Hitachi Metals' appeal over patent abuse dispute still awaits ruling of China's top court

The market-dominance abuse dispute between Japanese metal company Hitachi Metals and four Chinese magnetic-product manufacturers is still awaiting the ruling by the country’s top court, as part of the second-instance trial, MLex has learned.

Although the two sides have made efforts for a settlement, it’s understood that it has become quite difficult for them to reach a deal, due to several fundamental divergences.

In 2014, four Chinese companies lodged the antitrust lawsuit against Hitachi Metals, accusing the Japanese company of violating the Antimonopoly Law by abusing its market dominance in patent licensing to exclude and limit competition.

The four companies are Ningbo Ketian Magnet Co., Ningbo Permanent Magnetics Co., Ningbo Tongchuang Strong Magnet Material Co. and Ningbo Huahui Magnet Co.

Seven years later, the Ningbo Intermediate People’s Court handed down the first-instance trial ruling, ordering the Japanese company to end its monopolistic behavior, known as “refusal to trade,” and to pay part of the compensation requested by four Chinese downstream companies for their economic losses.

In the same year of 2021, China’s Supreme Court held a remote hearing after Hitachi Metals lodged an appeal.

During the hearing, the top court heard arguments about the definition of relevant markets and whether Hitachi Metals had a dominant position and then proceeded to engage in abusive behavior. The Supreme Court also heard challenges by Hitachi Metals over the legal liabilities set by the lower court and alleged procedural faults in the first-instance trial.

The case is the country’s first involving refusal of non-standard-essential patents.

Notably, the lower court adopted the essential-facility doctrine to analyze the case and affirmed that the relevant patents constituted an essential facility, although they weren’t standard-essential patents.

The top court's judges on the case include Zhu Li, deputy chief at China’s Intellectual Property Court of the Supreme People’s Court, according to the court’s website. Zhu is also a member of the Expert Advisory Group at the State Council's Antimonopoly Commission.

Hitachi Metals, which changed its name to Proterial in January 2023, has not yet responded to MLex’s request for comment.

-Analysis by Yang Yue