The fiscal cliff deal approved by the U.S. Senate and House earlier this week included an extension of the Production Tax Credit (PTC), but it’s not what Mitsubishi needs to consider opening its new but unused manufacturing plant at Chaffee Crossing.
Mitsubishi announced in April 2012 it would “mothball” its $100 million Fort Smith wind-turbine assembly plant that was expected to employ 400 at full production. Construction was completed in early 2012, but the facility never opened for production.
Officials with Mitsubishi Heavy Industries said the demand for wind turbines in North America had stagnated, with new contracts difficult to obtain. The company is also in a legal battle with General Electric related to patent claims on wind-turbine equipment.
Wind energy officials and lobbying groups have said extension of the PTC is needed to keep the wind energy sector financially viable.
The (PTC) establishes an income tax credit of 2.2 cents per kilowatt hour of energy produced by utility-scale wind turbines. The credit was first established in 1992, and was set to expire at the end of 2012. The fiscal cliff deal pushed the expiration date to January 2014.
“Unless the PTC is phased out rather than ended abruptly, there will be much less wind installed in America. Pulling the plug on the incentive will cost much of the $15.5 billion a year in private investment in U.S. wind farms, and the taxes they pay,” noted a statement from the American Wind Energy Association. “That doesn’t include billions of dollars of savings to electric consumers from lower-price, fixed-cost wind energy.”
But Mitsubishi officials are sticking to their previous comments that a PTC extension does not factor into when or if they will operate the newly constructed Fort Smith plant.
“Mitsubishi Power Systems Americas, Inc. will reconsider the future of its Fort Smith nacelle assembly plant when market conditions for wind turbines improve in the U.S., and the GE litigation is successfully resolved,” Sonia Williams said in a Wednesday (Jan. 3) statement to The City Wire.
The litigation and dispute with GE is spread across several courts and federal agencies, with near-term resolution appearing unlikely.
Williams provided the following statement as an update on key pending legal issues.
• ITC Action and Federal Circuit Appeal
GE initiated the litigation in 2008 when it filed a complaint with the US International Trade Commission (“ITC”), alleging that Mitsubishi’s 2.4MW variable speed wind turbine infringed three GE patents. The ITC found no violation by Mitsubishi. In particular, the ITC found Mitsubishi did not infringe two of the patents and that GE did not have a domestic industry for the third patent. GE appealed.
During the appeal, one of the patents expired and was dropped from the case as moot. The Federal Circuit affirmed the ITC’s decision that Mitsubishi did not infringe one of the other asserted patents. An ITC ruling on a third patent (the ‘985 patent) was found to be based on a mistaken interpretation of the patent language and remanded to the ITC for further review. In particular, the Federal Circuit reversed the ITC’s decision that GE did not have a domestic industry for the ‘985 patent.
In a separate action, the U.S. Patent & Trademark Office (PTO) reexamined the validity of the ‘985 patent. The PTO’s Central Reexamination Unit (CRU) rejected several of GE’s claims found in the ‘985 patent including those claims that GE alleges were infringed by Mitsubishi. The PTO relied on prior art that existed when GE filed its patent application.
• GE Filed a Patent Infringement Lawsuit in Corpus Christi
After GE filed the ITC action, it filed a patent infringement action in the U.S. District Court Southern District of Texas alleging infringement of the same three patents at issue before the ITC. That suit has been stayed pending the outcome of the ITC action.
• GE Filed a Patent Infringement Lawsuit in Dallas
GE filed a lawsuit against Mitsubishi in the U.S. District Court Northern District of Texas (Dallas) alleging infringement of two GE patents (the ‘055 and ‘705 patents) not mentioned in the ITC case.
The Court granted Mitsubishi summary judgment as to one of those patents, GE’s ‘055 patent, finding that the patent was invalid in view of GE’s own prior art. The Court also noted that the PTO had reexamined the ‘055 patent and found all claims of the patent to be invalid.
During phase one of the Dallas trial, the jury rendered a verdict in favor of GE finding that Mitsubishi infringed Claim 1 of the ‘705 patent, and awarded about $170 million in damages.
During the second phase of trial, Mitsubishi is seeking to prove that GE obtained certain claims of the ‘705 patent through inequitable conduct by failing to disclose material prior art known to GE at the time it filed its patent application with the PTO. Phase two of the trial is being tried before the judge. Trial began on October 3, 2012 and the parties finished presenting evidence to the Court on October 11. However, the Court requested further briefing on several issues. Closing arguments will occur after further briefing is completed.
In a separate action, the PTO’s CRU re-examined the claims of the ‘705 patent and found certain claims of the ‘705 patent that were subject to reexamination to be invalid. The PTO rejected the claims based on material prior art that GE failed to disclose when it filed its patent application with the PTO. The rejected claims included Claim 1, the same claim that the Dallas jury found was infringed by Mitsubishi during the first phase of the Dallas trial.
• Mitsubishi Filed an Antitrust Lawsuit in Arkansas
The antitrust lawsuit that Mitsubishi filed against GE in the U.S. District Court Western District of Arkansas has been stayed pending the outcome of GE’s patent infringement actions.
The City Wire Staff
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