This week an announcement came that Aspen Aerogels has won the initial determination in a US International Trade Commission (ITC) investigation. IDTechEx has been closely following the aerogel industry and discuss here the reasons behind this case, the initial result, and the implications of this announcement.
This case began in May 2016 with Aspen Aerogel accusing 2 Asian manufacturers of infringing several patents. This complaint was filed both in the US and in Germany. The complaint stated that The Asian manufacturers' activities were was "aimed at diverting customers away from Aspen and hurting Aspen's sales". This involved "seeking out and courting" Aspen's customers and directing them towards their cheaper products that are "made, produced, or processed by a claim in the Aspen patent" before being imported to the US. The full filing of the complaint can be seen here. The complaint includes both a call for a cease and desist order, but also a wider general exclusion order. The latter was requested because of how the accused could circumvent any exclusion against only the named parties by using downstream companies, Internet business-to-business marketplaces or through name changes (which Aspen Aerogels believed has already happened in the past).
The companies accused are Guangdong Alison Hi-Tech Co. and Nano Tech Co. The first is accused of infringing 4 patents and the second 5. The products in question are silica aerogel blankets which have aerogel particles embedded within their fibrous material. The blankets have diverse properties, the most relevant of which is the significant thermal insulation potential, and a highly complex manufacturing process. More information on the process, the properties, and more can be seen in the IDTechEx Research report on the market.
The initial determination has stated the Asian companies have not proven that the claims are invalid. A final determination is expected by January 29th 2018, but it will not be a surprise to have an outcome that sees many (if not all) of Aspen Aerogels demands met. The result of the German investigation is also expected in 2018.
Aspen Aerogels is the market leaders in this field and have provided a financial outlook for 2017 that states they will spend "between $3.9 million and $4.2 million of costs and expenses" associated with patent enforcement actions. This is not insignificant for a company that has a revenue outlook for 2017 between $104 and $112 million. A victorious result will give confidence in their position, which is important as they continue to look towards building a second larger manufacturing plant. This growth is a necessity because, as can be seen in the image below, revenues have stagnated and profits are still not materialising. As for their competitors, this result will be a large set-back in establishing a position in the currently most lucrative markets. The next steps that Guangdong Alison Hi-Tech Co. and Nano Tech Co. make in using their products and utilising the infrastructure already in place will be watched closely.
Historical revenue and net income for Aspen Aerogel (*2017 outlook given from Q2 results)
In a previous article, IDTechEx identified the need for the aerogel industry to diversify away from their core businesses and there are positive signs from Aspen Aerogels that this is happening. 3 advancements will be highlighted here:
1. July 2017 saw the launch of Pyrogel HPS, a thin low thermally conductive material and is specifically made for the higher-end of the temperature range - up to 650 °C. This product is targeted for power generation facilities.
2. Aspen Aerogel expanded their strategic partnership with BASF in 2016. This partnership looks to use their Spaceloft products within the more regulated buildings of the European market and Aspen Aerogels are anticipating greater sales in 2018 within this sector. Spaceloft importantly has an A2 fire rating, which is even more relevant because of the Grenfell Tower tragedy in London which saw 68 people die due to a fire with the insulative cladding used partially to blame.
3. Aspen Aerogel products are being used in PrimaLoft Gold for outdoor apparel, which launched earlier this year. This will be used in many well-known brands such as in Helly Hansen jackets for lifepockets for mobile phones and is already used by LL Bean as insoles for outdoor boots.
IDTechEx has been extensively studying the aerogel market and continue to give the most up to date and accurate research in this field. For more information on all the different types and forms of aerogels, as well as company profiles of the main players, market forecasts, cost projections and more then see the market research report Aerogels 2017-2027: Technologies, Markets and Players.