Honeywell has filed a large number of patents in all major regions of the world. These patents are related to both the process for making HFO-1234yf as well as the use of HFO-1234yf for mobile air conditioning (MAC) and other applications. Some of these patents have already been issued and others have been filed but have not yet been issued. A listing of patents is available at Solstice Patent Listing.
Who is challenging the patents and on what basis?
There have been multiple challenges from both our competitors as well as auto OEM’s. They have challenged these patents based on a number of different arguments.
The EU Patent authority recently rejected the validity of one of your patents. Which patent, on what grounds, and what are the implications?
We have filed a number of patents in Europe and one was recently rejected based on a legal technicality. We have already appealed the decision and are confident that we will win the appeal.
Why don’t you license to other producers as you have done for R-410A, for example?
We have not ruled out the possibility of licensing some of our patents, but will only do so if the value we receive is appropriate. Innovation requires steady and significant financial investment to support the years of research and development that are required to bring successful new products to market. To reward and encourage innovation, intellectual property must be protected.
ACEA and its members take the view that Honeywell intentionally withheld its IP position on HFO-1234yf. What is your reaction?
We believe that this argument is baseless. We made it very clear on numerous occasions that Honeywell had applied for patents relating to this product. All of our patents and many of the applications can be easily found in public databases by anyone who searches this information. We also issued a press release at the time one of our European patents issued.
Following is a listing of the Honeywell patents under which certain limited rights are granted to purchasers of Honeywell’s Solstice yf refrigerant (HFO-1234yf). Such rights are limited in accordance with the terms of the product’s label license.
EP 1 716 216
There are antitrust inquiries in Europe, the United States and South Korea.
One of the allegations is that Honeywell is abusing its dominant position to extract unreasonably high prices for HFO-1234yf. What is your reaction?
This is not an allegation currently under investigation. Honeywell and DuPont each spent tens of millions of dollars to develop and commercialize HFO-1234yf, an innovative and new product. As is common, Honeywell and DuPont have secured IP protection for the fruits of these investments. Further, no one has made HFO-1234yf on a large commercial scale yet and it is significantly more complex and expensive to manufacture than the existing product, R-134a.
What do you charge for 1 kg of HFO-1234yf, and what are the production costs?
This information is competitively sensitive and confidential.
According to some, the dominant position is the result of a de facto standard mandated under EU law in combination with the IP position. What is your view?
There is no standard that requires the use of HFO-1234yf. The EU Directive, adopted in 2006, only requires a gradual phase-in of refrigerants for automotive air conditioning with a lower global warming potential (GWP) from 2011 to 2017. There are several competing alternatives that meet these requirements and our competitors continue to invest in alternative solutions. Many car manufacturers have selected HFO-1234yf because it offers what Honeywell believes to be the most cost-effective and efficient low GWP refrigerant for automotive air-conditioning.
In the United States, there is no mandate even for the use of a low GWP refrigerant in cars. However, in 2010, the U.S. government announced rules requiring that auto manufacturers meet certain new emissions and greenhouse gas requirements with their fleets. One of the many ways they can earn credits to meet these requirements is through use of a low GWP refrigerant in their automobiles. Several auto manufacturers have indicated that they believe use of a low GWP refrigerant is among the most cost effective ways of meeting such U.S. emissions and greenhouse gas requirements.
If the authorities take the view that Honeywell is violating antitrust rules, what will be the consequences for the price and the product availability?
We strongly believe that Honeywell’s highly innovative efforts to identify, develop, and commercialize HFO-1234yf are pro-competitive and will be found so by the investigating agencies.
Is there a risk of forced licensing?
Honeywell has at all times been clear that the use of HFO-1234yf is proprietary and is covered by valid Honeywell IP. There is no basis for forced licensing or any other remedy.
Would you rather settle and license others?
Honeywell believes that its actions are fully compliant with competition laws and sees no basis to do so.
There have been allegations that Honeywell negotiated in bad faith. Is that correct?
No. Honeywell always has been clear that HFO-1234yf is a proprietary, IP-protected product, and believes that auto manufacturers have selected HFO-1234yf because it is a cost-effective low GWP refrigerant. Honeywell is working closely with its very sophisticated OEM customers to meet their needs on a timely basis as the auto manufacturers adjust plans for new models and their use of HFO-1234yf. Our negotiations with customers have been straightforward and professional.
Honeywell consistently communicated with auto manufacturers that it would need their commitments to buy HFO-1234yf at least two years before a commercial scale plant could be built to meet industry demand. GM was the first auto manufacturer to sign a contract for HFO-1234yf in July 2010; other auto manufacturers took much longer to determine if and at what volume they might use the product. Thus, a delay in building plants, given such uncertain demand, is understandable. As with any entirely new, never-before-commercially-produced product, there also can be delays in manufacturing start-up. Moreover, regulatory approvals, in part because of competitors’ and others’ efforts initially to create some delay, also were pushed back in time.
How long do you expect the proceedings to last?
There are no specific timeframes for these inquiries. We are working with the Commissions to address their respective questions.