I. Case Background and Nippon Steel’s Technical Strength

Steel is a fundamental industry for the national economy. Nippon Steel, as a global steel giant, continues to hold top-tier comprehensive strength and technological advantages worldwide. According to recent reports, Nippon Steel has spent USD 14.1 billion to acquire U.S. Steel, positioning itself to become the world’s second-largest steel company, behind only China Baowu Group. Notably, it also participated in the construction of Baosteel Group during China’s early reform and opening-up period.

In the field of high-end coated steel, Nippon Steel has accumulated a century of technical expertise. Its flagship product — Zn-Al-Mg-Si coated steel — boasts corrosion resistance four times that of conventional galvanized steel sheets, dominating the high-end market. The company has applied for numerous patents in this field, dating back to at least the 1980s, with these patents serving as both a technological moat and a core measure of international competitiveness.

Coated steel is produced by covering base steel with metallic or alloy layers of zinc, aluminum, magnesium, and other elements, significantly enhancing corrosion resistance, wear resistance, and decorative properties. It has found wide application in photovoltaics, construction, automotive manufacturing, and home appliances.

As global competition intensified, Nippon Steel initiated patent infringement lawsuits around the world, targeting competitors such as Baosteel, POSCO, S.A. Sagittario (Italy), and Tubacex (Spain), and has already won several cases.

II. Origin of the Case

(1) Initiation of the Dispute

Our client, Gansu JISCO Hongxing Iron & Steel Co., Ltd., is a major domestic steel manufacturer. In 2010, it commissioned two galvanizing lines. Its new generation of Zn-Al-Mg coated steel products, with unique self-healing properties at cut edges and superior surface hardness, earned recognition as “top-tier products” in the carbon steel sector.

Starting in 2016, without any domestic precedent to follow, JISCO independently developed its Zn-Al-Mg alloy coated steel (SCS product) and successfully produced China’s first coil of this type, breaking through foreign technical blockades and driving the localization of high corrosion-resistant steel. JISCO also participated in the formulation of multiple international and domestic standards for Zn-Al-Mg products. Over subsequent years, JISCO continued to innovate, solving problems such as surface black spots and achieving full coverage across cold-rolled, hot-rolled, thick, and thin plates. These products are widely used in photovoltaic supports, 5G base stations (as substitutes for stainless steel/aluminum alloys), highway guardrails, and rural housing. JISCO also led the development of the national standard Continuous Hot-Dip Zn-Al-Mg Alloy Coated Steel Sheets and Strips.

As domestic producers improved product quality and production levels, Nippon Steel’s flagship products faced increasingly fierce competition. After analyzing JISCO’s SCS products, Nippon Steel alleged potential infringement of its patented corrosion-resistant coated steel technology. Having notarized the purchase of relevant samples, Nippon Steel filed a lawsuit in 2019 before the Shanghai Intellectual Property Court, accusing JISCO and Shanghai Wanhong Company of patent infringement. Nippon Steel claimed damages of RMB 40 million and additional reasonable expenses of RMB 2 million.

(2) Initial Communication and Preparations

Once retained, our team quickly engaged with JISCO’s technical staff to fully understand the R&D process and technical details of the SCS products. We conducted in-depth research on the asserted patents, extensively reviewed literature, and developed a comprehensive litigation and administrative defense strategy, combining civil litigation defense with patent invalidation proceedings to maximize the chances of success.

The asserted patent, filed via PCT in December 1999, had been granted in China and other jurisdictions, covering product composition (mainly Zn-Al-Mg-Si). It contained multiple hierarchical dependent claims, with specifications spanning nearly a hundred pages and disclosing hundreds of embodiments. With technical experts’ support, we launched comprehensive prior art searches and, while defending in civil court, also filed a patent invalidation petition with CNIPA.

III. Core Legal Issues

(1) Composition Testing and Forensics

Determining whether the accused products fell within the patent’s scope hinged on analyzing coating composition. The accused samples contained dozens of elements, making microelement detection difficult with conventional methods.

Our team argued that JISCO deliberately added rare-earth elements during production. However, due to the active chemical nature of rare earths, most volatilized at high temperatures during coating, leaving only trace residues. Detecting these traces was crucial for the defense, yet industry standards lacked mature methodologies or precedents.

We vigorously contested the choice of testing institutions, advocating for labs with detection limits down to parts per million (PPM) or even parts per billion (PPB). The court accepted our arguments and appointed such an institution. Over nearly a year, forensic analysis ultimately confirmed trace rare-earth elements, even though over 80% had been lost during production. This specialized testing cost nearly RMB 2 million, far exceeding typical analysis expenses.

(2) Legal Interpretation of Closed Claims

Civil proceedings intertwined with the invalidation process. CNIPA initially upheld the patent, but this was overturned in first-instance administrative proceedings, and later affirmed invalid by the Supreme People’s Court in second-instance review.

Throughout this process, Nippon Steel clarified and narrowed its claims to maintain stability. Leveraging these clarifications, our team argued in civil litigation that key claims were “closed claims” and thus excluded JISCO’s products. Both the first- and second-instance courts accepted our arguments, referencing invalidation decisions and the patent’s own description, thereby confirming the scope of protection and rejecting Nippon Steel’s broader interpretation.

(3) Trace Elements: Functional Component or Impurity?

The presence of trace rare-earth elements raised a second core issue: whether they should be deemed impurities falling within the scope of claim 4.

Nippon Steel argued that rare-earth elements are ubiquitous in nature and that detected traces were merely incidental impurities. We countered with comprehensive process documentation showing JISCO intentionally added controlled amounts of rare-earth elements as functional components. We also cited numerous patents from Nippon Steel, Baosteel, and others confirming rare-earths as functional additives in coated steel, not impurities.

Expert testimony further confirmed that, given industry practices and standards, the detected rare-earths were deliberately added. Thus, the accused products’ technical features were not identical or equivalent to the asserted claims.

Both the first- and second-instance courts accepted our arguments, rejecting Nippon Steel’s claims.

IV. Case Significance

This case exemplifies the dual collaboration of technical and legal expertise. By leveraging favorable forensic results and legal interpretation, our team successfully blocked an international giant’s attempt to stifle domestic innovation, while also providing valuable precedent for China’s judicial practice in similar disputes.

Lawyer Profiles

Li Weitao
Lawyer, Landing Law Offices
Practice Areas: Intellectual property litigation and non-litigation
Email: weitao.li@landinglawyer.com
Tel: +86 13370007537

Huang Wushuang
Professor, Director of Intellectual Property Research Center, East China University of Political Science and Law
Practice Areas: Intellectual property
Email: 1517@ecupl.edu.cn