Chinese rare earth alliance to take on Hitachi over patents

BEIJING - Seven rare earth companies in China have formed an industrial alliance that is seeking to use this month’s expiry of a key patent held by Hitachi Metals Ltd. to expand exports of the micro magnets that are found in products ranging from motors to smartphones. The alliance is also trying to prove the invalidity of three patents owned by Hitachi.

Expiry of a 17-year old patent that defines the structure of such magnets could pave the way for previously blocked Chinese producers to sell to US customers, said Sun Baoyu, Chairman of Shenyang General Magnetic Co. Japan and the US are the most important overseas markets for magnets, with Japan holding most of the world’s rare-earth patents while China is the largest supplier of rare earths.

The end of the patent relating to micro magnets will pit the seven producers in the alliance and potentially others who try to tap into the market against Hitachi and eight Chinese companies that have paid for the right to make and ship the magnet.

An increase in exporters of the magnets could cut prices of the products used to make Apple Inc.’s iPhones and Toyota Motor Corp.’s hybrid-electric cars. The alliance has reportedly already started the process of hiring lawyers to ensure that their production process does not infringe on the Japanese company’s remaining patent rights. www.webershandwick.com (ATI).