|LG Chem employees look at battery cells produced at the company's plant in Ochang, North Chungcheong Province in this file photo. / Courtesy of LG Chem|
US ITC default judgment favors LG in EV battery case
By Baek Byung-yeul
|LG Chem CEO Shin Hak-cheol|
The battery-making arm of LG Group said the USITC made a "default judgment" or initial determination against SK Innovation Feb. 14 (local time), accepting its claim that the latter attempted to conceal evidence of infringement on its battery-making patents. The USITC is a U.S. government agency that deals with trade-related mandates.
"In November 2019, LG Chem asked the USITC for an early ruling against SK Innovation after it found that SK destroyed evidence that it infringed and stole trade secrets...The default judgment means the organization accepted our claim without having additional hearings or investigations," LG Chem said.
The default judgment is an interim ruling ― the USITC is scheduled to make a final ruling by October 5, LG Chem said. If the final determination is in favor of LG, SK Innovation will be unable to sell its battery cells, modules and all related components and materials in the U.S. - a hard blow to the latter, which is building a battery plant in Georgia to supply for Volkswagen's electric vehicles sold in the U.S.
The local battery rivals have been in legal battle since April 2019 after LG filed a pair of lawsuits with the USITC and a U.S. court, respectively, against SK for allegedly stealing battery technology through employee poaching.
LG Chem then said it found over 34,000 files and emails that show SK Innovation tried to tamper with evidence that it stole confidential battery-making trade secrets from LG.
|SK Innovation CEO Kim Jun|
LG Chem is the world's third-largest battery maker in the global electric vehicle market, following China's CATL and Panasonic of Japan.
However, there is a slim yet feasible chance that SK Innovation could get a reversal as banning its products in the U.S. could greatly disrupt supply chains.
The Wall Street Journal reported in December that the Trump administration "might be tempted to be lenient toward SK Innovation" because the U.S. government wants to build more battery-manufacturing plants on its soil.
Stating that Ford, which wants to source batteries for electric trucks from SK's new plant, could be another potential casualty from the legal dispute, the newspaper said the LG Chem-SK Innovation case "could eventually reach the desk of U.S. Trade Representative," which could exercise veto authority.
Regarding the legal dispute between LG and SK, an official in the local battery industry, who wished to remain anonymous, spoke of a relatively minimal impact on SK Innovation's operations.
"The ITC's decision to grant a default judgment against SK is definitely not a good sign for the company. Though there are many things to be considered in the aftermath, SK will be likely to suffer only a short-term hit," the official said.
The official raised concerns over losing footing against competitors.
"The rechargeable battery business is still in its early stages and we expect the industry will grow thanks to robust demand for electric vehicle batteries and energy storage systems. In such a situation, the legal dispute gives more room for competitors in China and Japan to improve their market share," he said.