Honeywell to Pay BorgWarner $32.5 Million to End Patent Suit

Honeywell International Inc. (HON) agreed to pay $32.5 million to settle a patent-infringement lawsuit brought by BorgWarner Inc. (BWA) over a titanium wheel used in engine turbochargers.

The settlement is less than the more than $100 million sought by BorgWarner and gives Honeywell a license to the patents, Honeywell said in a statement. A trial on the lawsuit BorgWarner filed in 2007 was scheduled to begin today in a federal court in Asheville, North Carolina.

“The settlement resolving the dispute at a fraction of BorgWarner’s claim was the best solution for Honeywell and its customers,” the Morris Township, New Jersey-based company said.

Turbochargers, which compress air to improve the power and efficiency of smaller engines, have become more widely used by automakers as governments push for stricter fuel-economy standards. Honeywell said in March it expects use of the devices to double in new U.S. automobiles by 2015.

The legal dispute with Auburn Hills, Michigan-based BorgWarner was over a lighter, titanium compressor wheel, which directs air to the engine’s intake manifold. BorgWarner’s inventions related to a cost-effective cast titanium compressor wheel, the design of the wheel and a method for making turbochargers with the titanium wheel.

Rising Sales

About 20 percent of engines built in the U.S., Canada and Mexico will include turbochargers by 2015, up from an estimated 9 percent this year, Honeywell said in March. Automakers in the U.S. are promoting turbochargers as they work to meet a government mandate that manufacturers’ fleets run an average 35.5 miles per gallon of gasoline by 2016, up from 25 miles now.

In Europe, 67 percent of new engines this year are projected to have turbochargers, partly because of higher oil prices and stricter carbon-emission standards. About 28 percent of India’s engines and 13 percent of China’s will have the devices this year, according to Honeywell estimates.

Honeywell’s turbochargers work with gas- or diesel-burning engines in vehicles from Tata Motors Ltd.’s Nano, with its 0.8- liter engine, to a Caterpillar Inc. mining truck with a 100- liter engine.

BorgWarner, which gets about 30 percent of its sales from turbochargers and has a 33 percent share of the market, said in April that sales sales this year will probably expand as much as 23 percent.

The case is BorgWarner Inc. v. Honeywell International Inc., no. 07cv184, U.S. District Court for the Western District of North Carolina (Asheville).

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net; Will Daley in New York at wdaley2@bloomberg.net

To contact the editors responsible for this story: Allan Holmes at aholmes25@bloomberg.net; Ed Dufner at edufner@bloomberg.net

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