The United States International Trade Commission (ITC) today announced a verdict in the legal dispute between two South Korean EV battery manufacturers: LG Chem and SK Innovation.
The case began in the spring of 2019, when LG Chem sued SK Innovation for alleged theft of trade secrets. SK Innovation defends itself, but in the end, ITC sided with LG Chem.
According to the announcement, The SK Innovation EV battery business (import, domestic production and sale of batteries for electric vehicles) is banned in the United States for 10 years. However, in order not to harm its customers (who hoped to avoid a “catastrophic interruption of supply”), ITC allows the continuation of the Ford F-150 Electric program to Four years, and the Volkswagen ID.4 (MEB) program for 2 years, to give them time to find new suppliers.
In other words, it looks like SK Innovation will be able to complete its two battery plants (under construction) in Georgia to supply Ford and Volkswagen. But will that complete them?
Well, we’re not sure what the options are for the next few years until the ban ends. Perhaps producing batteries for other markets / other applications or renting / selling the plant to another manufacturer just to limit losses? It is difficult to imagine that the new factories would be idle for 8 and 6 years.
Either way, there aren’t many battery suppliers that are ready to supply the necessary battery volume to get the race started. LG Energy Solution from LG Chem, CATL, Panasonic or maybe others have their chance.
We still don’t know SK Innovation’s response, but LG Energy Solution issued a press release announcing a bold victory:
“LG Energy Solution takes precedence over SK’s innovation in the final decision on trade secret theft at the International Trade Commission
Seoul, South Korea – (BUSINESS WIRE) – LG Energy Solution, the global leader in bag-type lithium-ion battery technology, prevailed on Wednesday over SK Innovation and SK Battery America in a billion-dollar trade secret dispute US dollars International Trade Commission. Today’s Commission decision blocks the import, domestic production and sale of SK Innovation batteries for electric vehicles that illegally depend on LG Energy Solution’s trade secrets.
“SKI’s total disregard for our notices and intellectual property rights gave us no choice but to open this case and we are grateful to the International Trade Commission for protecting our significant economic innovations and investments in the United States,” said Jong Hyun Kim, CEO of LG Energy Solution. “As a global leader and innovator in technology, we will further strengthen the protection of intellectual property rights in the future.”
In April 2019, LG Chem and its U.S.-based manufacturing unit filed a complaint with the International Trade Commission accusing SK Innovation and SK Battery America (“SKI”) of trade secret theft by hiring dozens of engineers , manufacturing and essential business service teams. In December 2020, LG Chem split its electric battery division into a new wholly owned subsidiary, LG Energy Solution, which now has the disputed trade secrets.
Citing a record that proved that SKI extensively and intentionally destroyed the evidence of its theft of trade secrets, an administrative law judge issued an initial determination that imposed a default judgment in favor of LG Chem in February 2020. That decision, which concluded that SKI acted in bad faith to hinder the investigation of the court and the administration of justice, was confirmed today by the entire Commission.
The Commission’s final determination provides two significant solutions to SKI’s theft, including the imposition of a ten-year exclusion order to stop any import of batteries, battery cells, battery modules, battery packs. The Commission also imposed a supplementary cease and desist order to prevent SKI from manufacturing or selling any of these products in the USA.
The Commission provided a limited exception to allow SKI to supply Ford with electric batteries for its EV F-150 pick-ups for four years and Volkswagen for its MEB line for the North America region for two years, after which the entire the force and effect of the exclusion and termination orders will remain in effect. The order also allows for the repair or replacement of batteries for Kia vehicles sold up to the date of the order and originally equipped with SKI batteries, as agreed between LGES and Commission staff.
Using technology stolen from LG Energy Solution, SKI wrongly won lucrative contracts with US automakers, whose orders totaled billions, and negotiated historic state and local government subsidies and incentives to build a new plant in Georgia. SKI’s new plant in Georgia would have relied on the stolen trade secrets from LG Energy Solution, and the ITC decision definitively banned the use of improperly appropriate technology from LG Energy Solution. “