On 17 August 2012 Hitachi Metals filed a complaint with the US
International Trade Commission (USITC), alleging unfair competition
under section 337 of the US Tariff Act of 1930 by the importation
into the USA and sale of certain sintered rare earth magnets,
methods of making them, and products containing these magnets that
infringe patents asserted by Hitachi Metals. There were 29
identified respondents. The battle ended with the parties reaching
settlement agreements. However, this was merely a prelude to
ongoing litigation at the Ningbo Intermediate Court on IP abuse and
a series of attacks on the validity of certain US patents directly
associated with sintered NdFeB magnets.
Owning 600+ patents associated with sintered NdFeB magnets,
Hitachi Metals is the recognised worldwide leader in this field.
Seven Chinese producers of rare-earth magnets formed an alliance to
fight Hitachi Metals over its US Patent Nos. 6,491,765 and
6,537,385. In early 2016, these US patents were found to be
partially invalid by the Patent Trial and Appeal Board of the
USPTO, although Hitachi Metals announced that it intended "to
continue to vigorously defend and protect its sintered NdFeB magnet
patent portfolio, and advance its views and positions on behalf of
itself and its licensees and customers."
At the end of 2015, four Chinese rare earth companies lodged an
antitrust case with the Ningbo Intermediate Court over Hitachi
Metals, seeking USD 3.4 million. This is the first case in China on
what constitutes abuse of non-essential patents (non-SEPs).
Generally non-SEPs owners are less restricted on licensing compared
to SEP owners who are subjected to FRAND (fair, reasonable and
non-discriminatory terms) license obligations. There appear to be
no formal standards in the NdFeB field. The plaintiffs requested
the court to license non-SEPs by arguing that these are de
facto standards and an essential facility for the
The plaintiffs took advantage of a previous public statement by
Hitachi Metals that "the company considers it's almost
impossible for other companies to commercially manufacture the
magnets if avoiding our entire patent network". The plaintiffs
seemed to be deploying the essential facilities doctrine originated
from the USA – the licence granted by Hitachi Metals may be
presented as the use of market power to create a bottleneck
obstructing competitors. If the argument succeeds, it may
deter patent filing and prompt IPR owners to seek alternative
We await the decision from the Ningbo Court, which will have an
impact on the global NdFeB market given that the USA is the largest
NdFeB market and China potentially the largest exporter.
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