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Baltimore hybrid engine inventor wins $29 million in verdict against Hyundai and Kia

Baltimore hybrid engine inventor wins $29 million in verdict against Hyundai and Kia
The Abell Foundation and a Baltimore-based hybrid engine inventor won $29 million jury verdict against automaker Hyundai and its sister company Kia for violating patents they own. (Fiat)

A Baltimore-based inventor of hybrid engine technology and the Abell Foundation, which invested in the company, have won a $28.9 million jury award in a patent infringement case against Hyundai Motor Co. and affiliate Kia Motors Corp.

The automakers knowingly used technology developed by Paice, a firm that designed a way to improve the performance of combined gas-electric engines, a jury ruled Thursday after an eight-day trial in federal court in Baltimore.

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Paice, founded in 1992 by Russian native Alexander Severinsky, had built a prototype hybrid-powered car but was turned away by major automakers, in some cases after years of discussions.

The company and Abell, the nonprofit that's known for fighting urban poverty and which also invests in promising startups, filed a lawsuit against Hyundai and Kia in 2012. Toyota settled a Paice lawsuit by agreeing to license the technology. Paice also has a lawsuit pending against Ford Motor Co.

Representatives of Kia did not respond Friday to requests for comment. Hyundai believes the verdict is not supported by the evidence, said Chris Hosford, a spokesman.

According to court documents, the companies plan to ask U.S. District Judge Marvin J. Garbis to reverse the verdict. The automakers had argued that Paice's patents were invalid.

Frances Keenan, chairman of the board for Paice and Abell's chief financial officer, said the jury was required to sort through complex evidence.

"We are pleased to have Dr. Severinsky's foundational technology recognized in the verdict and the finding of willful infringement," Keenan said Friday.

She said the inventor laid the foundation for today's hybrid vehicles, developing technology before the major automakers began to focus on electrification of the power train.

Severinsky, an electrical engineer who grew up in the Soviet Union and moved to the United States in 1978, came up with the idea to make cars more fuel-efficient while he was waiting in long gasoline lines in 1979. He soon began developing designs for a hybrid vehicle.

In 1992, he formed the company, starting out in the University of Maryland's small-company incubator program. He was awarded a hybrid vehicle patent in 1994, the first of 29 related to the technology. In an 2009 and 2010 analysis of 58,000 hybrid vehicle patents, intellectual property firm Griffith Hack identified the 10 most important hybrid patents in the world, counting four Paice patents among them.

Abell was introduced to Paice in 1998 through the university incubator program and has invested millions in support of the technology. The foundation now owns 60 percent of the firm.

Robert Embry, president of the Abell Foundation, said the organization first invested in Paice hoping it would make the hybrid engines in Baltimore and sell them to auto companies, creating local jobs. Instead the company has been forced to file lawsuits against manufacturers that used the technology without licensing it, Embry said.

A lawsuit against Toyota over technology used in the Prius resulted in the licensing agreement with the Japanese auto maker. In July 2010, Paice and Toyota entered a confidential settlement that needed a new round of litigation over other models.

In the recent lawsuit, Paice accused the Korean automakers of using Paice designs in cars such as the Hyundai Sonata Hybrid and the Kia Optima Hybrid.

If Hyundai refuses to license Paice's technology, it will be required to pay the damages, Embry said.

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"It's very helpful to the foundation, if the verdict holds," he said. "It adds a significant amount to our assets, which permits us to give away more money."

With assets of $334 million at the end of 2014, Abell gave away nearly $14 million last year in grants, matching gifts and other donations to support its mission of changing Baltimore for the better, according to its annual report.

In the pending lawsuit against Ford, Paice and Abell allege that Ford spent years considering a partnership with Paice before deciding to make its own hybrid engine. Paice believes that Ford used its ideas.

"Ford built its new hybrid system by relying heavily on the hybrid vehicle inventions it learned from Paice," according to the complaint, filed in February 2014. "Ford had concluded that to build a commercially viable hybrid, it must use Paice's fundamental patented technology and teachings."

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