Shares of JinkoSolar Holding (NYSE:JKS) fell as much as 12.5% in trading Wednesday after news of a lawsuit broke. The stock ended the session down 9.2%.
Hanwha Q-Cells (NASDAQ:HQCL) has filed a lawsuit against JinkoSolar in the "US ITC, US District Court of Delaware, and Germany's regional Dusseldorf court," according to a press release from JinkoSolar. At dispute is whether JinkoSolar allegedly infringed on Hanwha Q-Cell's patents.
JinkoSolar management said they think the lawsuit is "without technical or legal merit" and plans to fight in court. But that process could take many years to play out. For now, the company doesn't think the lawsuit will interrupt operations or sales in any way.
Patent disputes can be a long and drawn-out process, with companies arguing over minute details of manufacturing. We don't know how the courts will rule, but it's unlikely JinkoSolar will be significantly disrupted by this lawsuit. For investors, it's something to keep an eye on, but I wouldn't jump ship just because a competitor has filed a lawsuit. The market's reaction seems to be a little overblown given how little we'll know about the merits of this lawsuit for months.