Paice Goes Straight to the Border with Patent Complaint Against VW

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Over the years this blog has covered important patent litigation and settlements involving hybrid vehicle technology company Paice and some major automakers, including Hyundai/Kia, Toyota, and Ford (see, e.g., the Ford post here).

Paice has notched up some big wins, including a $28.9 million jury award against Hyundai and Kia and a $4.3 million jury award against Toyota, and has and entered into at least three license agreements:  recently with Hyundai and Kia, with Ford, and back in 2010 with Toyota.

Although these cases have been litigated in various forums through the years, Paice was forced to make a tactical shift in venue selection after the U.S. Supreme Court’s eBay v. MercExchange decision in 2006.

In eBay the Supreme Court reversed the U.S. courts’ long-standing practice of automatically issuing an injunction upon a finding of patent infringement and instead held that the traditional four-factor equitable test for injunctive relief must be analyzed in each case brought under the patent statute.

The eBay decision came down just as the Paice-Toyota trial court was deliberating Paice’s motion for an injunction against Toyota.  With the trial court suddenly bound to analyze the four injunction factors, it refused to grant an injunction, instead awarding Paice an ongoing royalty of $25 per infringing vehicle (a figure that was later raised to $98 per vehicle).

So Paice turned to the U.S. International Trade Commission (ITC) to seek an exclusion order that would have banned importation of infringing vehicles.

The ITC is a federal agency that investigates trade and importation issues, including conducting quasi-judicial proceedings involving alleged infringement of intellectual property rights by importation of accused products pursuant to 19 U.S.C. § 1337 (Section 337).

It is a popular forum for patentees (though only injunctive relief is available, not monetary damages) because the proceedings progress much faster than those in the federal courts.

Also, critically for Paice and other non-practicing entities, the ITC is not bound by the eBay decision, which governs injunctive relief analysis under the patent statute, not Section 337 trade law (for a detailed review of the effect of eBay and the ITC on clean tech patent litigation see my article here).

Facing the very real prospect of an import ban, Toyota came to the negotiating table and, settled the suit, and entered into a licensing deal with Paice.

Which brings us to the latest news and the subject of this post.  Paice recently went back to the border and filed a complaint against Volkswagen (together with Porsche and Audi), asking the ITC to investigate alleged infringement of U.S. Patent Nos. 7,237,634, 7,104,347, and 8,214,097.

The three related patents are entitled “Hybrid vehicles” and cover hybrid electric vehicles utilizing an internal combustion engine with series parallel electric motors, regenerative braking, and control circuitry.

The Paice technology, developed back in the 1990s, is called the Hyperdrive System and provides seamless switching between power from an electric motor and an internal combustion engine.

The accused products listed in the complaint are the VW Jetta Hybrid, the Audi Q5 Hybrid, the Audi A3 e-tron Hybrid, the Porsche S E-Hybrid, and the Porsche Panamera S E-Hybrid.

The Paice complaint requests a permanent limited exclusion order that would stop the allegedly infringing hybrid vehicles and components from entering the United States.

It remains to be seen whether Volkswagen, like the other automakers, will determine that it is in its best interest to take a license to Paice’s hybrid vehicle patents.

Eric Lane Avatar

Eric Lane

Eric Lane, the founder and principal of Green Patent Law, is an intellectual property lawyer and registered U.S. patent attorney in New York and is a member of the bar in New York and California. Eric has more than two decades of experience working with wind, solar PV, CSP, biofuels, and geothermal, energy storage technologies, carbon capture and sequestration, medical devices, data communications, mechanical, chemical, internet and software.