Black & Decker is sued over batteries

September 20, 2006|By Allison Connolly | Allison Connolly,Sun reporter

Black & Decker Corp. faces a patent-infringement suit over the batteries used in its new 36-volt line of DeWalt-brand power tools.

In the lawsuit, the University of Texas and its board of regents claim the lithium ion technology that powers Black & Decker's new cordless line of hammerdrills, circular saws and rotary hammers infringes on two patents held by the school.

The suit, filed Sept. 11 at the federal District Court in Dallas, asks the court to prevent Black & Decker from selling its 36-volt line with the batteries in question.

"Rechargeable lithium ion batteries are the world's next generation of electrical power sources, representing billions of dollars in potential sales," the plaintiffs said in the filing.

Lithium ion batteries power cell phones, cameras and laptops as well as hybrid electric cars.

The work behind the two patents at the center of the suit was largely done by John Goodenough, a University of Texas professor in the school's mechanical engineering department. He did not return a call yesterday seeking comment.

According to the lawsuit, Goodenough and his staff began researching lithium metal phosphate battery technology in 1994 and received two patents, in 1999 and 2003.

The school licensed its version of the technology exclusively to Hydro-Quebec, a Canadian utilities company in Montreal that also is a plaintiff.

Black & Decker's batteries were developed by Watertown, Mass.-based A123 Systems Inc., a Massachusetts Institute of Technology spinoff, and manufactured by China BAK Battery Inc. of Beijing. Both companies are named as co-defendants.

The suit contends that A123 "spiked" the school's patented technology with other metals including niobium, magnesium and manganese, and called the technology its own. The University of Texas and Hydro-Quebec are asking for a jury trial and seek unspecified damages, as well as reimbursement of court fees.

"We believe this lawsuit is without merit and will defend our position vigorously," said Keith Watson, spokesman for A123 Systems, in an e-mailed statement.

In April, A123 Systems filed a pre-emptive lawsuit against Hydro-Quebec, asking a judge to invalidate the two patents. A123 said in the filing that Hydro-Quebec had threatened to sue A123 if it began selling its batteries, and asked the court to "resolve the legal and factual questions raised by HQ and to afford relief from the uncertainty and controversy which HQ's accusations have precipitated."

No decision has been reached in that case.

Meanwhile, the DeWalt 36-volt line hit store shelves in June and is expected to gross $50 million in sales this year, Black & Decker Chief Financial Officer Michael D. Mangan said during a second-quarter conference call. He said the line had posted $20 million in sales during the second quarter, which ended June 30.

The filing of the lawsuits does not prevent Black & Decker from continuing to sell the 36-volt line, spokesman Roger A. Young said yesterday. "We do believe A123's position is correct, and we believe we will prevail in the litigation," Young said.

Several analysts reached yesterday said they were unaware of the suits. Bentley Offutt, who covers the stock for his Cockeysville-based investment research firm Offutt Securities Inc., said he isn't overly concerned about the suit.

"Historically, Black & Decker has done a good job defending itself in patent disputes," he said.

Black & Decker stock closed down 56 cents yesterday at $80.09 on the New York Stock Exchange.

allison.connolly@baltsun.com

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