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Hitachi Metals says patents in Ningbo dominance abuse lawsuits not “essential” _SHENYANG GENERAL MAGNETIC CO.,LTD
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Hitachi Metals says patents in Ningbo dominance abuse lawsuits not “essential”

Hitachi Metals told the Ningbo Intermediate Peoples Court in a pre-trial evidence exchange today that its rare-earth magnet patents at the center of a cluster of patent abuse lawsuits were neither "essential" nor "impossible to bypass", according to attorneys at the court appearance.

The presiding judge made general inquiries about the case and attorneys representing both sides went over several key issues, including defining the relevant market, alleged damages and monetary compensation, and Hitachi Metals’ patent licensing approach, according to one of the attorneys.

The Ningbo court is expected to hold the first hearing for the main oral arguments by the end of October, the attorneys said. The court may require both sides to exchange further supplementary evidence before the main arguments are presented at the first hearing, according to the attorneys.

As previously reported, four Chinese rare-earths companies – Ningbo Ketian Magnet, NingboPermanent Magnetics, Ningbo Huahui Magnetic Industry and Ningbo Tongchuang Strong Magnet Material – filed antitrust lawsuits last December with the Ningbo intermediate court against Hitachi Metals over alleged patent abuse issues related to rare-earth magnets.
The dispute centers on neodymium iron boron (NdFeb), a rare-earth magnet material made from an alloy of neodymium, iron and boron that is widely used in parts for airplanes, automobiles and other products.

China produces more than 95% of the worlds rare-earth elements and about 76% of the worlds rare-earth magnets, according to a report by the US Department of Energy. But Chinese companies say they have had difficulties exporting their NdFeb products because of patent lawsuits. Hitachi Metals owns more than 600 NdFeb-related patents globally that cover the whole production process.

Ding Liang, a partner at Deheng Law Offices representing the plaintiffs, told PaRR that Hitachi Metals’ acknowledgment that its patents were non-essential represented a notable shift in the company’s attitude and litigation strategy.

In a report by Bloomberg from July 2014, Hitachi Metals’ spokesperson Akio Minami was quoted as saying: "The company considers it’s almost impossible for other companies to commercially manufacture the magnets if avoiding all of our patent network."

At the evidence exchange today, lawyers representing Hitachi Metals said the company’s previous comments on the importance of its patents were merely a "commercial expression".

A lawyer representing Hitachi Metals told PaRR that the company had never claimed its patents were "essential" and that there were no such things as "essential patents" but only "standard essential patents", which Hitachi Metals’ patents were not.

The attorney also said the plaintiffs’ side had failed to specify which patents were being targeted in the lawsuit.

Ding said naming each patent was not essential to the suit, which is aimed at Hitachi Metals’ entire 600-plus NdFeb patent portfolio. The Japanese firm typically licensed the patents in package, not patent by patent.

Chinese local media reported in August 2014 that an alliance of seven Chinese rare-earths products producers – including the four Ningbo plaintiffs – was preparing to apply for the invalidation of some key Hitachi Metals patents with the US Patent and Trademark Office. The US patent office had initially found those invalid, Ding said. However, lawyers from both sides told PaRR that the US development would be unlikely to influence the Ningbo court’s proceedings.

The Chinese rare-earths companies’ lawsuits are viewed by some as being among the most complicated antitrust litigation filed in China so far. Previous complicated antitrust cases include the landmark Huawei/InterDigital lawsuits, which also involved alleged patent abuse and a US Section 337 investigation.

Hitcahi Metals is represented by Anjie Law Firm and the four Chinese plaintiffs by Deheng Law Offices.

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