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Patent war flares up again as giants go head to head -- Mitsubishi takes on GE Energy over rights to variable speed technology

A clash of the titans has started over GE Energy's patent on variable speed wind turbine technology. General Electric Co is asking US officials in Washington DC to block Mitsubishi Heavy Industries Ltd from importing its 2.4 MW model into the United States. The turbine has been selected for use in a number of projects in the booming market. A seven-day trial at the US International Trade Commission (ITC) concluded on May 19. Attorneys for both companies now have a month in which to submit legal briefs to Judge Carl Charneski before he issues a preliminary finding. Charneski is expected to release his decision by August 7.

GE, which has a history of aggressively defending its variable-speed intellectual property, maintains that Mitsubishi's 2.4 MW turbine infringes three of its patents, dating from 1992, 2005 and 2008. Scott Breedlove, an intellectual property lawyer acting for GE, argued during the trial that GE's variable speed technology brought "wind energy into the mainstream." He said that Mitsubishi's use of GE's patented property was "in a pretty straightforward fashion." Mitsubishi's 2.4 MW model is a competitor to GE's 2.5 MW model, coming to the US next year after its European launch in 2007.

Not in violation

At the trial, Mitsubishi argued GE's patents were too old to be relevant. "Today's wind turbines use different technology" to convert energy from a rotor running at variable speed into grid compatible power. Moreover, the patents were wrongly issued in the first place because "prior art" existed, says Roger Taylor, the lawyer who represented Mitsubishi at the ITC. Taylor told the ITC judge: "GE is forced to twist and contort the meaning" of its patents to prove infringement, he added.

The opinion of staff at the ITC, an independent quasi-judicial federal agency that acts for the US public, is that Mitsubishi's turbine does not violate GE's patents. All wind turbines with rotors running at variable speed must employ power conditioning equipment to produce electricity acceptable to the grid. The Mitsubishi unit uses a configuration that is normal for the wind industry of a variable speed rotor, gearbox, generator and converter. Jim Healy, a spokesman for GE, says the firm does not comment on ongoing litigation.

So large are the two opponents and so tight is GE's hold on basic variable speed technology, the outcome of the clash could shape the multi-billion dollar US wind market. GE's variable speed patents start to expire in 2011. GE will hope to tie up Mitsubishi in legal manoeuvring and to get an injunction that blocks the Japanese conglomerate from importing more of its 2.4 MW models into the US. Mitsubishi, while only the seventh largest supplier in the US with a 6.4% share of the market, has long stated its intention to ramp up its wind business there. The market is dominated by GE with an almost 50% share.

Mitsubishi, with its deep pockets, is clearly not taking the attack from GE lying down and may well have been responsible for bringing the dispute to the public eye by tipping off the press. The dispute was first reported by Bloomberg, a financial news service.

The ITC commissioners may decide to review the judge's ruling because of the complexity of the case. A final decision would be expected by December 7. If the ITC rules in GE's favour and agrees that Mitsubishi's 2.4 MW model should be banned from the US, there is a 60-day review period by the White House. During that time, Mitsubishi can only import the 2.4 MW model to the US by first posting a bond. Unless the ITC's decision is overturned, the exclusion order against Mitsubishi would become effective and enforceable by US Customs -- and that could happen as soon as early February 2010.

Injunction

The final decision is likely to be appealed in a federal appeals court. In theory, the dispute could go as high as the US Supreme Court. Also in theory, an injunction could also be issued to block Mitsubishi's 2.4 MW model by the end of 2009. GE appears to have moved as quickly as it could on the case. Rival technology has to be imported into the United States before a complaint can be filed at the ITC. In a deposition submitted to the ITC in March 2008, William Holley, at the time chief consulting engineer for wind technology at GE Energy, referred to what appeared to be the first Mitsubishi 2.4 MW turbine in the US, at the Klondike III wind farm near Wasco in Oregon.

In his testimony, Holley speculated, on the basis of his engineering expertise, that the Japanese turbine must use variable speed technology that infringes GE's patents. Many of Mitsubishi 2.4 MW turbines have only recently started operating in America, in south Texas, near Corpus Christi, at the Pensecal and Gulf Wind projects owned and operated by Iberdrola and Babcock & Brown (B&B). Construction started early last year. GE has reportedly subpoenaed Iberdrola and B&B for details of the technology. Iberdrola and Edison Mission have both contracted to buy more Mitsubishi 2.4 MW turbines.

American companies have been the holders of GE's patents on variable speed technology for nearly two decades. The first patent was registered in 1992 by Kenetech Wind Power, at the time the dominant US wind company before an ignominious bankruptcy. The remains of Kenetech, including the patent, eventually landed in the hands of Enron when it entered the wind business, before passing into GE's ownership in 2002 when it plucked Enron's wind interests from the ruins of that company's meltdown. Throughout this history, European companies selling wind turbines in the US have either had to spend money on inventing technology that circumnavigates the particulars of the patent, as have Siemens, Vestas and Gamesa, or strike a cross-licence deal with GE.

The current dispute is eerily similar to one that started in the mid-1990s between Kenetech and privately held German wind turbine maker Enercon, which had taken the same obvious approach to power conditioning the output of a variable speed turbine as GE had taken. Kenetech -- and later Enron Wind and then GE -- battled Enercon at the ITC and in the courts for about a decade over the 1992 patent. Advanced industrial espionage in Germany, even including the US National Security Agency, was alleged.

Offshoots of the case were still being fought as recently as 2003 at the European Patent Office as GE tried to widen the reach of the patent. The same year, GE filed suits against Enercon for alleged infringement in Britain and Canada of the 1992 variable speed patent that GE had become the owner of. GE and Enercon called a truce in May 2004 by agreeing to a "cross license with worldwide and long-term application."

Deals with GE

Since then GE has reached licensing agreements with other manufacturers utilising variable speed technology in their turbines, including German Repower, now controlled by India's Suzlon, and Spanish Acciona.

In 2007, GE Energy agreed on a patent license with AAER Inc, a Canadian turbine manufacturer opening a plant in Quebec. AAER had a technology licensing agreement with Germany's Fuhrländer AG. Through the deal with AAER "the two companies will continue to independently manufacture and sell wind turbines," said GE at the time. "The agreement with AAER is the latest example of GE's strategy of licensing our key patents for wind turbine control technologies to help suppliers and customers meet the rapidly growing demand for clean, efficient wind energy," said the company's Victor Abate.

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