After six years of legal wrangling in U.S. courts and the International Trade Commission (ITC) over hybrid vehicle patents, Paice and Toyota recently announced that they have settled their disputes.

Although the terms of the agreement are confidential, the reports and statements of people involved reveal two interesting elements of the deal.

First, a compromise statement reported in a PR Newswire article tactfully notes Toyota’s infringement of Paice’s U.S. Patent No. 5,343,970 (‘970 Patent) on the one hand and its independent development of the technology on the other hand:

The parties agree that, although certain Toyota vehicles have been found to be equivalent to a Paice patent, Toyota invented, designed and developed the Prius and Toyota’s hybrid technology independent of any inventions of [Paice founder] Dr. Severinsky and Paice as part of Toyota’s long history of innovation. 

Second, and more significantly, Toyota took a license to Paice’s entire patent portfolio.  According to this Forbes.com piece, the chair of Paice’s Board, Frances M. Keenan, said that “Toyota had agreed to license all 23 of Paice’s patents, not just the one at issue in the ITC claim.” 

The court clashes date back to a patent infringement suit filed by Paice in 2004 in which Toyota was held liable for infringing the ‘970 Patent under the doctrine of equivalents.  After being awarded an ongoing royalty of $98 per infringing vehicle, Paice turned its attention to the ITC where it could obtain an exclusion order against Toyota.

Most recently, the adminstrative law judge (ALJ) presiding over the ITC case denied Toyota’s motion for summary determination that the ITC investigation was barred by claim preclusion. 

The ALJ held that Paice was not precluded from pursuing its case in the ITC because the exclusion order was not available to Paice in the district court action and is a materially different remedy from the injunctive relief offered by the courts.

As a result of the license agreement, Paice will receive a revenue stream from Toyota for a while: the last patent under license expires in 2019.

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