In a shocking development Toyota faces a lawsuit filed with the U.S. International Trade Commission that seeks to ban the import of all hybrids to the American market. Toyota is being sued by Paice LLC for patent infringement on its hybrid system.

Before you think this is just a frivolous lawsuit that has no standing whatsoever, consider the fact that Paice has already successfully sued Toyota on five counts of patent infringement, and won on three of them. In April of this year, Paice was awarded by the Federal district court in the Eastern District of Texas a future royalty of $98 for every Prius sold.

Toyota is appealing that verdict, but just to up the ante Paice decided to file its suit with the ITC and go for an all-out ban on all the hybrids the giant Japanese automaker brings into the U.S. market.

Paice's hybrid system is the brainchild of Russian inventor Alex Severinski who managed to emigrate from the former Soviet Union in the mid-1970s. He landed in the United States smack dab in the middle of the first oil embargo. The way he tells it he escaped from the Soviet system where people had to stand in line to buy food only to land in America were people were standing in line to buy gasoline. Being an electronics engineer he decided to design a series hybrid system based on low-cost, high-voltage electronics. Severinski then began the long, arduous effort to get the auto industry interested in his invention.

Fast-forward a decade or so and an entirely chance encounter brought his invention to the attention of the late Bob Templin, the former chief engineer at Cadillac. Templin was retired at the time but became intrigued by the possibilities that Severinski's invention offered. Soon he recruited other automotive executives with extensive experience, including Ted Louckes, the former chief engineer of Oldsmobile, and Bob Oswald the former president of North American operations for the Bosch Company.

I mention their names because I've known each of these men for most of my career. They're honest, straight-forward executives who came up through the engineering ranks and really know technology. They're not the types who could get snowed by some pie-in-the-sky inventor.

The first thing they did was advise Severinski to get his invention patented. After that they joined Paice's board of directors. Then they too tried to get automakers interested in their hybrid system, but to no avail.

When Toyota came out with the Prius, Paice was pretty sure Toyota had infringed on its patents, so it sued the automaker. The lawsuit wound its way through the courts until they won this April's verdict.

Clearly Paice is more interested in getting Toyota to pay it royalties than in preventing the automaker from importing hybrids. And while Toyota can easily afford to pay them, it would certainly lose a lot of face if it turns out that it infringed on someone else's patents while trying to build its reputation as the world's leader in hybrid technology.