for several months, lithium battery upstream and downstream litigation.

power battery, Ningde era (SZ:300750) and Zhongchuang Xinhang (HK:03931)/Zhuhai Guanyu (SH:688772) start to fight; Lithium battery diaphragm, Enjie shares (SZ:002812) and Jinli shares (IPO underway); Lithium battery electrolyte, tianci materials (SZ002709) and Jinshi resources (SH603505) start to fight.

Take the latest Tianci Material v. Jinshi Resources infringement of trade secrets as an example. Let's not talk about the final result. Some of the information disclosed in it, combined with the operation of the two companies, has a lot to say.

first of all, let's talk about Chen chuncai (defendant 1). he was originally the deputy general manager of Jiujiang tianci (plaintiff 2), a subsidiary of tianci materials (plaintiff 1). the announcement issued by tianci said:

During his work in Jiujiang Tianci, Chen Chuncai fully understood the technical secret scheme of lithium hexafluorophosphate (LiPF6) involved in the case and was responsible for the production guidance of this technology.

on March 23, 2022, Jinshi resources (defendant 2) applied for a patent "a preparation method of phosphorus pentafluoride and its use" (PS: phosphorus pentafluoride is one of the core materials for manufacturing lithium hexafluorophosphate). the technical route disclosed in the patent is substantially similar to the technical route of phosphorus pentafluoride mastered by Chen chuncai in the plaintiff.

According to the appraisal report issued by the Guangdong Provincial Intellectual Property Protection Center, Jiujiang Tianci's work instruction records the technical solutions of the above patents.

Jiangshan Jinshi (defendant 3), a subsidiary of Jinshi resources, published an "environmental impact report on the project with an annual output of 15000 tons of lithium hexafluorophosphate" in November 2022 ".

Combined with the above information, Tianci believes that the defendant violated his own technical secrets. Again, I don't judge the final result here. Simply speaking, how much commercial interest is behind Chen Chuncai's job-hopping.

first of all, lithium hexafluorophosphate is the core of the electrolyte. due to its high technical barriers and complex process, it is a great challenge to the new production capacity. it takes a long period from project construction to the production of qualified products-this means that it is difficult to accomplish things without people like Chen chuncai who are knowledgeable and have extremely high industrial experience, especially this project is the first time that Jinshi has entered the core material track.

If Jinshi Resources 15000 tons of lithium hexafluorophosphate project is completed, how much benefit will it be? It is worth mentioning that 15000 tons of lithium hexafluorophosphate is only a part (Jinshi and Zhejiang Jiangshan Economic Development Zone Management Committee signed the "Project Investment Agreement" in October 2021), not counting the 10000 tons of lithium hexafluorophosphate and lithium bisfluorosulfonimide in the third phase.

Figure: Jinshi's "Project Investment Agreement", source: Everbright Securities

according to Baichuan yingfu data, the average domestic market price of lithium hexafluorophosphate on August 11, 2023 was 126000 yuan/ton, only 15000 tons of lithium hexafluorophosphate: once mass production is likely to bring 1.9 billion yuan related income to Jinshi, close to "rebuilding" the two Jinshi resources (its revenue in 2022 is 1.05 billion yuan).

that is to say, Chen chuncai's job-hopping may be a technical job-hopping worth 1.9 billion yuan. Looking back at heaven-sent materials, technology can be said to be the foundation of their lives.

in December 2007, after being brokered by the us chemical technology company, tianci materials, Dr. NovisSmith and the us chemical technology company signed the "LiPF6 manufacturing technology license agreement". the company obtained written data such as lithium hexafluorophosphate production procedures and PID process flow chart with control points. Dr.NovisSmith exclusively licenses Tianci Materials to own the technology patent rights and technology ownership of the lithium hexafluorophosphate manufacturing technology in Asia for a period of up to 15 years.

After that, Tianci Materials improved the authorized technical secrets to maintain the advancement and wide applicability of the technology, and brought huge economic benefits to the company.

Today, the market share of Tianci in China's electrolyte market is as high as 36%, which is the so-called "huge economic benefit". The most direct logic of technology and huge economic benefits is that better technology brings lower costs and higher gross margins-the gross margin of Tianci battery materials is 38.6 percent in 2022 and the gross margin of new Zeus battery electrolyte is 26.1 percent. In industries close to raw materials, it is strange that the gross profit margin advantage of 12.5 pct is not huge.

Having said that, with the expiration of Dr.'s NovisSmith 15-year exclusive lithium hexafluorophosphate license and the "fluctuation" of technicians, can Tianci Materials continue to lead in the increasingly important technology battlefield?

About the "fluctuation" of Tianci material technicians:

1) Chen Chuncai need not say much.

2) Xu Sanshan (Ren Shaohua, Zhou Shunwu, Tao Xingfa, Xu Sanshan and Chen Chuncai, one of the two core technical personnel strongly related to the electrolyte industry introduced by the original Tianci restructuring, has voluntarily requested to resign as deputy general manager and serve as vice chairman and member of the strategy committee of the company on October 31, 2022.

Figure: new shareholders disclosed in Tianci prospectus, source: prospectus

3) then ma meipeng, who started to serve as deputy general manager of the company in November 2022, resigned at the end of July this year for personal reasons.

Figure: Ma Meipeng's resume, source: Sina Finance

4) The number of technical personnel in the company changes strangely. The company has 961 technicians in 2021 and only 117 in 2022 (annual report data)-may be a statistical error or a clerical error? Looking at the proportion of R & D personnel and its proportion, in 2022, Tianci has 487 R & D personnel, 107 more than the previous year (up 28.16), but the proportion is only 8.11, down 1.34 pct from the previous year, and the proportion of R & D personnel is even less-which partly reflects how much the company attaches importance to R & D.

not to mention that half of Huawei's people are research and development, compared with peers-Xinzhoubang had 823 research and development in the same period, accounting for 22%, an increase of 3.48 pct. Looking at the research and development cost rate of Q1 this year, the rate of heaven-sent materials is 3.2, and that of new Zeus is 8%.

Figure: Tianci R & D Personnel and Percentage, Source: 2022 Earnings

there is nothing wrong with tianci materials safeguarding their rights and interests through litigation, but from a longer-term perspective: the frequent patent technology lawsuits upstream and downstream of lithium batteries represent that the industry has bid farewell to the rash and entered the era of patent technology as the core competitive element, and more emphasis on technology is the core of the everlasting foundation.

this article comes from wechat public number "know productivity" (ID:zhichanli), author: yun ke ge ding, editor: ge ding, 36 krypton is authorized to publish.