"The strange tale of CATL's attempts to patent nature and its absent data marks a crisis unfolding, not unlike the nuclear meltdown depicted in the 1979 American disaster thriller, 'China Syndrome.'"
China is more relevant than ever before and should drive much of what Trump 2.0 does on patents and critical technologies such as EVs, batteries and communications, all crucial to America's economic and national security. This op-ed follows up on my coverage of then candidate Trump in 2016, which focused on his intersection of China and patents.
The Contemporary Amperex Technology Co., Limited (CATL) is a timely example. CATL, a Chinese state company dominant in EV batteries, has been called out by Senator Marco Rubio (R-FL) and the Select Committee on the Chinese Communist Party. They want the Department of defense (DOD) and Department of Homeland Security (DHS) to put CATL on a black list. Earlier this year, Rubio, Representative John Moolenaar (R-MI), Chair of the Select Committee, and other Members of Congress discovered CATL's exploitation of slave labor, including people whom CCP deems to be practicing the "wrong religion".
On November 20, the Senate Homeland Security & Governmental Affairs Committee will meet to debate and vote on H.R.8631, which prohibits the Secretary of Homeland Security (DHS) from procuring certain foreign-made batteries, including CATL. This is the bipartisan bill that passed the House floor in late September with strong statements from Democrats and Republicans urging Senate passage before the end of this year.
On November 21, the Senate Homeland Security & Governmental Affairs Committee hosts a "Threats to the Homeland" hearing featuring DHS Secretary Alejandro Nicolas Mayorkas, FBI Director Christopher Wray, and DNI's Acting Director for National Counterterrorism, Brett Holmgren.
The Senate Judiciary Committee also has a busy week involving China and the Patent Trial and Appeal Board (PTAB). On November 19, there is the "Big Hacks & Big Tech: China's Cybersecurity Threat" hearing in the Subcommittee on Privacy, Technology and the Law, which has been doing excellent work on AI issues, including China and intellectual property concerns. And then, on November 21, the Senate Judiciary Committee hosts its weekly Executive Business Meeting to once again attempt to debate and vote on pending nominations and bills, including S.2220, the PREVAIL Act, the PTAB reform legislation that has been churning in various forms for many years.
If technologies are on the White House's Critical and Emerging Technologies List and if China is dominating in 37 of the 44 technologies critical to America's national and economic security, then why should the PTAB call the shots? Why should courts defer to the PTAB, which has a thinner record, weaker evidence, no cross examination, a loopy experts policy that Congress did not include in the America Invents Act (AIA), and where there is no discovery? In the PTAB you really can't know who you are dealing with. All critical technology patents should be litigated in a real court with a judge and jury. The Supreme Court's recent decisions in Loper Bright and Jarkesy support this.
Last month, in response to a Notice of Proposed Rulemaking (NPRM) from the Bureau of Industry & Security (BIS) at the U.S. Department of Commerce, CATL's abuse of the patent system was discussed in great detail as part of a comment submitted by Injustice Pool LLC:
"It is worth noting that the average time from application to issuance is approximately two years. CATL, for example, has received more than 330 patents in less than 180 days from the date of application and 44 in less than 100 days. One example shows 43 days. These speeds are unheard of. This by itself is worthy of an investigation. A second level of concern, given that CATL has 1360 pending applications at the USPTO, is whether CATL is involved with what Senator Leahy identified: Chinese entities flooding the USPTO with applications but not paying once the patent issues."
This NPRM concerns EVs and their wireless battery management systems as rolling spyware. Think Huawei and TikTok, but on steroids! And why is a Chinese state-owned company that gets U.S. government subsidies from the Inflation Reduction Act getting such favorable treatment and crazy speedy patent grants at a time when Director Vidal's leadership of the U.S. Patent and Trademark Office (USPTO) has produced an increase in the backlog of unexamined applications?
And the relationship between BIS and the Alliance for Automotive Innovation and American car makers such as Ford and GM that work with CATL is troubling. These large incumbents don't want wireless battery management systems to be included in the proposed regulation. This is what makes the car rolling spyware for China. This includes allowing critical electronic components like wireless BMS to be manufactured by People's Republic of China (PRC) entities, leaving them exposed to hacking and other security threats. Why American car makers that have received so many bailouts are selling out America's security to China is alarming. Hopefully, the incoming Trump administration will revoke these late in the game moves by the outgoing Biden administration.
CATL is no stranger to controversy here in the United States or in China. Another Chinese state-owned battery company, China Aviation Lithium Battery (CALB) has called out CATL in a Post Grant Review (PGR) proceeding at the USPTO and in China's IP courts. CALB, for example, filed PGR2022-00008 against CATL's U.S. Patent No. 10,930,932 on November 23, 2021. The PTAB declined to institute on June 6, 2022.
CALB highlights the following problems in both the United States and China actions with CATL's patent.
First, the '923 patent appears to rely on suspect data claiming extraordinary battery cycle life. Battery cycle life is a widely used performance metric. Why the examiner did not call this out is a mystery. The examiner who issued the '923 patent to CATL has a very high issuance rate and is generally rated as an easy examiner.
Second, the '923 patent defines a term called OI to claim an inherent feature of battery electrodes using concepts that have been publicly discussed a decade before CATL filed their patent application. CATL claims low "Orientation Index" (OI) values, as evidence of a breakthrough randomized arrangement of crystallites within lithium nickel manganese cobalt (NMC) electrodes, which are an essential component of cost-effective batteries. But here's the catch: most of these NMC materials, by nature, cannot be preferentially aligned, so low OI is an inherent feature of electrodes made from these materials. Claiming low OI NMC electrodes is like claiming to invent dice that don't always roll sixes.
Third, the Chinese court found that CATL did not show the requisite lab or testing data to back up the science asserted in the claims.
A close reading of the transcript from the floor debate of H.R.8631 reveals a hesitancy of Democrats not wanting to slow down the progress of the IRA, especially during a heated election year. CATL is a supplier to many automakers around the world, including Ford and GM here in America. CATL's batteries (backed by China's dominance of the supply chain for EVs and batteries and massive subsidies to drive domination of these key technologies) may be so cheap that Ford and GM have no choice but to use them, otherwise the EVs made in America by Americans will be too expensive to compete with super cheap and perhaps better EVs made in China, even if they are imported into America with super high tariffs. For the Biden Administration, going after CATL threatened their policy goals on clean energy and climate change to get more Americans more quickly into EVs by making EVs cheap and more affordable to more kinds of Americans.
Plus, it is an open secret that President Biden repeatedly snubbed Elon Musk and TESLA on EV policies the past four years. This leads to the impression that the help the Biden Administration provided to firms like CATL may have been its way of undermining Musk.
Now that Vidal has publicly announced that she is departing by mid-December and will be rejoining global law firm Winston & Strawn as of December 16, her words, under oath, to Senator Chuck Grassley (R-IA) during her Senate confirmation process will haunt her. Grassley asked this question for the record to Vidal: "Based on your extensive experience litigating patent cases, what are the biggest issues currently with the patent system?" Here is Vidal's answer: "We need to curb opportunistic behavior, from within the U.S. and from other countries, that does not benefit our country nor promote innovation."
This can be spun both ways of course, but now that Vidal is out and Biden is out, and now that Trump is in, along with many China hawks, including those like Rubio who are explicitly and openly against CATL, this merits further investigation. The fact that Rubio has gone after Huawei and other Chinese companies for abusing patents to attack Verizon makes this all the more relevant and timely for his Senate confirmation to be Secretary of State.
The strange tale of CATL's attempts to patent nature and its absent data marks a crisis unfolding, not unlike the nuclear meltdown depicted in the 1979 American disaster thriller, "China Syndrome," except this time the meltdown has already happened, and it came from China into the United States.
It's up to Trump 2.0 and Congress to investigate CATL's patent claims and stop spending IRA and other U.S. money on cheaters like CATL. Also, American car makers like Ford and GM that receive federal monies should stop using CATL. Bipartisan U.S. policy already blocks the transfer of key technology to China; why should U.S. dollars be used to bring cheating China tech into the United States? An energy future that depends on deceit is no future at all.