Intellectual property: High stakes dispute takes another twist

Japan's Mitsubishi Heavy Industries (MHI) is seeking damages of up to $1 billion from General Electric (GE) for allegedly creating a "patent empire built on a fabric of fraud" to keep MHI and other wind turbine manufacturers from gaining market share.

Google Translate

New York-based GE's allegedly monopolising behaviour imposed additional costs on rivals that stymied fair competition. GE's behaviour, which allegedly violates anti-trust laws, has also short-changed a country that needs green sources of energy, accused MHI in its suit.

GE is accused of fraudulently procuring or enforcing the five wind technology patents central to GE's own patent-infringement suits against MHI; using "baseless" patent infringement claims to bully competitors and the potential buyers of MHI's flagship 2.4MW turbine; and demanding such "exorbitant" licensing fees that MHI says it would have to increase the contract sale price of its 2.4MW wind turbines by "nearly 50%" if it sold 2GW of them. GE is vehemently denying all charges.

Rival machine

The anti-trust suit, brought by MHI and one of its US subsidiaries, Mitsubishi Power Systems Americas (MPSA), was filed in federal court in Arkansas in May. That is the same state where the Japanese conglomerate is to establish the base of its North American manufacturing operations. Upping the ante is GE, which is now selling its rival 2.5 MW turbine in the US. The first will be installed in 2011. GE is the largest US maker of wind turbines.

On the same day that the suit was filed, MHI initiated a second attack by suing GE in a federal court in Florida for allegedly infringing MHI's US patent for a device to control blade-pitch angle, the so-called '185 patent issued in 2008. MHI does not state which GE turbine allegedly infringes its patent.

The suits, and the gargantuan size of the legal budgets involved, show how cut-throat the fast-growing US wind market has become. The patent fight will undoubtedly already be costing tens of millions of dollars in legal fees, according to knowledgeable sources. Companies are also especially keen to get US-based business quickly because of the availability of large federal stimulus grants, a window of opportunity that may soon pass.

According to one of the most incendiary allegations in MHI's anti-trust suit, GE fraudulently obtained the five patents that it has accused Mitsubishi of infringing. GE "omitted references to studies; it has physically removed captions from graphs that disclose their originator; it has concealed material prior art; and it has omitted the name of an inventor whom it did not control", says the complaint.

Moreover, GE's "shocking" pattern of behaviour allegedly involved "using knowledge (that GE) obtained in government-funded programmes in the early 1980s and from sources outside the United States without disclosing the original sources to the US Patent and Trademark Office".

MHI also complains that GE's licensing fees for its wind business patents would have consisted of an "exorbitant $500 million up-front fee" for 2GW or less of MHI's 2.4MW turbines. According to MHI spokeswoman Sonia Williams, that means if MHI had sold fewer than 2GWs of 2.4MW turbines using GE's licensed technology, the price per turbine would have had to have been increased by an even higher amount than the "nearly 50%" estimated for 2GW. In addition, MHI says it was asked to pay a "comparable per-megawatt royalty based on the rated capacity of wind turbines manufactured and/or sold in the United States" if it sold more than 2GW of them.

Sales affected

MHI claims that GE's attacks have been highly effective. "Prior to the initiation of GE's first lawsuit against Mitsubishi (in February 2008), Mitsubishi had sales of approximately $2 billion per year of variable-speed wind turbines in the United States."

"Since GE's litigation campaign began over two years ago, MPSA has not sold a single variable-speed turbine in the United States," says Williams. However, this is not an easy comparison because sales of turbines were low in 2009 due to the recession.

MHI's salvo is only the latest in the long-running fight over wind turbine technology rights - and market share - that has shaped US turbine sales for more than a decade. Some of the disputed technology is fundamental to variable-speed wind turbines.

Prior to these two latest suits, filed in late May, GE had been waging a four-pronged billion-dollar battle against MHI over wind technology. GE is appealing the final finding of the US International Trade Commission (ITC), which in January had concluded that GE was not itself using the technology it had accused MHI of infringing and therefore MHI was not violating the patents. In a parallel suit in the federal courts in Texas, GE has again accused MHI of stealing the same intellectual property and is seeking an injunction and damages.

In the California federal courts, GE has also sued Thomas Wilkins, an engineer whom the ITC named as an alleged co-inventor of GE's patent for basic low-voltage ride-through technology (LVRT). GE wants Wilkins to hand over the intellectual property rights. LVRT is used to keep generators online during momentary dips in grid voltage. Further, GE has sued MHI in another federal court in Texas, accusing it of infringing two additional wind-related patents.

GE spokesman Dan Nelson describes all of MHI's1dollars allegations as "meritless and outrageous". He says: "The validity of the patents at issue has been examined and upheld in both the US Patent Office and the ITC. GE's conduct has been appropriate in all circumstances. "GE stands strongly behind the merits of its patent infringement lawsuits against MHI and will fight to protect its intellectual property."

Matt Kaplan, senior wind analyst for IHS Emerging Energy Research, noted that GE is clearly not afraid to try to keep competition out of the US in a variety of ways, including using patents. He adds: "As major industrial heavyweights including GE, Siemens, Mitsubishi, Samsung, Daewoo, Hyundai and UTC increasingly dominate the US (wind) market, more battles for market share between these companies will likely be waged."

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in

Latest news

Partner content