Firms battle Japan over patents

Seven Chinese neodymium iron boron magnet producers have come together to end the patent monopoly held by Japanese companies in the rare-earth magnet sector.

The alliance, led by Shenyang General Magnetic Co Ltd, is set to challenge Japanese companies like Hitachi Metals Ltd, which had the intellectual property patent rights for neodymium iron boron till July 8.

Sun Baoyu, chairman of the board of Shenyang General Magnetic Co Ltd, said the companies have set aside $15 million for legal expenses that may arise due to lawsuits that may be filed by the Japanese companies.

He said that because the Japanese - owned material patent in the United States expired, Chinese companies that had development and processing patents that are different from those of the Japanese companies should be allowed to sell their products in the US markets.  

But currently, most of their potential users still hold the perception that purchasing Chinese products will infringe on the patent rights of Japanese companies.

"We've been evaluated and assessed by legal firms in the United States for a year, and they have certified that our products do not violate intellectual property rights and can be sold in the US," said Sun.

Hitachi Metals holds more than 600 neodymium iron boron magnet patents and has only authorized eight Chinese companies with their 149 patents, he said.

Neodymium iron boron magnets are widely used in high-technology industries, from new - energy automobiles to mobile phones. It is estimated that an iPhone has at least 10 components where neodymium iron boron magnets are used.

Because of the patent barriers, Chinese companies have found it difficult to export neodymium iron boron magnet - related products to countries such as the United States.

Sun said that going forward China will account for most of the neodymium iron boron magnet manufacturing in the world. China already accounts for 90 percent of the global rare earth supplies. Rare earths are a group of minerals that have a wide range of uses in high-tech sectors such as defense and renewable energy

He said domestic consumption of neodymium iron boron magnets has reached between 70,000 and 80,000 metric tons each year, far more than the 20,000 metric tons consumed overseas.

Neodymium iron boron magnet product exports from China enjoy price advantages and also have the ability to generate more profits for companies than what they would get from the domestic market.

A lawyer said speedy resolution of the neodymium iron boron patent dispute is vital for the survival of the rare earth industry in China and urged the involved sides to come up with quick solutions.