As Toyota continues to plagued by safety recalls (this week, the automaker recalled 17,000 Lexus hybrids for faulty gas tanks), the company is facing legal trouble of another matter, this time over a patent controversy that could result in a ban of Toyota hybrids altogether.
This patent fight originally began in 2004, when Paice LLC, a Florida-based hybrid technology company, sued Toyota for using its patented technology in second-generation Prius vehicles. The court ruled that Toyota had infringed on Paice’s patent and Toyota filed multiple appeals, losing each time. According to Forbes, Toyota has paid $5 million in damages and a small fraction of the court-ordered license fee of $98 a car while it challenges future royalties. In the latest case, Paice is claiming that Toyota’s third-generation hybrids are also infringing on its patents and that Toyota is not paying enough in royalties. Paice is ultimately hoping to get the International Trade Commission to ban Toyota hybrids altogether. Toyota has fought to get the case dismissed but to no avail.
According to one expert, who commented on the case last year, a ban is unlikely. But if it does happen, Toyota would be looking at production delays, the inability to sell hybrid vehicles in the United States and millions of dollars in lost revenue while it inevitably tries to work out a licensing agreement.
When taken with the ongoing recall fiasco, this patent infringement mess is further evidence of the difference a year can make in business. This time last year, Toyota was seen as the industry gold standard.
But their ongoing troubles paint a picture of a car company that seems to have gotten caught up in believing its own press and lost sight of key details, like safety and technology, that helped make it great. A company that once was the model for quality is quickly becoming a textbook example of the dangers of complacency.
