Published: 3/14/16
Publication: IAM
The port city of Ningbo is playing host to China’s first case testing what constitutes abuse of non-essential patents. In a lawsuit being watched closely by regulators, four local companies are arguing that Hitachi Metals’ refusal to license its patents related to neodymium-iron-boron (NdFeB) magnets violates antimonopoly laws. There is no formal standard surrounding NdFeB technology, and Hitachi Metals, which largely controls the field, has made no voluntary declaration that it will license its patents on FRAND or any other terms. But regulators in both China and Korea are taking a close look at so-called de facto standards or ‘essential facilities’, in what could become one of the region’s more worrying trends for IP owners.
NdFeB magnets have a wide range of applications in high-tech and engineering-related fields. Sinteredmagnets of this type were originally developed in the 1980s by Sumitomo Metal Industries, which later became part of Hitachi. Today, Hitachi Metal owns most of the IP related to the field: over 600 patents globally. Chinese firms, however, control most of the world’s rare earth mines, and are thus key players in the production of the NdFeB alloy, which accounts for about half of all global rare earth metal consumption. Hitachi has licensed its IP to eight select Chinese companies, and refused licences to others, including the four local companies that are now seeking $3.4 million in a patent antitrust lawsuit before the Ningbo Intermediate Court.