert?
            The recent emergence of patent trolling firms Especially in the u.s, means they are fairly profitable!!

          • MrQuick

            I never said that the option of an injunction should be taken away, that just sounds silly.
            I was making the point that Paice is nothing more than a patent troll, and the injunction on the sales of the Prius is really nothing more than this guy getting desperate.

            And yes I know that the drawing doesn’t represent the scope of the invention, but in this case the subject of the infringement is crazy, everything I have read makes it seem like that the basis of the lawsuit is on the general idea of parallel hybrids. Its crazy, its like having a patent on the wheel or the four stroke engine

            How is there no difference between unis and small inventors?, theres a massive difference, research funding at unis is being propped up by the private sector massively. Small inventors will almost never tap into private funding. Paice fits into neither category, its is a very organised company structured for the sole purpose of making money off patent infringements.

            In regards to the CSIRO, they’re not a uni or a private company, they’re a branch of the government. The wifi case was clear cut, they showed the infringing companies the data on wifi protocols and the companies didn’t take up their patent. Eventually over time, the protocols set out for wifi became industry standard and that was clearly an infringement by the large companies, which is very different from this case.

    • don

      Can they even verify if his patent work? I mean my nephew can draw cars that can fly. So if someone actually creates a flux capacitor and makes a car travel through time, do they have to pay Universal Pictures for its idea (if it has a patent). Without a working prototype a patent is useless for something that is suppose to be functional. What if his patent didn’t work at all or didn’t produce to same results as the Prius?

  • crouchy

    I wish I was that guy :(

  • Barney

    That guy is so cool! Hopefully he wins and uses the money invent something great again!

  • Sexythang

    that guy looks so dodgy. he should be the face of patent trolls. a patent just for the sakeof patenting should not be allowed.

  • matt

    well it was settled, toyota are allowed to keep sending hybrids to the US, the amount of settlement money was undisclosed though. lol this alex guy is an old soviet defector. FOR MOTHER RUSSIA!

  • Tomas79

    I don’t know the particular case with Alex Severinsky, but i know Toyota and some other manufacturers have been hasled by patent trolls in the past….

    Patent trolls = is a pejorative term used for a person or company that enforces its patents against one or more alleged infringers in a manner considered unduly aggressive or opportunistic, often with no intention to manufacture or market the patented invention

    *Purchases a patent, often from a bankrupt firm, and then sues another company by claiming that one of its products infringes on the purchased patent.
    *Enforces patents against purported infringers without itself intending to manufacture the patented product or supply the patented service.
    *Enforces patents but has no manufacturing or research base.
    *Focuses its efforts solely on enforcing patent rights or
    *Asserts patent infringement claims against non-copiers or against a large industry that is composed of non-copiers.