Based on an unfavorable decision from the Japanese patent office Board of Appeals, Modine Manufacturing Co. (Racine, WI) will no longer receive royalty payments in Japan related to its parallel-flow (PF) technology. Since July of 2000, Modine has been receiving royalty payments from Japanese competitors related to its PF patents, which expire in 2006. Over the last 12 months, royalties from Japanese companies have accounted for approximately $2.8 million of pretax income. The company is reviewing its options regarding an appeal of the ruling.
Over the last 10 years, Modine has been defending its PF technology in Japan. Modine had estimated a one-time royalty payment of approximately $29.9 million to cover past infringements if the validity of its PF patent in Japan was confirmed. Since this ruling does not effect Modine's royalty income outside of Japan, Modine will continue to collect royalties for PF products produced in Europe and the US where, to date, its patents have been upheld.