Phosphorus Reduction

China’s Patent Re-Examination Board of SIPO Rules in Favor of Neo Performance Materials in Invalidating Patent Claims of Rhodia Operations

Neo to seek permission from the Court to appeal UK Business and Property Courts Decision and Will Continue to Develop Innovative Pollution Control Technologies with its Customers

TORONTO, Canada, April 23, 2018 – Neo Performance Materials Inc. and Zibo Jiahua Advanced Material Resources Co., Ltd (collectively “Neo”, “the Company”) (TSX:NEO), a global leader in the innovation and manufacturing of rare earth and rare metal-based functional materials, is pleased to report that the Patent Reexamination Board (“PRB”) of the State Intellectual Property Office of China (“SIPO”) has ruled in favour of Neo by invalidating all claims associated with patent ZL 03817110.4, held by Rhodia Operations S.A.S, an affiliate of Brussels-based Solvay (“Rhodia“).  In light of the favourable ruling by the PRB, Neo intends to seek a stay of Rhodia’s pending lawsuit alleging infringement of patent ZL 03817110.4 before the Shandong Zibo Intermediate People’s Court.

The invalidated patent relates to certain vehicle emissions catalyst products, which Neo produces to help vehicle manufacturers and consumers reduce emissions from vehicle exhaust systems.  The demand in China for vehicle catalyst products is large and continues to grow significantly.

The patent invalidation by the PRB, which is subject to Rhodia’s right of appeal, is one of five challenges filed by Neo before the PRB on automotive vehicle catalyst patents claimed by Rhodia and Daiichi Kigenso Kagaku Kogyo Co. (“DKKK”).  Neo also is seeking revocation of European Patent 1527018, which is the European equivalent to Chinese Patent ZL 03817110.4.  A decision by the European Patent Office on Neo’s challenge to 1527018 is expected later this year.

In response to the PRB ruling, Neo’s President and CEO, Geoff Bedford issued the following statement:  “Neo is very pleased with the PRB’s decision, and it further reinforces the SIPO’s ongoing commitment to both uphold valid intellectual property rights and to strike down patent claims that are invalid.  Neo is proud to serve our customers in the increasingly important Chinese market and around the world with our innovative rare-earth-based vehicle emissions catalyst products, which are helping vehicle manufacturers in China and elsewhere meet increasingly stringent air pollution standards.”

In a separate development on April 23, the UK Business and Property Courts upheld a claim of patent infringement against Neo by Anan Kasei Co., Ltd and Rhodia pertaining to European Patent 1435338.   Neo intends to seek permission from the Court to appeal the decision.  UK sales of Neo products affected by the lawsuit have been relatively insignificant, and the Company expects no future material impacts to sales as a result of the decision.  In the near term, Neo expects to continue to sell its products into patent-free jurisdictions and will continue to work with customers to reallocate their demand accordingly.  The Company will continue to defend its auto catalyst products, and its customers’ ability to access those products, in other jurisdictions.  Most important, Neo will continue to develop unique, next-generation products, often in partnership with its customers, that can help to avoid alleged patent infringement in the future.

“We very much appreciate the continuing support we are receiving from our customers, who clearly want us in the market and who know that having multiple suppliers of these materials is a benefit not only to them, but also to their customers, end-use consumers, and our global environment,” added Mr. Bedford.

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