The End of the Solar Patent Wars: A Possible Resolution
By Liu Canbang, Securities Times
Since the beginning of this year, the solar industry has witnessed a surge in patent litigation. Leading companies such as JinkoSolar, LONGi Green Energy, Trina Solar, and Canadian Solar have been engaged in mutual legal attacks. According to sources involved in the cases, many of these lawsuits are currently under court review, with parties awaiting verdicts. The solar industry is facing a challenging economic environment, and the previous neglect of patent issues has resulted in rapid technological diffusion and intensified homogeneous competition. Experts suggest that, drawing from historical cases, the likelihood of a resolution to the current patent conflicts is high.
Another point of focus within the industry is whether these patent litigations can help clear the excess production capacity. Opinions on this matter vary. Some believe that while patent lawsuits may provide compensation to one party, they will not effectively eliminate excess capacity. Others argue that changes in supply and demand dynamics may accelerate industry consolidation through strengthened patent protections, particularly in overseas markets that prioritize patent enforcement.
1. The Patent Warfare Unfolds
The legal disputes between JinkoSolar and LONGi Green Energy mark the opening chapter of this year’s patent wars in the solar sector. In early January, JinkoSolar filed a lawsuit against LONGi Green Energy in the Nanchang Intermediate People’s Court, demanding that the latter immediately cease infringement of relevant invention patents and compensate for economic losses. The plaintiff is the Shangrao Xinyuan Yuedong Technology Development Co., Ltd., which is wholly owned by JinkoSolar, and the case pertains to a dispute over the infringement of invention patent rights. JinkoSolar expressed a preference for achieving mutual benefits through patent licensing and paid usage, but firmly opposes the unauthorized use of its patents.
Following this, LONGi Green Energy countered with a lawsuit in Texas, USA, claiming patent infringement by JinkoSolar related to TOPCon technology, and sought a court order to prevent Jinko from selling the disputed products in the United States while also demanding compensation for damages. Additionally, in February, LONGi Green Energy filed another patent infringement lawsuit against Jinko in the Jinan Intermediate People’s Court, accusing Jinko of infringing LONGi’s patented technology.
Besides the dispute between Jinko and LONGi, Trina Solar and Canadian Solar have also become embroiled in their own patent litigation. In a February announcement, Trina Solar stated that it holds the legitimate patent rights for the “solar cell module” and “solar cell and its manufacturing method.” Trina asserts that the photovoltaic components manufactured, promised for sale, and sold by Canadian Solar fall within the protective scope of these patents. Consequently, Trina is seeking compensation of 1.058 billion yuan from Canadian Solar for the damages incurred due to the infringement of its two invention patents, along with reasonable legal costs. In response, Canadian Solar claimed to possess strong evidence demonstrating the invalidity of these two patents and asserted that its products and processes do not infringe upon them. An industry insider commented, “The solar technologies, whether P-type PERC or N-type TOPCon and HJT, originated from European and American companies over a decade ago; Chinese firms merely scaled them up.”
The source indicated that the origin of these patent lawsuits could be traced back to JinkoSolar’s strategy to transition its battery technology to N-type by acquiring a patent portfolio from South Korean company LG Solar, which includes over 300 patents, some of which were originally developed by LG and others transferred from European companies exiting the solar business. After acquiring these patents, Jinko also transferred some to JA Solar and Trina, leading to this series of patent disputes among these three companies.
“The patents Trina used for its lawsuit may have changed hands several times,” stated a source close to Canadian Solar. Although legally permissible, suing other companies based on purchased patents can hinder the development of original technologies, representing a “buy-and-sue” mentality. “The core driving force in any industry comes from original technology; using patents to block or stifle the development of other firms is certainly detrimental to industry growth,” the source added.
However, representatives from Trina Solar explained that their initial intention was to negotiate a licensing agreement with Canadian Solar. The situation escalated when customs identified potential patent infringements in Canadian Solar’s products. Trina hoped to resolve the issue through negotiation, but Canadian Solar did not respond, prompting Trina to file a lawsuit in the United States. “In China, we only filed a lawsuit after Canadian Solar challenged the validity of our patents and denied infringement. Their claims of non-infringement are merely unilateral judgments; we will await the court’s decision.”
2. High Likelihood of Settlement
It is noteworthy that JinkoSolar is expanding its litigation efforts against LONGi Green Energy. On March 11, recent case information from the European Unified Patent Court indicated that JinkoSolar has filed a lawsuit against LONGi and its distributors in Europe, accusing them of infringing European patent EP4372829, titled “Solar Cells and Their Manufacturing Methods and Photovoltaic Modules.” Since December of last year, Jinko has pursued legal action against LONGi in various countries, including courts in Suzhou, Nanchang, Australia, and Tokyo. Importantly, this European patent is owned by Jinko and is not part of the TOPCon patents acquired from LG.
Industry insiders speculate that Jinko may pursue further legal action in Germany, given that this technology is related to corresponding patents in Germany. An interesting aspect of this situation is that patent litigations are occurring simultaneously in multiple countries. An industry source explained that patent lawsuit rulings are only binding within the jurisdiction of the litigating country, necessitating individual lawsuits in each market. However, they also noted that due to the complexity of battery technology processes, asserting patent ownership over specific manufacturing techniques for a single battery can be challenging. Currently, there is limited public information on the progress of these lawsuits, with involved companies generally stating that litigation is ongoing or under review, although some have indicated that further legal actions may be forthcoming.
During discussions with a company representative, they emphasized that the core issue of these lawsuits revolves around TOPCon technology patents, which are currently a primary type of photovoltaic product globally. “Many companies believe that TOPCon will be the mainstream product in the next 3-5 years, and the actual damages caused by patent infringement to TOPCon companies are significant.” According to data from industry organization InfoLink, the total shipment volume of the top ten global module manufacturers reached approximately 502 GW last year, with PERC products accounting for 23%, and N-type TOPCon components making up 74%. Regarding LONGi’s counterclaims against Jinko, some industry insiders perceive this as more of a strategic posture, noting that the core TOPCon patents are held by Jinko, JA Solar, and Trina, with LONGi having minimal shipments in the U.S. over the past two years.
Sources close to Jinko reported that the company’s shipments in the U.S. have not been affected by patent issues, and there is an internal belief that no TOPCon patent infringement has occurred. Recently, LONGi’s President, Li Zhengguo, mentioned that the company will not pursue the TOPCon technology route in the U.S. market due to the complex patent landscape in this field. “LONGi’s business in the U.S. will continue to focus on PERC, and the next steps for development are not yet fully determined.” He also expressed strong confidence in the counterclaims against existing lawsuits.
It is worth noting that industry rumors suggest that one of Jinko’s motivations for suing LONGi is to achieve cross-licensing of BC patents; however, this has been denied by sources close to Jinko, who labeled it as “nonsense.” As for the direction of this round of patent wars, insiders shared their perspectives. “Similar to previous patent litigations by Hanwha against Chinese firms for PERC technology, the likelihood of preserving evidence and asserting rights after actual damages have occurred is higher.” The source noted that based on historical cases, damage compensation tends to be less common, with settlements being more frequent. An anonymous industry insider believes that the possibility of a resolution is high, suggesting that the outcome may either be inconclusive or result in one party receiving compensation for patent usage. “Compensation would merely reflect the cost of acquiring the patent. As long as the industry emerges from its difficulties, no one will expend energy on this matter any longer.”
3. Clearing Excess Capacity
“After a year of price wars, there are no winners, and discussing patents seems a more sophisticated approach,” stated an industry insider. As they noted, the 2024 performance forecasts indicate that the solar industry is a significant area of loss. Aiko Solar expects a loss of 4.75 billion to 5.85 billion yuan in 2024, Trina Solar anticipates a loss of 3.455 billion yuan, TCL Zhonghuan projects a loss of 8.2 billion to 8.9 billion yuan, and JA Solar expects a loss of 4.5 billion to 5.2 billion yuan. Additionally, Tongwei Co. and LONGi Green Energy have also reported significant losses. Although JinkoSolar has managed to achieve a positive net profit, its non-recurring net profit has recorded losses.
Currently, the solar industry is undertaking self-regulatory measures to control output from the supply side. The purpose of these patent litigations is to attempt to manage supply constraints. Statistical data indicates that the number of patent applications in China’s solar sector has consistently increased, with a year-on-year growth of approximately 14% projected for 2024, accounting for over 55% of global applications. At the same time, there has been a marked rise in patent infringement lawsuits in the solar field, with many leading companies actively seeking legal avenues to protect their innovations and safeguard intellectual property rights. On the policy front, the “Regulatory Conditions for the Photovoltaic Manufacturing Industry (2024 Edition)” includes new requirements such as “products developed and produced must comply with intellectual property protection laws and must not have been subject to infringement rulings by patent enforcement agencies in the last three years.”
Wang Bohua, honorary chairman of the China Photovoltaic Industry Association, suggested that companies should accelerate the enhancement of patent quality and cultivate a number of competitive core patents. He emphasized the need to further raise awareness regarding intellectual property protection and foster an industry environment that respects innovation and intellectual property rights, while also advocating for the active use of various methods to safeguard their interests. However, industry opinions on the effectiveness of patent litigation remain divided. “Leading manufacturers have significantly exceeded global demand in terms of quality capacity, and no company can differentiate itself based on product performance, cost, or brand. While patent litigation may yield some financial compensation, it will not achieve capacity elimination,” said one industry insider.
This source further pointed out that in the context of severe excess in quality capacity, only by leading firms reducing their production rates and refraining from accepting orders below cost can the overall supply and demand reach equilibrium and allow prices to stabilize and escape the trap of vicious competition. “Patent protection and the construction of an intellectual property system are certainly important, but they are directed at unique techniques. In the development history of crystalline silicon photovoltaics, the shift away from thin-film technology is attributed to the sharing and cooperation of crystalline silicon industrialization technologies, rather than patent protection for thin-film technology.”
Nevertheless, the source provided a different perspective, suggesting that during the industry’s rapid growth over the past two years, new capacities were absorbed by increasing demand, and rapid technological iterations benefitted from a temporary advantage. As the focus on rights protection increased, everyone hopes that strengthening patent protections will hasten industry consolidation. They further noted that while clearing out or eliminating second- and third-tier companies cannot rely solely on patents, it is still an effective measure, particularly in overseas markets where clients place greater importance on patent protections, potentially curtailing excessive market competition.
