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Nippon Steel sues Toyota, China's Baoshan over patent infringement

Steelmaker also asks Tokyo court to block Toyota from selling EVs

Nippon Steel has asked a Tokyo court to block Toyota from building and selling electric vehicles in Japan. (Source photos by Reuters and AP)

TOKYO -- Nippon Steel is seeking a court injunction to stop Toyota Motor from producing electric vehicles, in a patent infringement suit against the carmaker and a Chinese steelmaker.

The Japanese company said on Thursday that it has filed a lawsuit against Toyota and Baoshan Iron & Steel, a subsidiary of China's state-run China Baowu Steel Group. It accuses the two companies of infringing Nippon Steel patents that cover nonoriented electrical steel sheet, which is used in electric vehicle motors.

The legal move brings into the open a rare intellectual property dispute between a Japanese steelmaker and one of its top customers.

The steelmaker is seeking 20 billion yen ($176 million) from each and has also filed a petition for a preliminary injunction before the Tokyo District Court prohibiting Toyota from manufacturing and selling such electric cars.

"Nippon Steel is taking these legal actions to protect its intellectual property rights on the alleged products," it said.

Nippon Steel says that a patent on highly functional steel sheet called a nonoriented electrical steel sheet has been infringed.

A motor can be rotated with less power by adjusting the composition and thickness of the steel.

Nippon Steel says Baoshan supplies Toyota with products that violate Nippon Steel's patents, such as those covering the composition of steel materials, and uses them in its electric cars sold in Japan.

The steelmaker also says it has held discussions with the two companies but has failed to reach a resolution.

The use of electrical steel sheet was the subject of a previous lawsuit. In 2012, Nippon Steel filed a lawsuit against South Korea's Posco, accusing the company of illegally acquiring production technology for electrical steel sheet. The two companies later settled.

Toyota on Thursday issued a statement saying the matter "should be discussed among material manufacturers" and that it is "extremely regrettable" that Toyota was sued.

"We have confirmed with the material manufacturer that there are no patent infringements," the statement says, "and prior to concluding the dealings with the material manufacturer, we have also confirmed with the manufacturer that there are no infringements of other companies' patents, including the electrical steel sheet."

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