In previous posts (here, here and here), I’ve discussed the patent litigation between hybrid vehicle technology company Paice and Japanese automaker Toyota in the U.S. International Trade Commission (ITC).

This case centers on Paice’s allegations that Toyota’s importation of the third generation Prius, the Camry Hybrid, the Lexus HS250h and RX450h (Accused Products) infringe U.S. Patent No. 5,343,970 (’970 Patent). 

In a prior action in the Eastern District of Texas Paice won a jury verdict that the second generation Prius, the Highlander and the Lexus RX 400h infringed two claims of the ’970 Patent under the doctrine of equivalents, and the verdict was affirmed on appeal (see my previous post about the verdict and appeal here). 

The court awarded Paice an ongoing royalty of $25 per infringing vehicle, which was later increased to $98, but the court denied Paice’s request for an injunction.

Last month in the ITC case, the ITC reversed an administrative law judge’s ruling that Toyota was barred from asserting a defense of non-infringement of the ’970 patent and from challenging the validity or enforceability of the ’970 patent under the principles of claim preclusion and issue preclusion because of the prior federal district court and appeals court rulings against Toyota.

Claim preclusion prevents a succession of lawsuits on a common claim by precluding re-litigation of the same claim between the same parties in a second forum in the absence of certain exceptions.

The ITC opinion (itc_opinion.pdf) found the only “claim” presented in the investigation is Paice’s and “thus claim preclusion cannot be applied as a sword by Paice against Toyota.”

Significantly, the ITC opinion went on to say that “if this investigation is part of the same ‘claim’ as the district court action, and if no exception to claim preclusion applies, then this investigation is precluded altogether.”

Toyota subsequently filed a renewed motion for summary determination (toyota_motion.pdf) asking the presiding administrative law judge to dismiss the case on the ground that Paice’s claim is barred by the doctrine of claim preclusion.

According to Toyota’s motion, the ITC investigation is part of the same “claim” as the prior Texas district court action and none of the exceptions applies. 

The only “arguably relevant” exception – that the plaintiff was unable to seek a certain remedy or form of relief in the first action – does not apply, Toyota contends, because there is no meaningful difference between the injunction Paice sought in the district court and the limited exclusion order Paice has requested in the ITC.

In its opposition brief (paice_opp.pdf), Paice counters that claim preclusion should not apply because its ITC claim involves new products introduced by Toyota subsequent to the earlier district court action and therefore is based on acts of alleged infringement that occurred after that case.  Thus, Paice contends, the ITC case cannot be deemed the “same cause of action” as the first suit.

Paice also argues that some of the exceptions to claim preclusion apply here, including that it was unable to rely on certain theories in the district court action and unable to seek the exclusionary relief there that is only available in the ITC.

Much is riding on the determination of this motion:  Paice has requested a permanent limited exclusion order barring entry into the U.S. of the Accused Products.

In two previous posts (here and here) I discussed the patent infringement case between hybrid drivetrain technology company Paice LLC (Paice) and Toyota in the U.S. International Trade Commission (ITC).

In September of last year, Paice filed a complaint in the ITC asking the agency to investigate whether Toyota’s importation of the third generation Prius, the Camry hybrid and two Lexus models (Accused Products) infringed U.S. Patent No. 5,343,970 (’970 Patent).

After the ITC agreed to open an investigation, Paice moved for summary determination of infringement, validity and enforceability of the ’970 Patent. 

Specifically, Paice contended that Toyota was barred from asserting a defense of non-infringement of the ’970 patent and from challenging the validity or enforceability of the ’970 patent under the principles of claim preclusion and issue preclusion because of a prior federal district court and appeals court ruling against Toyota.

In a response issued in December and made public earlier this month, the ITC staff agreed with Paice and supported its motion.   The response noted that, although the Accused Products are different from those at issue in the federal court case, Toyota admitted that the hybrid drivetrains are materially the same as the vehicles found to infringe in that lawsuit.

Compounding Toyota’s troubles was a ruling last week in the same case in which the ITC staff opposed the automaker’s cross-motion for summary judgment that claim preclusion should bar Paice from obtaining any remedy in the investigation. 

The response rejected Toyota’s argument because claim preclusion applies only to the cause of action and does not include the ensuing remedies.

Assuming the administrative law judge follows the recommendations of the ITC staff, the only remaining issue would be whether Paice meets the “domestic industry” requirement. 

19 U.S.C. 1337 requires that there be an industry in the U.S. relating to the products at issue, which includes both an economic prong (demonstrated investment in plant/equipment, labor/capital, research and development or licensing) and a technical prong (demonstrated practice of the asserted intellectual property right).

Now the big question is whether Toyota will continue to fight or decide to fold and pay royalties to Paice.  If the case moves forward, it will be interesting to see whether the ITC finds Paice’s engineering, R&D and licensing activities in the U.S. suffice to meet the domestic industry requirement.

Considering what is at stake in this case – Paice has requested a permanent exclusion order barring entry into the U.S. of the Prius, Camry hybrid and the two accused Lexus models – I wonder if and when the mainstream media will start to pay attention.

In a previous post, I wrote about patent attorney-inventor Conrad O. Gardner’s patent infringement suit against Toyota Motor Corp. (Toyota). 

In April 2008, Gardner sued Toyota in federal court in Seattle, accusing the automaker of infringing U.S. Patent No. 7,290,627 (’627 patent), entitled “Extended Range Motor Vehicle Having Ambient Pollutant Processing” by making and selling the second generation Prius, the Camry and the Highlander.

According to the second amended complaint (gardnercomplaint.pdf), the ’627 patent’s early priority date (based on a parent patent application filed back in April 1992) was more than two years before Toyota began investigating the development of a commercial hybrid automobile.

Last month Toyota succeeded in knocking independent claim 6 out of the case when the court granted Toyota’s motion for partial summary judgment that the claim was invalid for indefiniteness under Section 112, paragraph 2 of the Patent Act.  This provision provides that patent claims must “particularly point[] out and distinctly claim[]” the subject matter of the invention.

The problematic language of claim 6 is “said speed demands.”  The claim reads:

6.  A hybrid motor vehicle comprising in combination:

an engine;

an electric motor;

a storage device;

said electric motor power said hybrid motor at lower speeds;

said engine powering said vehicle at high speeds; and said engine operative connected through a charging path for charging said battery at lower speeds

wherein said speed demands do not drop below 40 mph for predetermined time periods of 45 seconds.

The court held claim 6 indefinite because it is unclear what “said speed demands” refers to (gardner_order.pdf).  The claim recites both high speeds and lower speeds, however:

Nothing in claim 6 directs one of ordinary skill in the art as to which of the two earlier recited speeds provides the antecedent basis for “said speed demands.”

This is a significant win for Toyota because claim 6 was the broader of the two independent claims of the ’627 patent.

Thanks to Stu Soffer, who brought this decision to my attention.

In a previous post, I discussed the complaint filed by hybrid drivetrain technology company Paice LLC (Paice) against Toyota in the U.S. International Trade Commission (ITC). 

In the complaint (paice_itc_complaint.pdf), Paice alleged that Toyota’s importation of the third generation Prius, the Camry Hybrid, the Lexus HS250h and RX450h (Accused Products) infringe U.S. Patent No. 5,343,970 (’970 Patent).

Earlier this month the ITC issued a Notice of Investigation announcing its decision to conduct an investigation into Paice’s allegations.

In a prior case in the Eastern District of Texas Paice won a jury verdict that the second generation Prius, the Highlander and the Lexus RX 400h infringed two claims of the ’970 Patent under the doctrine of equivalents, and the verdict was affirmed on appeal (see my previous post about the verdict and appeal here). 

The court awarded Paice an ongoing royalty of $25 per infringing vehicle, which was later increased to $98.

In this ITC action, Paice asserts that Toyota is precluded from challenging the infringement, validity and enforceability of the ’970 Patent because those issues were previously adjudicated. 

Paice also contends that the Accused Products infringe the ’970 Patent because of alleged judicial admissions by Toyota that the drivetrains of the Accused Products are materially the same as those that were found to infringe the ’970 Patent.

According to Paice, that leaves only issues relating to “domestic industry,” i.e., whether Paice has significantly invested in the patented technology in the U.S.  

This issue could be dispositive here.  Although licensing activity can suffice for domestic industry, it remains to be seen whether Paice’s court-imposed royalty arrangement with Toyota will be enough to meet this requirement.

A U.S. patent historically has provided its owner with an almost absolute right to exclude others from making, using, selling and offering to sell the patented product.  That all changed with 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.

The timing of the eBay decision couldn’t have been worse for hybrid technology company Paice, LLC (Paice).  Back in 2005, Paice sued Toyota in the Eastern District of Texas alleging that the second generation Prius, the Highlander and the Lexus RX400h sport utility vehicle infringed U.S. Patent Nos. 5,343,970 (’970 Patent), 6,209,672 and 6,554,088. 

In December of 2005, a jury found that the accused vehicles did not literally infringe Paice’s patents but did infringe two claims of the ’970 Patent under the doctrine of equivalents.  The jury awarded about $4.3 million in past damages.

Having succeeded on infringement, Paice moved for a permanent injunction.  Less than a month after the hearing on the injunction motion, but before the district court ruled on it, the Supreme Court handed down the eBay decision.

The court was now bound to analyze the four injunction factors.  As a result, the court 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).

As of the date of this writing, two other district court cases between Paice and Toyota over hybrid vehicle technology remain pending in the U.S. district courts.

Denied an injunction by the district court, the court-imposed ongoing royalty affirmed in principle by the Federal Circuit, Paice has pursued Toyota but hasn’t gotten any exclusion satisfaction out of its hybrid vehicle patents. 

That may be about to change.

Earlier this month, Paice filed a complaint in the U.S. International Trade Commisson (ITC) asking the ITC to investigate whether Toyota’s importation of the third generation Prius, the Camry Hybrid, the Lexus HS250h and RX450h (Accused Products) infringe the ’970 Patent.

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.  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.

According to the complaint (paice_itc_complaint.pdf), Toyota has made judicial admissions in the form of discovery responses and stipulations in the prior district court actions that the drivetrains of the Accused Products are materially the same as those that were found to infringe the ’970 Patent.

Moreover, Paice asserts, Toyota is precluded from challenging the infringement, validity and enforceability of the ’970 Patent because those issues were “fully and finally litigated against Toyota” in the district court, giving rise to collateral estoppel. 

Paice further asserts that res judicata also precludes Toyota from challenging infringement of the ’970 Patent because the Accused Products are materially identical to the vehicles found to be infringing in the district court case.

According to Paice, that leaves only issues relating to “domestic industry,” which all ITC complainants must prove.  Section 337 requires there be an industry in the U.S. relating to the products at issue.  This includes an economic prong (demonstrated investment in plant/equipment, labor/capital, research and development or licensing) and a technical prong (demonstrated practice of the asserted intellectual property right).

Paice alleges it meets the domestic industry requirement because of its engineering, research and development activities and its licensing activities in the U.S.

Paice is requesting a permanent limited exclusion order barring entry into the U.S. of the Prius, Camry hybrid and the two accused Lexus models.  With this ITC action, Paice is ratcheting up the pressure on Toyota to pay a large sum in settlement and/or licensing fees. 

Considering what’s at stake here, I’m surprised the Paice complaint hasn’t gotten more media attention.  I don’t think it’s an exaggeration to say this could be the Blackberry case of clean tech and one of the biggest green patent stories we’ve seen so far.

In the hybrid vehicle patent war between hybrid technology company Paice LLC (Paice) and Toyota Motor Corp. (Toyota), Paice has withdrawn from one front after the parties reached a very limited truce.

Specifically, Paice agreed to a covenant not to assert U.S. Patent No. 5,343,970 (’970 patent) against the Lexus GS450h and the Lexus LS600h and recently filed a Second Amended Complaint (paice-amended-complaint.pdf) in a lawsuit in the Eastern District of Texas dropping allegations that the two Lexus models infringe the ’970 patent.

The suit, which Paice originally filed in July of 2007, now alleges that the Toyota Camry hybrid infringes the ’970 patent and that the second generation Prius, the Highlander SUV, the Lexus RX400h SUV, the Camry hybrid and the two other Lexus models infringe the ’970 patent as well as U.S. Patent Nos. 7,104,347 and 7,237,634.

The ’970 patent is directed to a hybrid drive train that uses a microprocessor (48) and a controllable torque transfer unit (28) that accepts torque input from both an internal combustion engine (40) and an electric motor (20). 

The microprocessor (48) controls the amount of torque provided by the internal combustion engine (40) and the electric motor (20) by locking or releasing a bevel gear assembly (not shown) and holding torque inputs constant.

Paice and Toyota have an ongoing history of litigation over Paice’s hybrid vehicle patents.  In the fall of 2007, the Federal Circuit affirmed a jury verdict that the Prius, Highlander and Lexus SUV infringed two claims of the ’970 patent under the doctrine of equivalents. 

In that case Paice was awarded about $4.3 million in past damages and an ongoing royalty of $98 per infringing vehicle sold.  Paice later sued Toyota again, asserting that the Highlander and Lexus SUV infringed U.S. Patent No. 7,392,871.