Escalating Dispute with LG Chem
The dispute between LG Chem and SK Innovation, which was triggered by LG Chem’s legal action against SK Innovation for "infringing its secondary battery trade secrets," is escalating.
While LG Chem's claim is that SK Innovation infringed on business secrets by pulling out LG Chem employees, SK Innovation suspects that LG Chem intentionally raises the issue to pass on the responsibility for the departure of its employees to its rival and gain an upper hand in overseas order competition.
"We have decided not to sit idly by and take a frontal response to issues raised by our competitor," said SK Innovation in a statement on May 3. "If our competitor continues to raise groundless issues, we will respond strongly, including through legal actions."
LG Chem disclosed to the media on April 30 that it had filed lawsuits with U.S. courts against SK Innovation, asserting that its trade secrets related to electric vehicle batteries have been leaked to SK Innovation through its former employees hired by its competitor.
At the time, SK Innovation said in a statement, "We have hired employees through a transparent open recruitment procedure. We will explain it in the process of court trial.”
LG Chem's offensive did not stop. "If it is acceptable for a late company to easily utilize its competitors' trade secrets without investing in technology development, no company will make bold investments for the future," it said in an additional statement on May 2.
Even LG Group, the holding company of LG Chem, is reported to be drumming up support from the media for its subsidiary, raising concerns over the possible escalation of the dispute to the nation`s third- and fourth-largest conglomerates, SK Group and LG Group.
SK Innovation's second statement was aimed at responding to LG Chem's continuing offensive.
"We were refraining from countering LG Chem’s claims as we thought that it would be unhelpful to each other and disrespectful to the people. But we cannot help but respond because the other side lost its temper and launched an offensive," an official at SK Innovation said.
SK Innovation argues that it does not need LG Chem’s trade secrets, even if the competitor officially offers to provide them to it, because it already has secured the world's best technology by investing massively in R&D, and furthermore, because of the difference in technology and production methods with LG Chem.
SK Innovation also says that it has recruited former LG Chem employees through normal hiring procedures, and that there is no reason to pull out workers from a competitor to obtain its technology.
"According to former LG Chem employees, a large number of officials have left LG Chem due to poor treatment. Among them, only 76 have joined SK Innovation," a SK Innovation official said. "Most of former LG Chem employees who joined SK Innovation were rank-and-file workers, with only very few being high-ranking officials. If we were thinking of taking out LG Chem’s technology, we would not have pulled out rank-and-file employees."
SK Innovation suspects that LG Chem is blaming SK Innovation for the departure of its employees due to its poor treatment. An SK Innovation official said that employees from LG Chem posted messages on the company's blind advising LG Chem to “improve treatment of its employees if it has time to file lawsuits against a competitor.”
SK Innovation says it has not been much concerned about the outcome of the lawsuits, as there were no problems with the hiring process and no breach of business secrets. The problem is that just the fact that the company is sued can adversely affect its efforts to win orders. This is because clients tend to hesitate to use products from a company that faces technology-related lawsuits.
SK Innovation also suspects that LG Chem’s move is aimed at hindering SK Innovation's order-taking efforts.
"If our competitors continue to attack us, we have no choice but to respond strongly because of trust issues with our customers," the SK Innovation official said. "We hope LG Chem will regain its reason and return to competition in good faith."