America's largest company, General Electric (GE), has won a key preliminary ruling in its drive to block Japan's Mitsubishi Heavy Industries (MHI) from selling its flagship 2.4 MW wind turbine model into the United States. Judge Carl Charneski of the International Trade Commission in Washington DC ruled on August 7 that MHI and one of its subsidiaries, Mitsubishi Power Systems Americas, have infringed GE's patents relating two fundamental and common aspects of modern wind turbine technology - operation at variable speed to maximise energy capture from the wind and the ability to "ride through" sudden dips in voltage on the grid without any operational disturbance.
A proposed "remedy" for the alleged patent violation was released by Charneski on August 21, but the document was confidential. A final remedy, if one is issued, could include an outright ban in the US market of Mitsubishi's 2.4 MW turbines, the MWT92 and MWT95 models. The ban could take full effect as soon as February 7.
If the full six-member International Trade Commission (ITC) decides not to accept the preliminary ruling but to review the case instead - a decision it is expected to make by about October 6 - it would then be expected to issue a final ruling by about December 7. That final ruling is then subject to a 60-day review by the office of President Barack Obama, which may overrule the commission's suggested remedy because of "policy considerations," an unlikely scenario usually reserved for high-stakes bilateral disputes. Only after the "final determination" is issued by the full commission can a ban or another remedy take effect.
While the White House is reviewing the ITC's final ruling, Mitsubishi can only import its 2.4 MW model to the US after first posting a bond. The company can also appeal the final decision in the federal circuit of the US Court of Appeals.
The impact of a ban would be momentous, both for the US wind market - where Mitsubishi is a major supplier - and for the Mitsubishi conglomerate. Shortly after the judge's initial ruling, Mitsubishi said it would ask the full commission to review the case and would "pursue all avenues of relief," indicating the case is likely to go the Federal Appeals Court.
Last year, Mitsubishi sold components to US customers for assembly of more than 400 wind turbines, according to the Turbomachinery Society of Japan. The US is currently the world's most active wind power market. Losing its US wind business would add to MHI's troubles. A rise in value of the yen and the recession are hitting the Japanese company hard. MHI has forecast a fall in net profit of 50% in the current fiscal year ending March 31, 2010.
In recent months, MHI has repeatedly announced its intention to ramp up its wind business and it is seeking to increase its share of the US market. By the autumn it has said it will confirm its plans to build a $105 million wind turbine manufacturing plant in the US or Canada capable of turning out turbines with a combined capacity of 600 MW a year, representing half its current global wind turbine manufacturing capability. For the US market, blades are imported from Mexico with the remaining tower-head machinery coming from Japan.
Mitsubishi denies that its business will be affected by the outcome of the preliminary hearing. "MHI does not expect any interruption in its business while the commissioners review the initial determination," says the company.
The battle seems likely to continue. Fights over intellectual property are a common way of trying to keep a rival locked out of important markets. General Electric has a history of aggressively defending its wind technology patents and is thought to license the rights to its patents to competitors for as much as $15,000 to $25,000 a megawatt, indicating that the clash with Mitsubishi over its intellectual property is potentially worth hundreds of millions of dollars. Upping the ante is the ITC, a forum that is broadly viewed as having a US focus.
The ruling in favour of GE by the ITC, an independent federal agency which investigates unfair trade practices, was unexpected. In a complex opinion issued earlier, ITC staff said that Mitsubishi was not infringing GE's intellectual property rights (Windpower Monthly, June 2009). Although the staff opinion carries no more weight than that of either of the contenders in the case, observers saw it as highly significant.
The two allegedly violated patents are the 039 patent, originally from 1992, which covers GE's variable speed technology and which expires in 2011, and patent 985, which is for GE's "low voltage ride through technology" (LVRT). Both are widely viewed as such common and basic parts of modern wind turbine operation that the outcome of the patent fight is being watched closely in the wind industry worldwide.
Furthermore, GE, in its initial request for an investigation back in February, had also accused Mitsubishi and its US subsidiaries of infringing a third patent, the 221 patent, which also apparently covers LVRT technology. But the judge found that GE did not use that patent - and thus there was no violation of Section 337 of the Tariff Act of 1930.
In the seven-day ITC trial that took place in May, GE's patent lawyer, Scott Breedlove, claimed that GE's variable-speed technology was such a breakthrough, it "brought wind energy into the mainstream." He also said that GE has the right to protect its intellectual property. GE entered the commercial wind turbine business as recently as 2002, long after variable speed operation was common in wind turbines.
Lawyers for Mitsubishi argued that GE's variable speed patent was wrongly issued in the first place because "prior art" existed. Mitsubishi also contended that GE's patents were no longer relevant. "Today's wind turbines use different technology" than covered by the GE patents, argued Mitsubishi's lawyer, Roger Taylor. GE "is forced to twist and contort the meaning" of its patents to prove infringement, he said.
During the trial, lawyers for Mitsubishi additionally argued that GE engaged in "inequitable conduct" regarding its LVRT patent, a charge that if successful could eventually lead to the patent in question being unenforcable. GE declines to comment on the allegation.
The GE-Mitsubishi dispute has raised bitter memories in the wind industry. A similar battle in the 1990s between Kenetech Wind Power, at that time the US's and one of the world's largest wind turbine suppliers, and Germany's Enercon, resulted in the ITC banning Enercon variable speed turbines from North America, a precedent-setting ban still in existence. Enercon had in part based its defence on the existence of "prior art," an argument supported by many in the industry to this day. The variable speed patent has not been challenged through the ITC until now.
Rather than go head-to-head with the US patent owners as the patent changed hands over time, overseas competitors have gone to considerable and costly lengths to redesign their turbines for the US market.
Vestas introduced its patented "Opti-slip" control technology in the V80 turbines imported into the US - instead of using the variable speed technology that it employs on the same turbine model in Europe. German DeWind technology was not introduced to America until after development of a technological fix, the Voith WinDrive, which avoided contravening the GE patent. The fix (page 94) may come into its own with the purchase of the rights to the DeWind technology by Daewoo Heavy Industries.
Experts admit that the existence of the US patent has either led to wind turbines being imported into the country that do not have the advanced operating capabilities they could have, or has required the purchase of a licence from GE so that the advantages of full variable speed operation could be maintained. An experienced independent wind consultant has even suggested that wind technology development has been set back by a full ten years because of disputes over the 039 patent and the need for other companies to circumnavigate GE's patented technology.
GE declines to comment on whether it is open to discussing the licensing of its patent rights for variable speed and low voltage ride through technology with MHI.
For a full account of the history of the 15-year patent battle over wind turbine technology search the word "patent" in our online article archive: www.windpower-monthly.com