According to Sun, eight Chinese rare earth companies have gained patent licenses from Hitachi Metals. However, there are about 200 companies producing such magnets in China. Of those, five have annual production capacities of 3,000 metric tons, and about 20 have capacities of 1,000 tons to 3,000 tons.

Hitachi Metals is dominant in the rare earth sector, with more than 100 patents in the United States, about 300 in China and 600 in Japan.

This means a large portion of Chinese products containing the magnets cannot be exported because they don't have patent licenses, said Sun.

And Hitachi Metals will not sell its patent rights, he said.

Gao Yunhu, chief of the Rare Earth Office under the Ministry of Industry and Information Technology, said the government will provide assistance to the Chinese companies if asked.

At present, China produces about 80,000 tons of the magnets each year, and about a quarter of the products have patent licenses enabling them to be sold abroad.

About 30,000 to 40,000 tons of such products are used domestically.

Without a patent license, "our foreign clients will not buy our products", Sun said.

"We respect the intellectual property rights. But what Hitachi Metals has done is to set up trade barriers," he said.

So far, each member company of the alliance has paid $1.5 million to cover possible costs of the lawsuits. Chinese and US legal teams will act on behalf of the Chinese companies in the courts of the two countries.