The Abell Foundation is known for giving away money, but soon the venerable Baltimore grant-maker will be getting quite a bit, possibly doubling its current $180 million net worth, The Brew has learned, based on interviews with Abell officials and several knowledgeable sources.

Abell’s windfall comes to them by an unusual route:

In July, a Florida-based inventor of hybrid car engine technology won a settlement in a patent-infringement case against Japanese car-maker Toyota.  The major financial backer behind the winner in this six-year David-and-Goliath legal battle? Baltimore-based Abell.

The exact amount of the settlement in the case has not been made public and Abell President Robert C. Embry Jr. isn’t disclosing it, but he acknowledged in an interview that Abell stands to reap “a significant return.”

Since 1998, the foundation’s investment arm, Abell Venture Fund, has invested $20 million in Paice, the Bonita Springs, Florida company founded by Ukrainian-born electrical engineer Alex J. Severinsky. Frances M. Keenan, Abell’s vice president and CFO, is chairman of the board of Paice.

Embry smiled when asked to confirm numerous accounts that he has been crowing in recent weeks about an impending big payday that would double Abell’s assets — which totaled $180 million as of Dec. 31, 2009 according to the foundation website.

“It’s money that’s going to be used to support the foundation’s mission in the city of Baltimore,” Embry said.  “The exact amount coming to the foundation will be made public, to everyone, at a future time.”

Asked why the big windfall had not generated buzz earlier, since it springs from a settlement announced three months ago, Embry explained that the terms of the settlement with Toyota took some time to work through.

“There were some issues involving Japanese withholding taxes,” he explained.

Judging by publicly-available information on the case, it’s clearly going to be a major settlement.

Taking on Toyota

In June 2005, a Texas jury found that Toyota, the biggest seller of hybrid vehicles in the U.S., had infringed on the 1994 patent held by Severinsky for a high-voltage method to power gas-electric hybrid cars. The Toyota models at issue included the Prius, the  Lexus 4000 h and the hybrid Toyota Highlander.  The jury awarded $4.27 million to Paice.

Instead of halting the sale of Toyota’s hybrid cars, the judge in the case told Toyota to pay Paice $25 for every car, an amount that was later recalculated to $98. Toyota appealed that amount.

According to a 7/19/10 Bloomberg News  report on the settlement, if that rate were applied to all of Toyota’s hybrids on sale in the U.S., the company would have to pay $1.43 million in royalties for June alone.

Toyota appealed that verdict and then, as auto industry blogger John McElroy put it, Paice “decided to up the ante” and file suit with the International Trade Commission “and go for an all-out ban on all the hybrids the giant Japanese automaker brings into the U.S. market.”

The case that was to have gone to trial before the ITC in July “hinged on what is more important:  Severinsky’s right to protect the millions of dollars invested in his invention or the potential economic harm of banning Toyota’s hybrid-vehicle imports,” according to Bloomberg.

The Ford Motor Co., maker of the Fusion hybrid, also agreed to license Paice’s technology, the companies said in July without disclosing the terms.

Half-century-old foundation bets on next-generation technology

Harry C. Black, chairman of the parent company of the Baltimore Sunpapers, founded the A.S. Abell Company Foundation in 1953. Following the sale of the Sunpapers in 1986, the Abell Foundation was established as a private foundation with over $112 million in assets.

Embry was named president of the foundation in 1987.

The foundation describes itself as “dedicated to the enhancement of the quality of life in Baltimore and Maryland.” Much of that mission involves addressing “complex challenges to break through the cycles of urban poverty,” according to its website.

Abell gives grants to programs for public school students, substance abuse treatment centers, arts and culture projects, workforce development, conservation and many other causes. It distributed $7,788,202 to mostly Baltimore-area groups in 2008, according to its 2008 federal tax returns.

While holding the majority of its assets in corporate stocks, the foundation also operates Abell Venture Fund, which financed Paice and other start-up companies involved in “green” technology.

For example, Abell owns outright OTEC International, which is attempting to convert the solar energy of tropical oceans into low-cost electricity. The foundation also is an investor in Ceratech, which has pioneered a type of cement using recycled fly ash.

An immigrant’s tale

Severinsky’s story is somewhat akin to that of intermittent windshield wiper inventor Robert Kearns, who successfully pressed his claim that Detroit automakers stole his idea.

A refugee from impoverished Ukraine, he came to the U.S. in 1978 with a doctorate in electrical engineering, according to a University of Maryland news releases from 2008, when he was inducted into the Innovation Hall of Fame at the school’s A. James Clark School of Engineering.

Severinsky received his award for developing “the hyperdrive power-amplified internal combustion engine power train, a more fuel-efficient successor to the conventional internal combustion engine power train,” the University said.

With help from the school’s incubator program, the Maryland Technology Enterprise Institute (Mtech), he started his own company. Describing Severinsky as a “graduate” of Mtech in a news release about the July settlement, the Itnstitute recounts how he developed the hybrid technology and even made a prototype using a Cadillac Coupe de Ville, cutting its gas consumption in half while retaining driving performance.  Severinsky also has lectured at the Engineering School.

After winning the case against Toyota over the summer, the 65-year-old Severinsky told Bloomberg he felt vindicated.

“Finally people understand the merits of what I invented and give it the proper value,” Severinsky said. “Toyota is the leading technology company and finally appreciates the value of the invention.”

So will his non-profit benefactor.