Chinese rare earth industry alliance to fight Japanese monopoly  

(ECNS) -- A Chinese rare-earth magnet industrial alliance formed by seven firms has vowed to break a trade barrier created by a Japanese company through a patent monopoly, the Guangdong-based 21st Century Business Herald reported.

Neodymium-iron-boron alloy magnets are used in motors, audio speakers, headphones, cordless tools, computer hard drives and even golf ball markers. The biggest patent holder of neodymium magnets is Hitachi Metals.

It has obtained over 600 patents globally to create the trade barrier, according to Sun Baoyu, head of the coalition and president of Shenyang General Magnetic Co.

China produces 70,000 to 80,000 tons of the magnets annually, with half of the products used domestically. Only a quarter of the magnet manufacturers have patent licenses enabling the products to be sold off-shore. Sun said that without a patent license, foreign clients will not buy their products.

Hitachi Metals' action has severely affected China's rare earth industry, especially for exports of China's downstream rare earth products, Sun added.

Companies producing the magnets in China have sought ways to resolve the issue. Seven firms, including Shenyang General Magnetic Co., formed an industrial alliance in 2012, and they have applied for hundreds of patents in China and the US.

"We respect intellectual property rights," Sun said, but a former investigation showed that Hitachi's patent will expire after July 8, 2014, which means Chinese firms will export their products to the US without patent license.

Sun and the other six firms will attend an international rare earth industry expo in Japan on July 23. "If Hitachi Metals forbids us from exporting on the excuse of patent infringement, we are prepared to respond with a lawsuit," he said.

"Once we win, we can compete fairly with Japanese firms in the global market," said Zhao Hongliang, head of another firm in the alliance.

In 2012, Hitachi Metals and Hitachi Metals North Carolina asked the US International Trade Commission (ITC) to stop the sales of such products that did not have US patent licenses.

Three Chinese companies entered into settlement agreements with Hitachi in May by paying money to gain the patent license. Another five rare earth companies had gained patent licenses from Hitachi Metals before that.