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Md. hybrid technology firm sues Ford for patent infringement

A Baltimore-based hybrid technology company is suing Ford Motor Co., claiming the automaker co-opted its patented innovations for several of its hybrid and plug-in vehicles.

Paice LLC alleges the Ford Fusion, C-Max and Lincoln MKZ all infringe on Paice patents that control electric motor and internal combustion engines to increase fuel economy and reduce emissions. Ford licensed one patent from Paice in 2010 but six years earlier declined to enter a formal business relationship after dozens of meetings, according to the lawsuit, filed Wednesday in U.S. District Court in Baltimore.

But the lack of a contract didn’t stop the automaker from applying what it learned from Paice, the lawsuit states.

“Paice’s technology has indeed proven to be the ‘game changer’ that Ford told Paice it was looking for many years ago,” the lawsuit states.

Ford’s media relations department did not respond to a request for comment Thursday.

Paice was founded in 1992 by Alex Severinsky, a Soviet immigrant and engineer; the company’s name stands for “Power Assisted Internal Combustion Engine,” according to the complaint.

Paice was accepted into the University of Maryland’s technology incubator and has received millions of dollars in funding from The Abell Foundation, which is now a co-owner of the company and other plaintiff in the lawsuit.

A 2010 study found Paice owns four of the world’s 10 most-dominant hybrid vehicle patents, according to the lawsuit. That same year, the company reached a confidential settlement in a similar patent infringement lawsuit with Toyota, whereby the Japanese automaker agreed to a global license of all of Paice’s U.S. and foreign patents, according to the lawsuit.

“It is simply unfair to Paice, and to Toyota, to permit Ford to ‘free ride’ and use this key technology without compensation,” the lawsuit states. “Ford, too, must acknowledge Paice’s critical contributions to Ford’s success with its hybrid vehicles and provide Paice with just returns on its technology investment.”

Paice officials first met with Ford officials in 1999 and, over the course of five years of engineering work and communications, “taught Ford how to implement” Paice’s patented technology, according to the complaint. But Ford never bought a license, which is why Severinsky was “stunned” when he saw a Ford Escape Hybrid at the 2003 New York Auto Show that incorporated Paice’s “modeling and analysis,” according to the lawsuit.

Ford filed what Paice alleges was a pre-emptive lawsuit against Paice in Michigan in 2005, after a jury in the Toyota litigation found in favor of the technology company, according to the complaint. Ford’s lawsuit was dismissed two years later, Paice alleges.

Under the 2010 licensing agreement for one patent, both Paice and Ford agreed not to litigate over the other patents until after Jan. 1, 2014, in the hopes of reaching a settlement. But all talks have been “short and one-sided,” according to Paice’s lawsuit.

Paice gave Ford written notice of the patent infringement in October, the lawsuit states. In December, Ford filed another complaint in Delaware Chancery Court seeking a ruling that Paice could not file a complaint under the terms of the 2010 licensing agreement, according to Bloomberg News.

Paice seeks unspecified damages from Ford. In a 1999 proposal given to several high-ranking Ford officials, including Chairman William Clay Ford Jr. and then-CEO Jacques Nasser, Paice said it would license its technology for $150 per vehicle.

Ford’s U.S. hybrid and electrified vehicle sales in 2013 climbed to 85,919, more than double the 33,476 a year earlier, according to Bloomberg News. By May of last year, the automaker had beaten its previous annual best for hybrid and electrified U.S. vehicle sales in 2010, Bloomberg News said.

The case is Paice LLC v. The Ford Motor Co., U.S. DMD No. 14-492.

Paice is represented locally by lawyers from Kramon & Graham P.A. in Baltimore.

The company is separately suing Hyundai Motor Co. and Kia Motors Corp., alleging they, too, have infringed the same patents. That litigation, also in U.S. District Court in Baltimore, is in the discovery phase, according to court records.