LG Chem has pulled off a victory in a lawsuit filed against SK Innovation regarding an infringement of its electric battery (EV) battery trade secrets. LG Chem and SK Innovation are expected to begin a settlement process in the near future.
On Feb. 14 (local time), the U.S. International Trade Commission (ITC) made a default judgment against SK Innovation in a lawsuit between LG Chem and SK Innovation over a breach of rechargeable battery trade secrets. Following the preliminary decision, the ITC will make a final decision on Oct. 5 without holding additional hearings that were scheduled for early March.
In April 2019, LG Chem filed a complaint against SK Innovation with the ITC and the Federal District Court of Delaware, the United States, claiming that the latter had taken out trade secrets about rechargeable batteries by hiring key personnel who worked at LG Chem. Later, in November of the same year, LG Chem requested a preliminary default judgment against SK Innovation, claiming that it had systematically and extensively destroyed relevant evidence in the litigation process and failed to implement forensic examinations ordered by the ITC. A final decision by the ITC will result in a U.S. ban on the import of SK Innovation's battery cells, modules, packs, and related parts and materials, which infringes on trade secrets about LG Chem's rechargeable batteries.
Accordingly, industry experts say that SK Innovation will seek out of court settlement with LG Chem before the final decision because in the worst-case scenario, it could give up its battery business in the United States. “LG Chem and SK Innovation are in competition in the battery business, but they are at the same time partners that should cooperate in the development of the industrial ecosystem,” SK Innovation said in a statement, leaving open the possibility of settling out of court.
"We will be active and sincere in the remaining litigation process, but the door for a dialogue is open," LG Chem said. Industry watchers say LG Chem also finds it burdensome to continue the lawsuit filed with the Federal District Court for more than two years. LG Chem is facing a growing criticism that only Chinese companies will benefit from the legal battle between the two EV battery leaders. LG Chem says that it will leave open the door for a dialogue with SK Innovation.
Industry analysts believe that the SK Innovation may decide to purchase the relevant patents from LG Chem to settle the dispute. They say the settlement amount, which includes patent purchases, will reach hundreds of billions of won. Earlier, LG Chem set SK Innovation’s apology, promise to prevent recurrence of similar cases and appropriate compensation as the preconditions for negotiations.
SK Innovation has decided to enter an objection process in the United States. In particular, the company will submit to the ITC a petition asking it to consider the impact of this lawsuit on the public interest of the United States. This means that SK Innovation will ask the ITU to consider SK Innovation’s investment in a 1.9-trillion-won plant under construction in Georgia, the United States and a second plant of a similar scale to be built in the United States. “The Donald Trump administration, who wants to expand its battery plant in the United States, may want to see a generous conclusion for SK innovation,” the Wall Street Journal (WSJ) said in December 2019, adding that the case may go to the USTR, which can exercise a veto.
The ITC's ruling, which will detail the grounds for the decision and instructions, will be released on Feb. 18. LG Chem asked the ITC to ban the import of SK Innovation's battery cells, modules, packs, and related parts and materials to the United States, but it is unclear whether this will be accepted. However, experts believe that the ITC is likely to maintain its decision against SK Innovation in the final decision scheduled for Oct. 5. Since 1996, in all cases of trade secret infringement proceedings at the ITC, early default judgments have been maintained in the final decisions.