What? Steelmaker AK Steel (NYSE:AKS) can start making its Ultralume automotive steel product now that the federal U.S. Court of Appeals rebuffed a petition by rival ArcelorMittal (NYSE:MT) to rehear a patent infringement case.
So what? The two steel companies have been battling since 2009, when Arcelor said certain hot-rolled and cold-rolled coil sheet products produced by AK and two other steelmakers -- Russian steel producer Severstal and Japan's Nisshin Steel -- infringed on a patent central to its production of Usibor steel in the United States. Usibor is used in automotive components when high strength is required, such as in car frames.
A jury subsequently found that the inventor of the process had published an article about it in 1997, a year before the patent was issued, and combined with older French patents and specifications issued by Ford, Arcelor's patent was rendered invalid because it was obvious.
Arcelor appealed the finding, and an appeals court ruled that a new trial was needed to determine whether the patent was invalid because lower court instructions prevented the jury from properly considering ArcelorMittal’s evidence. However, the appeals court affirmed the jury's finding that AK Steel didn't infringe on the patent, which is what Arcelor was asking the court to reconsider.
Now what? The decision will allow AK to start selling its Ultralume product, which has been accepted for use by numerous automotive OEMs. The automotive market accounted for 45% of AK's $5.9 billion in net sales in 2012, up from 36% the year before .
With light-duty auto sales recovering to a seasonally adjusted rate of 15.3 million vehicles, AK Steel ought to be able to recover its sales growth itself.