Mitsubishi Heavy Industries (MHI) has stopped selling wind turbines in the US, the world's second-largest market. The Tokyo-based company has been embroiled in a complex four-year legal fight with US General Electric (GE) over patented wind technology and GE's alleged anti-trust behaviour. "Mitsubishi has made the difficult decision to suspend sales of new wind turbines in the US until market conditions improve and the GE litigation comes to an end," said MHI spokeswoman Sonia Williams.
Analysts see the importance of the MHI-GE clash, in competitive business terms, as waning fast. GE is secure in its position of dominating the US market, partly because of an aggressive strategy on intellectual property (IP). Dan Shreve, an analyst at Make Consulting, and former leader of wind-energy market and competitive intelligence at GE Energy, said: "The damage (in the US) has largely been done to MHI. GE has strengthened its position. The gains have already been made."
MHI's Williams agreed: "GE's serial litigation against Mitsubishi has resulted in a severe decline in Mitsubishi's wind turbine sales and market share in the US." MHI has had to offer extra assurances to potential US buyers and financers leery of the litigation risk, she said.
Specifically, said Williams, MHI offered "more indemnities" for the 2.4MW, the model at the centre of the disputes over technology IP. Over 1.5GW of the model has been installed in the US. She declined to describe the protections, but added: "We have had to manage that risk." GE could not be reached for comment.
The MHI-GE legal proceedings have had a profound impact, especially when coupled with the current slump in US turbine sales because of policy uncertainty.
In April, MHI mothballed its new $100-million assembly plant in Arkansas. The plant, completed in late 2011, was for assembling the company's flagship 2.4MW turbine. It was never used.
In the ongoing anti-trust suit, MHI has argued that US sales of its 2.4MW turbine have dropped from $2 billion annually to almost zero because of GE's manipulation of the US market for variable-speed turbines by misusing the acquisition of IP. GE denies the allegation.
In 2009, MHI had 8.1% of the US market, in terms of megawatt sales of turbines, and ranked fourth. By 2011, its share had dropped to 4.7% and its ranking was sixth, according to Make Consulting. That change came as the fight with GE gained traction, as other major players entered the market and because of the global financial crisis. Some 1.59GW of MHI's 2.4MW wind turbines have now been installed in the US, a market that overall accounts for 90% of Mitsubishi's wind turbine sales. In 2011, GE had the largest share of US wind turbine sales.
Observers have watched the fight closely because of the opponents' global clout. And IP is vital in an industry such as wind so increasingly based on technology and in a market where business is shrinking at least temporarily. Also, a previous owner of the patent for GE's variable-speed technology, Kenetech Windpower, blocked its German rival Enercon from the US market for years using the courts.
MHI and GE will clash again in October, in the same Dallas court where jurors in March ordered MHI to pay $170 million in damages to GE after finding that MHI's 2.4MW turbine infringed GE's patent for zero-voltage ride-through (ZVRT) technology. ZVRT is a widely applicable technology for allowing turbines to cope with fluctuating grid voltage.
In the upcoming trial, MHI will allege that GE knew the patented technology was unoriginal, which GE denies. If the patent were invalidated, the damages against MHI would be moot.
In July, a Florida federal judge ruled that GE did not infringe an MHI patent for controlling blade pitch. MHI has 30 days to appeal once the court has formally adopted the decision. As of mid-July, MHI had not decided whether to appeal.
Eric Lane, an IP attorney, said the initiator of legal action usually has the advantage. "In theory, they can shape the field of play somewhat more than the defendant," he said. GE made the first move in 2008 by suing MHI at the US International Trade Commission (ITC) over alleged infringement of three patents.