ITC To Probe Toyota, BMW, Others Over Electric Motor Parts

The U.S. International Trade Commission said Thursday it will be kicking off an investigation into thermoplastic parts used in imported cars by Toyota, BMW and others, after a judge previously terminated a probe upon discovering that petitionerIntellectual Ventures II LLC lacked standing because of an error in an assigning agreement.

The commission said it voted to re-initiate the investigation of the products — which include coolant pumps, water pumps, power steering motors, other auto parts as well as the vehicles that contain them — based on a complaint lodged by Intellectual Ventures on Sept. 5 that claims imports and sales of the products run afoul of section 337 of the Tariff Act of 1930.

Intellectual Ventures is seeking a limited exclusion order and cease and desist orders against Toyota Motor Corp., BMW Manufacturing Co, and a handful of other Japanese auto parts manufacturers, including Aisin Seiki Co., Denso International America Inc., Honda Motor Co., Ltd., Mitsuba Corp., Nidec Corp. and their affiliates.

Honda and Toyota representatives and an Intellectual Ventures spokesman declined to comment. Representatives for the manufacturers did not respond to a request for comment.

In August, Intellectual Ventures opted to rescind its previous filing and replace it with a new complaint, which essentially included the same allegations against the manufacturers, after obtaining new assignments for its patents, which had been held by Encap Technologies Inc.

In an initial determination from Aug. 3, Administrative Law Judge Dee Lord terminated the ITC’s investigation into the matter, saying Intellectual Ventures lacked standing because of an error in a 2012 assigning agreement between Intellectual Ventures's affiliated holding company and Encap — a company that had ceased to exist after a 2008 merger with Encap Holding Corp.

Intellectual Ventures had told the court that the error was unintended, arguing that the president of Encap Holding, who is the named inventor on the patents, signed the agreement. But Judge Lord said it did not grant Intellectual Ventures ownership.

The complaint is based on five patents it says it bought in 2012 from Encap Technologies. Intellectual Ventures has also brought suits over its Electric Motor intellectual property in Delaware federal court.

The ITC’s docket shows that Intellectual Ventures withdrew the August complaint and re-filed a new one in early September. The document on file was redacted and it was not clear why Intellectual Ventures withdrew it. The same five patents are listed in the most recently-filed complaint. 

In May, the ITC said it was launching an investigation into the matter and identified a total of 25 companies to be part of the investigation — the same manufacturers in the current investigation.

The car companies then filed a motion to terminate the investigation, citing a lack of standing because Intellectual Ventures never owned the patents in question. They said that Intellectual Ventures failed to disclose the 2008 Encap Holdings merger in which “Encap Technologies ceased to exist,” citing public records. Four years after the merger, Encap Technologies sold the patents to IV Holding 88 LLC.

Because the patents were sold by a company that did not exist, Intellectual Ventures never owned the patents it bought and so could not press an ITC investigation, the automakers argued.

Intellectual Ventures argued in turn that Encap Technologies ceased to exist only in the sense that it did not have its own separate existence from Encap Holding, so Encap Technologies could still convey the patents to IV Holding 88.

“Intellectual Ventures, as a result of an error in the 2012 assignment agreement, does not own the asserted patents,” Judge Lord said in August. “No provision of the Patent Act or section 337 permits a Commission ALJ to reform patent assignment agreements to change the ownership of a patent.”

The patents-in-suit are U.S. Patent Numbers 7,154,200; 7,067,944; 7,067,952;7,683,509; and 7,928,348.

Intellectual Ventures is represented by James M. Wodarski of Mintz Levin Cohn Ferris Glovsky and Popeo PC.

Counsel information for the manufacturers was not immediately available.

The case is In the Matter of Certain Thermoplastic-encapsulated Electric Motors, Components thereof, and Products and Vehicles Containing Same, case number 337-TA-1073, in the U.S. International Trade Commission.

--Additional reporting by Kevin Penton and Melissa Daniels. Editing by Joe Phalon.