2— Green patent paradox: absent eBay, patent protection is always in tension with green tech development which kills new tech before it hits the market.

In 1992, Paice LLC, a startup company in the business of hybrid gas-electric vehicles, filed a patent for its developed hybrid technology.45 Paice’s patent application covered the utilization of an electric motor in conjunction with the standard internal combustion engine (ICE) that supplies additional power and transfers torque to the drive wheels of conventional automobiles.46 In 1994, the USPTO granted Patent No. 5,343,970 (“the ‘970 patent”) to Paice.47 One year later, Toyota started developing hybrid gas-electric vehicles in Japan and later launched the Prius in 1997, which was subsequently released to the U.S. in 2000.48 Paice founder, Dr. Alex Severinsky, met with representatives of Toyota USA to demonstrate Paice’s hybrid technology and offer a license agreement; however, Toyota refused because it had “no intention of developing [Paice’s] technology.”49 At subsequent meetings between the parties, Toyota acknowledging Paice’s strong contributions but still refusing its offer to license the patent.50 Thereafter, Paice filed suit against Toyota in the Eastern District of Texas for infringement of the ‘970 patent.51

Pursuant to eBay, the District Court denied permanent injunctive relief for Paice; however, the Court went on to hold that Toyota infringed on the patent rights of Paice and awarded ongoing royalties of $25 per infringing hybrid Toyota vehicle to Paice.52 On appeal, the Federal Circuit Court affirmed the denial of the injunction but remanded on the issue of royalties, holding that the District Court could not allow further use by Toyota without clarifying how to calculate the ongoing royalty.53 On remand, after providing the parties an opportunity to settle on a rate themselves, the District Court raised the ongoing royalties to $98 per hybrid vehicle.54

Paice demonstrates the sheer benefit that eBay has toward resolving the Green Patent Paradox. If Dr. Severinsky had his way, Toyota would not have been able to sell the Prius, Highlander, Lexus RH400h, or other hybrid models in the U.S.55 Given Toyota’s success and leadership in the fuel efficiency market, such a result could have imposed a severe impact on the climate.56 However, given Dr. Severinsky’s zealousness to hold dominion over the hybrid motor, this case also reveals the potential threat of a patent holder not fully utilizing their rights on the rights of valuable green patents.