Toyota Prius getting investigated.

[Matt Herring]

The problem for Toyota is that the patent was filed in the US and a ruling in favor of the Paice company holding the patent can block Toyota/Lexus from having any of their hybrid cars imported to the US because it is a US Patent. This is what the new litigation filed by Paice is attempting to do. An investigation has been launched into the allegations and any ruling is said to be at least 15 months down the road so there is no threat of Toyota hybrids being halted at customs at this time.

Originally, Paice and Toyota agreed on a $4.3 million settlement in 2005 with a $25 per Toyota/Lexus hybrid vehicle produced royalty charge added to that settlement for already produced and future produced vehicles.

I believe this is the text (very lengthy) on the patent that was filed by Paice of which they claim Toyota infringed on.

United States Patent: 7392871

[user removed]

5343970 filed by severinsky in 1992 looks like it might precede Toyotas drive system.

regards
Mech

[Matt Herring]

And there en lies the reason for litigation by the Paice Company of Florida vs. the Bully on the Block (Toyota).

From what I had read there are numerous patent infringement allegations filed on behalf of Paice vs. Toyota and the new litigation aims to increase the royalty fee from Toyota to Paice because of this (or stop Toyota hybrid imports until the new litigation is settled). Essentially, Toyota paid $4.3 million + $25 per hybrid vehicle to Paice for their technology but now that Toyota has taken that technology and further applied it to their vehicles Paice is seeking additional compensation.

IMO, both sides have valid arguments...

Paice agreed to a settlement as Toyota admitted patent infringement and Paice was paid an amount they agreed to with Toyota for those violations. However, Paice did not anticipate further patent infringement by Toyota at the level it is proposed to have happened. Therefore, Paice wants more money.

Toyota feels they settled on an amount with Paice that cleared them of any violations and then developed their own technology (albeit thanks to Paice) to further their product development.

Sticky situation...

[user removed]

If Toyota's improvement still uses the core novelty of Paice's design therin lies the rub.

The fact that they have agreed to compensate Paice is strong evidence to support Paice's position.

Kind of reminds me of the old George Bernard Shaw, Marlena Dietrich joke.

Shaw ask her if she would go to bed with him for 2 million dollars.

Dietrich agrees.

Shaw as if she would for 2 dollars.

Dietrich responds, what do you think I am?

Shaw responds, we have already determined what you are, we are just negotiating the price.

The question is does Toyota still owe Paice. Answer probably so.

How much?

That's what the court will decide.

Why would either party want to stop importation? Loss of profit for Toyota and loss of income for Paice.

regards
Mech

[Matt Herring]

Originally Posted by Old Mechanic

Why would either party want to stop importation? Loss of profit for Toyota and loss of income for Paice.

regards
Mech

Toyota would not want to stop importation...which is the reason Paice is litigating for it. Loss of imports to the US hits Toyota where it hurts...in the wallet...especially right now when every dollar is precious. $4.3 million paid to Paice in 2005 is change for Toyota...they already have the technology and are using it in their hybrid vehicles.

From what I have read and as I understand it, Paice is paid the $25 per vehicle royalty for hybrid cars produced...not sold....they get their money up front including all the cars that would potentially be sitting at the docks in the hands of US customs.

[user removed]

I understand but it makes no sense to cut off your own gravy train.

I doubt you will ever see it get to that.

regards
Mech

[Matt Herring]

I also doubt it will ever get to that. But, Paice really wouldn't be cutting off their gravy train by holding up Toyota hybrids at the ports...they already have their gravy payments when the cars are produced. And holding the Toyota hybrids ransom at the ports via litigation would produce a very quick response (most likely in dollars) from Toyota to negotiate another settlement...I would expect.

Paice isn't in business with Toyota...they are the exact opposite...they are suing them. The more damage they do to Toyota the better for Paice...especially if it means money coming their way and more importantly protecting their patent investments. I know you read through the lengthy link I posted to their hybrid patents...there are hundreds of them under the Paice name. Since they do not actually produce cars their livelihood depends on the sale of those patent technologies to auto makers...and $4.3 million from Toyota only scratches the surface of the funds they could generate from the sale of their patented technology.

I'm leaning towards Paice on this one...Toyota appears to have clearly violated their patent rights under US jurisdiction. But, unless Paice presses the issue with lawsuits Toyota isn't going to stop producing cars with Paice patented technology.

[Christ]

I wonder if Toyota will offer to buy the technology at this point, as opposed to continuously paying the settlements?

I think that if they make a strong enough case, the Judge may point it out as an option, and it could be set so that if Paice refuses, they're giving up their option to further litigation, making this the final settlement that is allowed unless Toyota commits further violations.

If Toyota plans on continuing this type of technology, they'd probably be well enough off to just buy the damn patent and stop trying to make money off someone else's work.

$0.02

[Matt Herring]

Originally Posted by Christ

I wonder if Toyota will offer to buy the technology at this point, as opposed to continuously paying the settlements?

I was thinking the exact same thing about Toyota buying the technology at an agreeable rate but how do you put a price on something that is already being used...the horse is already out of the barn. And why at this point would Toyota pay more than they need to for technology that is already "theirs"...it's already in their cars.

If Toyota had to pay $4+ million in 2005 and has to do the same in 2010 and again in 2015 eventually the next best technology will be available and Toyota will have basically rented Paice's patented system for $15-20 million while they profited well beyond that over those years. Why would Toyota ever agree to this when they are paying pennies while making dollars? Surely, Paice could have sold their CVT technology for more than $15-20 million to an aggressive automaker before Toyota began using it. Paice gets the shaft in this one.

There is no question Toyota is not going to stop using the Paice technology...in fact...they have already improved on it so much they are already selling it to other companies (example: GM's interest in using Toyota CVT technology in their own cars).

The only security for Toyota in this situation is their foreign status. If they were a US based company Toyota would never have gotten away with this for so long...it would have been squashed before a single car with Paice technology was produced.

[Christ]

My thinking on this is that Paice could force the issue, if presenting the proper case. They could basically say that they're not taking a settlement, either production stops, or they get compensated at a determined "fair market value" for the patent.

Of course, The Judge could enforce this with Toyota, making it so that they CAN'T settle the case, and they are forced the buy the technology that they've already so clearly raped.

This reminds me of when I buy something to see how it works, build my own, then return the original. I just don't start mass producing them and selling them under a different name on a wholly other premise.