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Why JinkoSolar Shares Plunged 9% Yesterday

What happened

Shares of JinkoSolar Holding (NYSE: JKS) fell as much as 12.5% in trading Wednesday after news of a lawsuit broke. The stock ended the session down 9.2%.

So what

Hanwha Q-Cells (NASDAQ: HQCL) has filed a lawsuit against JinkoSolar in the "US ITC, US District Court of Delaware, and Germany's regional Dusseldorf court," according to a press release from JinkoSolar. At dispute is whether JinkoSolar allegedly infringed on Hanwha Q-Cell's patents.

Roof with solar panels on it.
Roof with solar panels on it.

Image source: Getty Images.

JinkoSolar management said they think the lawsuit is "without technical or legal merit" and plans to fight in court. But that process could take many years to play out. For now, the company doesn't think the lawsuit will interrupt operations or sales in any way.

Now what

Patent disputes can be a long and drawn-out process, with companies arguing over minute details of manufacturing. We don't know how the courts will rule, but it's unlikely JinkoSolar will be significantly disrupted by this lawsuit. For investors, it's something to keep an eye on, but I wouldn't jump ship just because a competitor has filed a lawsuit. The market's reaction seems to be a little overblown given how little we'll know about the merits of this lawsuit for months.

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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