This Man Fought Toyota For Stealing His Hybrid Tech And Won

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Alex Severinsky, a Soviet emigrant who began his career developing antitank-warfare instrumentation, patented a system for powering gas-electric hybrids in 1994. Toyota used his system for the Prius without permission or payment. Until this week.

Alex Severinsky recieved his master's degree in electrical engineering from the Kharkov College of Radioelectronics, in Kharkov, Ukraine, in 1967. Eight years later, he earned his Ph.D. in the same discipline from Moscow's Institute for Precision Measurements in Radioelectronics and Physics. Three years after that, he emigrated to the United States as a refugee.

On September 6, 1994, the U.S. Patent and Trademark Office issued Severinsky a patent for a high-voltage method of powering gas-electric hybrid vehicles. He called the method, and the technology involved in it, "Hyperdrive." The filing was the culmination of years of work and research, and it represented an early version of the thinking that led to the drivetrain in most modern hybrids.


Three years after Severinsky was awarded that patent, Toyota released the first generation of its Prius hybrid. The car wasn't the first hybrid vehicle sold to the public, but it marked the start of the single most successful hybrid brand to date — the second-generation Prius sold astoundingly well, and the car's name became shorthand for "green car."


The Prius incorporated — and continues to incorporate — a version of Severinsky's technology. It was used without license or permission, and while both parties now have issued statements saying that it was developed in parallel (independently and without knowledge of other advancements or patents), Toyota initially refused to acknowledge Severinsky's efforts. The then-alleged patent infringement resulted in a six-year legal battle between Severinsky and Toyota, one that recently culminated in a royalty settlement.

This is how a single man won a lawsuit against the biggest and most powerful car company in the world.


The Beginning

"We [were] met by a high degree of cynicism from the automakers." —Alex Severinsky, on the industry reception to his technology in the pre-Prius era, to Auto Field Guide


Predictably, Severinsky's interest in hybrid vehicle power grew out of computing. In the 1980s, he spent a great deal of time working on uninterruptible power supplies for computer systems.


Patents for gasoline-electric vehicle technology had been awarded before, but the seamless management of drive torque — the subtle transition that makes a hybrid feel like a normal car and not an on-off gas/electric light switch — had long been limited by available computing power and the cost of the necessary components. After years of research and investigation, and encouraged by outside research and the evolution of high-voltage power semiconductors (needed, as the Innovation Hall of Fame puts it, to deliver "satisfactory energy efficiency and power for acceleration" from an "electric traction motor"), Severinsky founded Paice (Power Assisted Internal Combustion Engines) Corporation in 1992. He began working on his idea.

Inexpensive versions of those semiconductors, which became available in the late 1990s, allowed Severinsky to build his patented ideas into a working vehicle prototype. In October of 1999, he demonstrated his technology in a Cadillac Coupe de Ville and pursued licensing agreements from manufacturers.


The Patents

Make no mistake: Toyota is a juggernaut. The world's largest car company has suffered a few setbacks of late, but it still has a stranglehold on the market for consumer hybrid vehicles. It's also aggressively pursued the protection of its technology. According to an Australian study, Toyota has filed for more than 4000 patents relating to hybrid-car technology in the United States, or roughly 43 perecent of the hybrid-car patents ever filed. More than 1000 of those patents were claimed for the 2009 Prius alone.


A clarifying point: Contrary to popular belief, Severinsky's patents are not for hybrid cars or hybrid systems in their entirety. Hybrid vehicles have existed for as long as the automobile, if not longer, and the principle is not new. Severinsky's patents focus on a problem of implementation: the method by which torque from an electric motor is seamlessly blended with that of a gasoline engine. In a nutshell, his company owns the notion of back-and-forth cooperative management of an internal-combustion engine and an electric motor.


Put another way, the digital integration of countless variables — engine speed, road speed, throttle position, load, air density, etc. — into the gas-or-electric-power decision that a hybrid car makes countless times a day? That's his.

Excerpts from Severinsky's first patent, as well as two others he filed for similar technology, can be seen in the gallery above. The complete text of the relevant patents can be found on Google:


The Fight

Severinsky took his problem to the courts, invoking a six-year legal battle that ended yesterday. Although the Prius contains technology that infringes upon Severinsky's 1994 patent, Toyota maintained that its vehicles were the result of its own research and invented independently. The courtroom war that ensued is best chronicled by the following timeline, borrowed from (yes, we fact-checked it) Paice's website:

June 8, 2004: Paice files suit against Toyota Motor Corporation in U.S. District Court for the Eastern District of Texas for infringement of Paice's patents related to hybrid vehicle technology.

December 20, 2005: At the conclusion of a 10-day trial, a jury finds that Toyota's hybrid vehicles infringe two claims of the Paice ‘970 patent. The jury rejects Toyota's claims that the asserted claims of Paice's patent are invalid and awards Paice past damages of $4,269,950 (based on U.S. sales of the Toyota Prius, Toyota Highlander Hybrid and Lexus RX400h Hybrid between June 2004 and November 2005). Following the December 2005 trial, Toyota files a motion asking the U.S. District Court judge to set aside the jury's infringement finding or give Toyota a new trial.

April 2006: Dr.Severinsky resigns as Paice CEO to become CEO of Fuelcor LLC, an intellectual property development and management company for making synthetic fuels. Robert Oswald, an automotive executive with 45 years' experience at Ford and Robert Bosch North America, is named CEO.

August 16, 2006: The U.S. District Court judge rejects Toyota's motion to set aside the jury's finding of patent infringement of the ‘970 patent and rejects Toyota's request for a new trial. The judge sets an ongoing royalty of $25 per car for the three infringing vehicles (Prius II, Highlander Hybrid and Lexus RX400h) for the remaining life of the ‘970 patent.

August 31, 2006: Toyota appeals the U.S. District Court's judgment that Toyota infringes the ‘970 patent. Paice cross-appeals certain issues, principally whether the ongoing royalty of $25 per car is the right amount. The case goes to the U.S. Court of Appeals for the Federal Circuit.

September 12, 2006: Paice is awarded U.S. Patent No. 7,104,347.

May 8, 2007: Paice files a second lawsuit against Toyota in the Eastern District of Texas, alleging that Toyota is now willfully infringing the ‘970 patent with respect to its new hybrid vehicles brought to market after the December 2005 trial. (Specifically, the Camry Hybrid, Lexus RX 450h, Lexus HS 250h, and third-generation Prius. —Ed.)

July 3, 2007: Paice is awarded U.S. Patent No. 7,237,634. The company amends its second lawsuit to allege that this new patent also is infringed by Toyota's hybrid vehicles.

October 18, 2007: The U.S. Court of Appeals for the Federal Circuit affirms the judgment regarding Toyota's infringement of the Paice ‘970 patent, rejecting Toyota's challenges to the jury's verdict.

July 21, 2008: A one-day evidentiary hearing is held in U.S. District Court on the remanded issue of ongoing royalties in light of Toyota's continued infringement of the '970 patent.

April 17, 2009: The U.S. District Court determines that, in light of the testimony and evidence presented at the July 2008 remand evidentiary hearing, the appropriate ongoing royalty should be set as "a percentage of wholesale vehicle price, of 0.48% for each Toyota Prius II, 0.32% for each Toyota Highlander, and 0.26% for each Lexus RX400H." These percentages would result in a royalty of $98 per each vehicle based on current Toyota pricing.

April 21, 2009: The U.S. Supreme Court denies Toyota's petition for certiorari seeking review of the liability finding on the ‘970 patent.

May 15, 2009: Toyota appeals the U.S. District Court's ruling regarding the determination of the ongoing royalty. The case again goes to the U.S. Court of Appeals for the Federal Circuit.

September 3, 2009: Paice files a complaint with the International Trade Commission, alleging infringement of the ‘970 patent by certain Toyota hybrid electric vehicles that went on sale after the August 2006 final judgment in the first lawsuit.

September 25, 2009: In the second lawsuit, the U.S. District Court stays the damages portion of the case with respect to the ‘970, ‘347 and ‘634 patents pending resolution of the ITC investigation of the ‘970 patent. A trial date has not yet been set for the infringement portions of the case for the ‘347 and ‘634 patents.

October 5, 2009: The U.S. International Trade Commission votes to launch an investigation into whether Toyota infringes Paice's ‘970 patent. The ITC has the authority to block Toyota from importing its hybrid vehicles into the United States.


The Decision

On July 15 of this year, Paice announced that it had reached an agreement with Ford — it licenses Toyota's hybrid technology, remember — to license Severinsky's 1994 ('970) patent. As the Paice timeline notes, the ITC has the authority to stop Toyota from importing vehicles that infringe upon U.S. patents. The commission's investigation was set to begin yesterday, four days after the Ford settlement.


Shortly before the investigation commenced, Toyota agreed to settle the dispute. The terms of each agreement were not disclosed, but both companies issued separate statements containing the following:

"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 Dr. Severinsky and Paice as part of Toyota's long history of innovation."


Bloomberg's Business Week published Severinsky's more pointed quote Monday. "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."

Photo Credits: Top: University of Maryland, all others, Toyota