Chinese manufacturers defended against eveready: Hogan and Hartson win decision for battery company against industry giant.

The International Trade Commission announced recently that it terminated an investigation brought by Eveready against nine Chinese battery manufacturers, signaling a huge victory for them over industry giant Eveready. In the ITC action, Eveready sought to prohibit the importation of alkaline batteries into the United States based on alleged patent infringement of the "zero mercury added" ingredients within the batteries. The Commission held that Eveready's U.S. patent is invalid for indefiniteness. This determination effectively reverses the Initial Determination of Administrative Law Judge Charles Bullock that respondents, principally Chinese battery manufacturers, infringed the Eveready patent, and his recommendation that the Commission issue a general exclusion order, barring importation of the allegedly infringing batteries.

The decision, won by lawyers from Hogan & Hartson, allows the manufacturers to continue to export batteries by the shipload to the United States, the world's largest consumer of batteries. As the largest supplier of non-rechargeable or primary batteries, China provides more than 33 percent of the global battery output. Worth over $4 billion, the battery industry has been identified as a key development area by the central government and since 1999 has had an annual growth rate of 10 percent. "To try and establish infringement, Eveready argued a very broad interpretation of the patent," says William E. Thomson Jr., a litigation partner who was involved with the case.

Eveready previously had sued battery industry competitors Duracell, Rayovac and Matsushita in separate federal court actions charging them with infringing the patent. Each of the lawsuits was settled. According to Eveready itself, "many of the largest battery manufacturers in the world paid significant sums of money to Eveready to take a license" for the patent. These licensees included Duracell, Rayovac, Matsushita, FDK, Gold Peak and Hitachi Maxell, among others. Duracell recently acquired a majority stake in Fujian Nanping Nanfu Battery Co., one of the respondents in the ITC 337 investigation. Rayovac is a majority equity holder in Ningbo Baowang Battery Co., Ltd., another of the 337 respondents.

"We are pleased that our clients prevailed on an issue where larger rivals of Eveready cut deals," says Mr. Thomson. "It is significant as a sign that Chinese companies can receive a fair hearing within the U.S. system."

"Last year six cases were filed in the ITC against Chinese companies; so far this year, there are already ten cases," says Wei-Ning Yang, another of the Hogan & Hartson lawyers representing the China battery manufacturers. "This victory will give Chinese companies more of a chance of selling to U.S. markets."

Hogan & Hartson's Washington D.C. office teamed with the Los Angeles office on the case. In Los Angeles Mr. Thomson and partner Wei-Ning Yang served as counsel on behalf of nine Chinese battery companies, through the China Battery Industry Association. Los Angeles attorneys Olga Berson, Yoncha Kundupolglu, Manuel Nelson, and Minda Schecter also assisted in the litigation. In Washington, Steve Hollman served as counsel, together with Susan Cook, Robert Wolinsky, and Jessica Ellsworth.

Information for this article was provided by Hogan & Harmon.