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Does Goliath drive a Prius?

A tiny Tarpon Springs company says the automaker's hybrids infringe on its patent.

Published February 11, 2006

[Toyota photo]
Toyota Prius

The outcome probably won't be known for months, but the groundwork has been laid for a tiny Tarpon Springs company to throw a major scare into mighty Toyota Motor Corp.

Solomon Technologies Inc., makers of electric propulsion systems primarily for the marine industry, filed a complaint with the International Trade Commission last month alleging that Toyota's hybrid technology in two of its most popular vehicles, the Prius and Highlander, infringes on one of its patents.

The ITC voted this week to begin an investigation.

Toyota's gasoline-electric hybrid models are one of the fastest-growing parts of the company's line. The nation's fourth-largest automaker sold 110,000 Prius models and 18,800 Highlander hybrid SUVs in North America last year.

Solomon contends part of the hybrid technology, a "dual-input, infinite-speed integral motor and transmission device," belongs to them.

According to the complaint, inventor Jonathan Edwards received a patent for the device in 1991 and assigned the patent to Town Creek Industries. Town Creek discussed the technology with Toyota representatives in 1992 and 1993, the complaint says, but no deal was finalized.

Solomon acquired Town Creek in 2001 through a merger and reorganization agreement.

The ITC acts as an investigative body to determine, among other things, whether goods imported into the United States infringe on U.S. patents. If the ITC rules in Solomon's favor, it could block Toyota from importing some engine parts, although that determination could be reversed by the Office of the U.S. Trade Representative.

The investigation could take a year, said an ITC spokeswoman.

"The filing of the ITC complaint is the next step in our effort to fully prosecute the alleged infringement by Toyota and to protect our valuable intellectual property," Solomon president Peter W. DeVecchis Jr. said in a statement.

DeVecchis did not return calls for comment Friday, and a Toyota spokesman said the company couldn't comment on ongoing investigations.

In this David and Goliath battle, it's clear who's playing the role of David. In a recent Securities and Exchange Commission filing, Solomon, which incorporated in 1995 and operates out of a two-story building near the Anclote River, reported third quarter revenues in 2005 of $3,674, and a net loss for the period of $1.5-million. For the first three quarters of the fiscal year, the company reported a net loss of $4,877,927.

Despite it's small size, Solomon is publicly traded. Its stock closed Friday at 75 cents a share, up 14 cents, or 23 percent, from Thursday.

Industry analysts say it's not uncommon for small parts suppliers to claim an automaker stole an idea, but the cases usually involve something simple, such as a tail-light lens.

Major transmission parts are a different story.

"I'm not sure how this is going to play out," said Harry Stoffer, who covers the industry for Automotive News . "But if this little company is right, it would be a very big deal.

"Look at somebody like BlackBerry. It's a widely accepted device, and low and behold, a court has determined it is based on someone else's technology. The big guy is having to scramble to keep its business running."

Solomon has gone to court to try to stop Toyota. Last fall, the company sued Toyota in U.S. District court in Tampa claiming patent infringement. The suit seeks an injunction against Toyota and unspecified damages.

[Last modified February 11, 2006, 01:14:11]

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