Toyota Settles Big Hybrid Engine Patent Lawsuit; Demonstrates The Patent Tax

Posted: July 26th, 2010 by Gadget42

by Mike Masnick, TechDirt

RedGhost was the first of a few of you to pass along Jalopnik’s detailed story of Toyota’s long patent battle with Paice and its founder Alex Severinsky, over patents on hybrid engine technology, which was just settled. We’ve actually covered the story before, last year when Paice — who had already won a court battle — aimed to get a second crack at the apple, by taking the case to the ITC, which potentially could bar the import of Toyota vehicles into the US if it found that Toyota infringed. Toyota settled the case the day the ITC was to begin its investigation, and it did so for one reason: the potential liability from a possible injunction isn’t worth the uncertainty. So you pay to make it go away.

But, of course, the reality of the situation was that everyone admits that Toyota invented its technology entirely independently. This is not a case of Toyota “stealing” or even “copying” an idea from someone else. That’s not even in dispute. What people should be asking is why it’s okay for a company that actually successfully built something for the market place have to pay a company that did not? Even Paice admits that “the market for hybrid cars ‘did not take off’ until Toyota ‘revamped its vehicle program’ with technology Paice patented almost a decade earlier.” In other words, even Paice and Severinsky know that the success of the Prius was not because of his technology, but because of what Toyota did with it. As the blog Treehugger noted last year:

So if a company has a technology that could be a huge boon for drivers and the environment and they sit on it for a decade, does a competing company that finally does something with it and makes it a success really need to be sued repeatedly for using it? Paice seems to be somewhat at fault for not being effective enough with a smart technology.

Therein lies the rub of the patent system. It does not encourage innovation. It punishes it.

Furthermore, I have to point out some huge problems with Jalopnik’s coverage of the story. Even though it notes that everyone admits that Toyota came up with these inventions independently (which, by the way, suggests that they never should have been patentable in the first place), it repeatedly makes statements that make it sound like Toyota copied the invention:

The Prius incorporated — and continues to incorporate — a version of Severinsky’s technology. It was used without license or permission…

In what kind of world do we live in that people think it’s okay to think someone needs a “license” or “permission” to use a technology that they, themselves, came up with, and which isn’t even found on the market anywhere else? It’s mind-boggling. Toyota didn’t “incorporate” Severinsky’s technology. Severinsky doesn’t own the technology, and the technology in the Prius is not Severinsky’s at all. Toyota incorporated its own technology, which Severinsky claimed infringed on his patents. The differences here are important, because writing it the way Jalopnik did implies that Toyota actually “took” something from Severinsky. This is why so many people are confused and think patent infringement is about copying or even “stealing.”

Finally, Severinsky’s quote about the settlement is equally bogus:

“Finally,” he said, “people understand the merits of what I invented and give it the proper value. Toyota is the leading technology company and finally appreciates the value of the invention.”

Um. No. Not at all. They invented this on their own and actually successfully made use of it — unlike Severinsky. They didn’t recognize the merits of what Severenski did. They did their own work, and made it a success in the market place.

Of course, as we’ve also noted in the past, the lesson that Toyota seems to have learned from all this is to get as many hybrid technology patents as possible and to work hard to hinder the innovation of everyone else’s hybrid technology.


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