Court ruling strengthens American Superconductor patent estate in HTS Technology

WESTBOROUGH, Mass., Sept. 4, 2002 — American Superconductor Corp., a global supplier of superconductor products and power electronic converters for the electric power industry, Wednesday announced that the U.S. District Court in Boston has confirmed the breadth of a fundamental composition of matter patent, owned by the Massachusetts Institute of Technology and exclusively licensed by AMSC, related to high temperature superconductor (HTS) wires.

At the heart of the court’s ruling is the breadth of the patent, which applies to any composite consisting of an HTS material in intimate contact with a noble metal, such as silver. The company and its competitors are employing such composites both in current manufactured HTS wire architectures and in new HTS wire architectures under development.

The inventors of the patent are Dr. Gregory J. Yurek, formerly a professor of materials science and engineering at MIT and now Chairman and CEO of AMSC, and Dr. John Vander Sande, a professor of materials science and engineering at MIT and a Director of AMSC. Both are founders of AMSC. The patent issued in 1993 in the U.S. and expires in 2010.

It was recently reviewed by the U.S. Patent Office and the U.S. District Court after the Patent Office declared an interference between the Yurek-Vander Sande patent and another U.S. patent application. The scope of the Yurek-Vander Sande patent has now been reconfirmed in the process, and the declared interference has been closed.

“This patent is a fundamental composition of matter patent — it applies to all composite HTS wires that utilize a noble metal such as silver in intimate contact with the superconductor material,” said Yurek. “It doesn’t matter how you make the HTS wire and what its final architecture is — as long as a composite of HTS material and noble metal is used, this patent covers it.”

Yurek noted that its current HTS wire product is a composite of very fine filaments of HTS material, which is a ceramic compound, in a matrix of silver or silver alloy, which is called a multi-filamentary composite wire architecture. “This patent covers not only multi-filamentary HTS wire; it also covers HTS coated conductor composite wires, which we and others are developing,” said Yurek.

“Coated conductor composite wires consist basically of a coating of the HTS ceramic material on a normal metal substrate with a layer of noble metal on top of the HTS coating. This patent covers both of these composite HTS wire architectures.”

To view the multi-filamentary and coated conductor composite wire architectures see http://www.amsuper.com/wirefact.htm. To read the latest research results on coated conductor composite wire, see http://www.amsuper.com/webcopy/technicalpapers/190.pdf.

Growth of AMSC’s Patent Portfolio

AMSC also reported that its portfolio of wholly owned patents continued to grow at a significant rate. During the last two years, AMSC received 46 additional issued U.S. patents and an additional 20 issued foreign patents in the area of HTS technology. AMSC currently owns or jointly owns more than 350 patents and patents pending worldwide on HTS technology, one of the largest portfolios on HTS technology in the world.

It also has licenses to more than 190 patents and patents pending worldwide on HTS technology that are owned by others, including Toshiba Corporation.

“American Superconductor has been an HTS technology leader for 15 years,” said Yurek. “We have been at the edge of HTS, and our scientists and engineers have been aggressive and successful in inventing new ways to manufacture and utilize HTS wires. We have been equally aggressive in protecting these inventions with patents – a strategy we believe will pay off handsomely for our shareholders. We are continuing this tradition of invention, patent protection and licensing today in all areas of technology that we are pursuing.”

Toshiba’s HTS Wire Patent Portfolio AMSC also provided an update today regarding its non-exclusive, worldwide license of the HTS wire patent portfolio of Toshiba. The portfolio consists of 34 patents in the U.S., Europe, Japan and China on materials and methodologies for manufacturing HTS wires.

“The Toshiba HTS patent portfolio is an excellent complement to the AMSC portfolio,” commented Yurek. “We believe that licensing this portfolio at this time was the right strategic move for our company, which is in the process of penetrating markets for its HTS wire around the world.”

AMSC paid Toshiba an upfront license fee, the amount of which the companies did not disclose and which AMSC expensed in the quarter ended June 30, 2002. The upfront payment and running royalty rates are not considered material by AMSC.

AMSC Wire

The court ruling announced today further solidifies AMSC’s strong market position for HTS wire, which offers compelling advantages in applications such as utility generators, ship propulsion motors and electric power cables. Because AMSC wire conducts significantly more electricity, up to 140 times the electrical current of similar sized copper conductors, it is expected to change the generator and motor industries through major reductions in initial and operating costs, size and weight.

Similarly, HTS power cables are expected to benefit electrical transmission networks by opening up the power bandwidth of existing rights-of-way and alleviating grid congestion.

About American Superconductor

American Superconductor Corporation is a specialist in developing and manufacturing products using superconductor wires and power electronic converters for the electric power infrastructure. American Superconductor’s products, and those sold by electrical equipment manufacturers that incorporate its products, can dramatically increase the bandwidth and reliability of power delivery grids, reduce manufacturing and operating costs, and conserve resources used to produce electric power.

Founded in 1987, the company is headquartered in Westborough, Mass. For more information, visit http://www.amsuper.com.

SOURCE American Superconductor Corporation

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