By David Lawder
WASHINGTON (Reuters) - The U.S. International Trade Commission on Wednesday said it launched an investigation into whether Volkswagen AG (DE:VOWG_p) and its subsidiaries infringed hybrid electric vehicle patents owned by Baltimore-based Paice LLC.
The commission said it has not made any decisions on the merits of the case. But a ruling against Volkswagen could be a significant setback to the automaker's strategy to shift towards hybrid vehicles after a crushing emissions fraud scandal halted sales of its diesel vehicles in the United States last year.
Paice is seeking an ITC order that would block the import and sale of Volkswagen, Audi and Porsche brand hybrid vehicles in the U.S. market. It filed its initial request on April 15.
After a similar ITC complaint and federal lawsuits against Toyota Motor Corp, (T:7203) Paice struck a licensing deal in 2010 with Toyota that covers 23 hybrid electrical control patents. In 2015, it said it reached similar licensing agreements with Hyundai Motor Co Ltd (KS:005380) and Kia Motors Corp (KS:000270).
Paice claims on its website that it shared with Volkswagen its patented hybrid technology, including computer modelling and control algorithms with Volkswagen from 2001 to 2004 in a
"But after learning everything it needed from Paice, VW abruptly ended the collaboration and never licensed Paice's technology," the company said, adding that the automaker shifted its efforts to develop diesel technology instead.
Paice, founded in the early 1990s by Soviet-trained electrical engineer Alex Severinsky, said it holds 29 U.S. and foreign patents related to hybrid vehicle technology. The firm is partly owned by the non-profit Abell Foundation in Baltimore, which has provided over $25 million in funding support and is also listed as a complainant in the ITC case.
In Germany, a VW spokesman said the company "does not comment in principal in ongoing legal disputes" and added that company and subsidiaries named in the case have made statements to the trade commission and these will be made available on the ITC website.