European Commission Investigating Alleged Patent Ambush By Honeywell And Dupont

California – The European Commission is opening an investigation against Dupont Co. and Honeywell International Inc. into whether they concealed patents and patent applications necessary to develop automobile refrigerant, known as Solstice 1234yf, during the development of standards pertaining to that technology.

Honeywell and Dupont jointly developed an automobile refrigerant for air conditioning systems for all new cars sold in the European Union (EU) beginning in 2017, replacing the previously-used ozone-depleting chlorofluorocarbons (CFCs) refrigerant. As the sole providers of this refrigerant, EU antitrust regulators are investigating whether Honeywell and Dupont entered into anti-competitive arrangements over the joint development, licensing, and production of the refrigerant.

Further, EU regulators are also investigating Honeywell after receiving complaints of deceptive conduct with regards to Honeywell’s business practices. Honeywell has been accused of not disclosing patents and patent applications to the Society of Automobile Engineers when developing the standards for the automobile refrigerant and failing to grant licenses on fair and reasonable terms.

Complainants allege Honeywell has committed a patent ambush which occurs when a company withholds relevant information to a standard-setting organization creating a standard in favor of the withholding company. Any company wishing to license the productwould have to pay a substantial royalty, effectively creating a barrier to entry into the market.

French company Arkema filed a complaint with EU regulators in April, 2011 arguing that Honeywell and Dupont did not engage in fair and reasonable negotiations for licensing the automobile refrigerant. Arkema said in a statement, “Arkema will continue to fully collaborate to the investigation which purpose of which is to clarify the legal environement related to Honeywell andDupont`s patents.”

EU Competition [Antitrust] Commissioner Joaquin Almunia stated, he wanted to make sure that intellectual property rights “are used to reward inventions and motivate innovation and not as tools to foreclose access for expansion in markets.”

Honeywell’s spokesperson Peter Dalpe, maintains that the company’s actions were compliant with the law and that “the Commission will conclude that we acted in full compliance with European Union competition rules.” Dupont also contends that its actions complied with the law and that they will cooperate with the investigation.

If found in violation of European antitrust laws, Honeywell and Dupont could be fined up to 10 percent of yearly sales or required to change business practices that harm competition.