Seven domestic rare earth companies have formed an industrial alliance to sue Japan's Hitachi Metals for its patent monopoly in the United States.

Sun Baoyu, chairman of the board of Shenyang General Magnetic Co Ltd and leader of the alliance, said the companies want to end the longtime monopoly held by the Japanese firm in various international markets.

The alliance has already kick-started the process by hiring lawyers to ensure that their production process does not infringe on the Japanese company's patent rights. In addition, Sun and his alliance plan to prove the invalidity of three patents owned by Hitachi Metals Ltd, as part of its efforts to break the stereotype among potential customers.

The Japanese firm had the key intellectual property patent rights for neodymium iron boron untill July 8. Hitachi Metals holds more than 600 neodymium iron boron magnet patents and has authorized only eight Chinese companies with their 149 patents.

Hitachi's own material patent in the United States has expired, Sun said, adding that Chinese companies that had development and processing patents that are different from those of the Japanese company should be allowed to sell their products in the US markets.

China has about 200 neodymium iron boron magnet producers, with five companies having annual production capacity of more than 3,000 metric tons and 20 with capacity of between 1,000 and 3000 metric tons.

If the Japanese firm's patents are held valid, then domestic companies can sell their products only within China. Sun said the production of neodymium iron boron magnet products has remained stagnant at about 80,000 metric tons, of which, one-fourth is patented and the rest is either sold domestically or pending approval of patents in overseas markets.

"Very few international customers would be interested in our products because of the influence of Hitachi's patents," said Sun. Chinese producers have to compete in the low-end market where many have been suffering from losses and production suspensions.

The alliance has been sell its products since July and received interest from many international customers, Sun said.

Neodymium iron boron magnets are widely used in high-technology industries, from new-energy automobiles to mobile phones. It is estimated that an iPhone has at least 10 components where neodymium iron boron magnets are used. China already accounts for 90 percent of the global rare earth supplies. Rare earths are a group of minerals that have a wide range of uses in high-tech sectors such as defense and renewable energy.

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