Tuesday, January 17, 2006

FROM BLACKBERRIES TO HYBRID VEHICLES - THE NEXT PATENT CONTROVERSY: Back in September, Solomon Technologies, Inc. announced that they were suing Toyota Motor Corporation in federal district court in Tampa, Florida for infringement of Solomon's Electric Wheel patent. Solomon alleges that the hybrid transmission drive in the Toyota Prius and Highlander infringes a number of claims contained in its U.S. Patent No. 5,067,932. In the lawsuit Solomon is asking for an injunction barring further infringement as well as damages for the unauthorized use of its patent by Toyota.

Last Friday, Solomon announced that they were expanding their litigation against Toyota by filing a complaint (called a "section 337 investigation") with the United States International Trade Commission (ITC) in Washington D.C. The ITC acts as an administrative investigative body to determine, among other things, whether or not goods imported into the United States infringe U.S. patents. It is important to note that litigation before the ITC does not deal with monetary damages for infringement - the primary remedy available in Section 337 investigations is an exclusion order that directs U.S. Customs to prevent infringing imports from entering the United States. Section 337 investigations, which are conducted pursuant to 19 U.S.C. § 1337 and the Administrative Procedure Act, include trial proceedings before administrative law judges and review by the Commission. (view copy of Solomon's complaint here)

This case is interesting for a number of reasons. First of all, the lawsuit will certainly generate a "buzz" in the press, as the patent is being asserted against a popular, high-profile product (hybrid vehicles). Second, the case appears to be a classic David-vs.-Goliath battle (Solomon's total capitalization in 2004 was $978,487). Furthermore, unlike NTP, Solomon has developed and commercialized an electric drive motor known as the "Electric Wheel." According to Solomon, the hybrid motor is used primarily in marine applications and also on land-based vehicles (it was even used in NASA's Sojourner Mars rover). It will be interesting to see how the case will affect the views of commentators on patent law - while it has always been convenient to dismiss "trolls" during patent litigation, the usual sniping over a "broken patent system" doesn't seem to apply here.

Finally, as this blog has reported before, Solomon is taking part in the growing trend of using legal financing companies to fund their lawsuit. Enforcing patents is a very expensive process, and smaller companies are often not financially capable to take an infringement action to trial. Aside from using contingency-fee arrangements with lawyers, most companies have few options in asserting their patent rights. If the litigation presses forward (which is statistically unlikely), it could very well become a watershed case for legal financing companies and the smaller clients they service.

2 Comentários:

Anonymous said...

The available press releases point to some sort of hybrid contingency/third party financed arrangement:

"Mintz's reputation in helping small companies protect their intellectual property rights is well known. Their agreement to take on this case, after a thorough analysis of Solomon's underlying technology, is a major endorsement of our claims in this action."

"Oliver Street Finance, LLC, has agreed to pay all legal fees and expenses in exchange for a portion of any recovery Solomon receives in the litigation equal to the greater of 40% of the recovery or the actual amount of legal fees and expenses Oliver Street pays on Solomon's behalf."


Just speculation from what is available on the Solomon website.

Anonymous said...

It's amazing that individuals in America even bother with inventions. Odds are 99 out of 100 they will get screwed unless, of course, they work for a big, deep pockets corporation. Even then they still get screwed because they will never be fairly compensated for their efforts. If they are, then such an act may well qualify for a spot among the great wonders of the world. Face it, such a thing would be an extreme rarity. I learned my lesson a long time ago.


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