[Expert Views] CATL and CALB Competing in the Power Battery Market &#8211; Patent Offenses and Defense War Tend to Be Harsh

Home / Market Insights [Expert Views] CATL and CALB Competing in the Power Battery Market – Patent Offenses and Defense War Tend to Be Harsh

[Expert Views] CATL and CALB Competing in the Power Battery Market – Patent Offenses and Defense War Tend to Be Harsh

Wispro

Published On 2022-06-23

By Alvyn Lin, Director of WISPRO Technology Consulting Corporation/ WISPRO International Patent & Trademark Office As a critical component of electric vehicles, batteries not only affect the endurance and performance of electric vehicles: they are also a key aspect of electric vehicles’ possible popularity in the future. With the rise of the electric vehicle industry, the global power battery field is also gradually moving towards a more mature stage where a hundred schools of thought compete in a rather fierce manner. Both Contemporary Amperex Technology Co. Limited (CATL) and China Aviation Lithium Electricity Technology Co., Ltd. (formerly known as China Aviation Lithium Battery Co., Ltd., or CALB) are China-based power battery manufacturers. Their batteries are mainly installed in electric vehicles and energy storage systems, with corresponding battery management systems provided as well. Based on data released by the China Automotive Power Battery Industry Innovation Alliance from January to April 2022, the total installed capacity of CATL vehicle power batteries in the Chinese market was 30.59 GWh, accounting for about 47.39%, ranking first among Chinese power battery manufacturers; BYD’s total installed capacity was 14.68 GWh, accounting for about 22.75%, ranking second; as for CALB’s total installed capacity, it reached 5.09 GWh, accounting for about 7.89%, ranking third. CALB’s total installed capacity of vehicle power batteries still lags behind those ones of CATL and BYD. However, the demand for vehicle power batteries remains high due to the continuous growth of the electric vehicle market. If CALB can take the lead by expanding its production, it would be a great opportunity for that company to obtain a more substantial market share.

Patent litigation goes ahead. CATL may gain the upper hand from litigation experience.

Without any doubt, CATL will not allow CALB to seize this strategic market easily. In July 2021, CATL filed a patent infringement lawsuit against CALB before the Fuzhou Intermediate People's Court, alleging that CALB's products infringed its patent rights related to battery technology, and asked CALB for damages amounting to CNY 185 million. CALB responded by submitting a request for patent invalidation before the China National Intellectual Property Administration. In May 2022, CATL further increased the requested damages amount up to CNY 510 million. So far, the patent offense and defense war between the two sides has gradually entered a white-hot stage. Although there is still no litigation outcome, past judicial data shows that CATL has accumulated remarkable experience and is coordinated by a professional team. Its response ability at court cannot be underestimated. For example, CATL filed a patent infringement lawsuit against Jiangsu TAFEL New Energy Technology Co., Ltd. and Dongguan TAFEL New Energy Technology Co., Ltd. (collectively referred to as TAFEL) before the Fujian Higher People's Court in January 2020, claiming CNY 120 million. CATL won the lawsuit in 2021, following which TAFEL is to compensate CATL for CNY 22.98 million.

CATL continues to strengthen its patent portfolio, and CALB needs to make a response prudently.

Based on data from Patentcloud, CATL has registered 3,625 valid patents as of May 31 this year, including 1,045 patents for invention and 2,541 patents for utility models. CATL has a considerable number of patents for invention and patents for utility models. There are five patents involved in this lawsuit, including those two patents for utility models that were at the heart of the lawsuit brought by CATL against TAFEL, i.e., "Top Cover Structure of Power Battery and Power Battery (CN204668368U)" and "Explosion-Proof Device (CN205231128U)". Three patents for invention are added to this current procedure, including "Component for Collecting Current and Battery (CN108258180A)", "Lithium Ion Battery (CN110010851B)" and "Positive Electrode Plate and Battery (CN108878892B)". By highlighting patents that have been successfully validated in past lawsuits and by adding new patents in order to strengthen its patent portfolio, CATL may have a certain destructive power in court and may even continue to consolidate its other portfolios. Therefore, CALB must adopt a prudent approach.

The outcome of patent war is not yet a foregone conclusion, and the commercial battle is coming soon.

CALB applied for listing on the Hong Kong Stock Exchange in March 2022, and plans to raise about USD 1.5 billion to prepare for operation strengthening and market expansion. However, the patent war initiated by CATL may add variables to CALB’s public listing. Although the litigation outcome is not yet a final conclusion to the dispute between both parties, CATL's nearly three-fold increase in damages claims might well have a major impact on the confidence of potential investors. In any case, it is certain that CATL will use legal means such as patent litigation to hit its opponent when it raises funds to delay and slow down the schedule of its market expansion, so that CATL may plan its follow-up response strategies and try to consolidate its industry leadership. As a major enterprise in the power battery industry in China and even in the world, CATL has launched a patent war against CALB, not only to protect its own product technology, but also as an ambitious business strategy. It is not uncommon to fight competitors in the same industry through patent litigation. As the party initiating litigation, CATL, with its technical, capital and patent capabilities, still has the opportunity to affect the other party's operations, slow down the original development plans of its opponent and even undermine customer trust, even at this stage where the outcome of the ongoing litigation is unclear. From CALB’s perspective, being the party accused of infringement, invalidating the opponent's patents is one of the standard countermeasures that can be used. However, if CALB obtains patents with excellent quality and value (including integrating its own patents or obtaining patents through transaction) to countercharge its opponent for infringement, such strategy could reverse the situation or serve as a bargaining chip for future negotiations with CATL. Thus, one may argue that in addition to protecting its own product technology, enterprises should also focus on patent applications so as to integrate them into a complete patent strategy by investigating the patent portfolio and product technology of their competitors. Such approach may not only reduce the risk of infringement for its own products, but it can also ensure that the freedom of operation is not threatened by competitors.

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