LG Chem-SK Inno Battery Lawsuit, Key Issue: Who Will Lead the 'US Business'?

ITC to Deliver Final Verdict on Trade Secret Infringement on 26th
LG Chem Must Prove SK Inno's Trade Secret Infringement if 'Remand' Verdict Issued
SK Inno Most Concerned About Defeat... Import Ban on Related Products in US Expected

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] The trade secret infringement lawsuit between LG Chem and SK Innovation over electric vehicle batteries, which has been ongoing for over a year and a half, will be concluded on the 26th (local time). The U.S. International Trade Commission (ITC) is scheduled to announce its final ruling on that day. The final ruling will be revealed in Korea in the early hours of the 27th. The key point both companies are focusing on in this lawsuit is whether there will be an import ban on related products within the United States.

◆ SK Innovation Faces Difficulties in U.S. Battery Business if Ultimately Defeated... Trump’s 'Veto Power' Key Factor

According to industry sources on the 25th, the ITC will deliver its final ruling on the trade secret infringement lawsuit between LG Chem and SK Innovation related to electric vehicle batteries on the 26th. There are three main possible scenarios for the final ruling.

First is the possibility that the ITC issues a remand decision regarding the preliminary ruling announced last February. The ITC had previously ruled against SK Innovation in the preliminary ruling due to document deletion following a document security inspection. If a remand decision is made, it essentially means a full reconsideration of the existing lawsuit. In this case, trial procedures will resume, and LG Chem will need to prove the infringement of trade secrets and the damages claimed.

However, the industry consensus is that a remand decision is unlikely, as no preliminary ruling by the ITC since 1996 has ever been overturned in the final ruling.

The second scenario is that the preliminary ruling becomes the final ruling. This would mean SK Innovation’s ultimate defeat. If SK Innovation loses, an import ban will be enforced in the U.S. on its battery cells, modules, packs, and related parts and materials. This effectively makes business operations in the U.S. impossible, which is SK Innovation’s greatest concern. The U.S., along with Europe, is one of the world’s major electric vehicle markets. This is why global electric vehicle battery companies cannot afford to give up on the U.S. market.

Even if the ITC rules in favor of LG Chem, variables remain. One such variable is the U.S. administration exercising its veto power over the ITC decision. If this happens, the lawsuit will be referred to the U.S. Trade Representative (USTR). To date, there has been only one instance where a U.S. president exercised veto power over a final ITC ruling. In 2013, when Apple accused Samsung Electronics of patent infringement and the ITC imposed an import ban, the U.S. administration exercised its veto power.

◆ ITC Expected to Rule According to Law but May Politically Allow Exceptions

Some believe that the ITC will find it difficult to side with either company. The Rust Belt (three declining industrial regions in the North) and the southern state of Georgia are both strongholds of former President Donald Trump, and both companies contribute to economic revitalization in these areas.

LG Chem’s joint venture with GM, 'Ultium Cells,' is located in the U.S. (Ohio), and SK Innovation’s recent aggressive investments are also in the U.S. (Georgia). When the two companies fiercely contested, Ohio and Georgia publicly expressed support for each company, providing indirect backing.

Therefore, there is analysis that the ITC may cite the existing preliminary ruling but order additional investigation into the impact on U.S. public interest. Legally, SK Innovation’s defeat may be acknowledged, but politically, an exception clause could be included allowing SK Innovation to continue investing in its battery business within the U.S.

LG Chem stated, "The final ruling is within the ITC’s authority, so it is difficult to predict. However, we expect the possibility of a remand decision to be low, and LG Chem will respect the ITC’s ruling."

SK Innovation said, "Many experts expect the ITC to issue a remand decision regarding the preliminary ruling. Once substantive disputes begin, SK Innovation plans to sincerely engage in the lawsuit by proving its independent technology development process, among other things."