LG Chem-SK Inno Battery Lawsuit Settlement Possible

ITC Battery Lawsuit Ruling Delayed Again

"Due to COVID-19" vs "Many Issues at Stake"

Each Side Offers Different Interpretations

Cost Burden from Fruitless Disputes

Possibility of Settlement Discussions Before December

[Asia Economy Reporter Park So-yeon] The U.S. International Trade Commission (ITC) has once again postponed the final ruling date for the trade secret infringement lawsuit between LG Chem and SK Innovation over electric vehicle batteries to December 10, drawing attention to whether the two parties will reach a settlement. Both companies are quite exhausted after more than a year and a half of consecutive domestic and international lawsuits, and with the trial delayed again, they continue to engage in a fruitless dispute. Given the enormous capital required for battery investments, the increasing litigation costs are inevitably a burden. It is known that the amount both companies have spent on lawsuits so far is equivalent to building a 10GWh-scale electric vehicle battery factory.

◇Why the Future of 'K-Battery' Entrusted to the U.S. Keeps Being Delayed

The two companies interpreted the ITC's twice-delayed decisions differently. LG's side explained that it was "postponed due to the impact of the novel coronavirus (COVID-19) pandemic," while SK's side said, "It means there are many issues to be considered at the ITC, and different conclusions could be reached."

In the industry, there is also an analysis that the ITC's repeated delays are to reduce political pressure ahead of the U.S. presidential election. Since both LG Chem and SK Innovation are companies creating economic effects through large-scale investments in the U.S., opinions are divided within the U.S. about a ruling that would effectively make SK Innovation's U.S. business impossible due to a loss. Recently, amid the U.S. presidential election, there have been conflicting forecasts on whether the Donald Trump administration would exercise a veto if an unfavorable ruling for SK Innovation is issued.

While the ITC can delay rulings, the general interpretation is that postponing for more than two months twice is unusual. Considering that the ITC made a preliminary decision in February ruling against SK Innovation and that there has been no precedent of overturning a preliminary decision, LG Chem's victory remains a likely scenario. However, the fact that the ITC has not confirmed LG Chem's victory and has delayed the ruling twice indicates deep deliberation on this lawsuit. There is also a possibility that the ITC, after additional review, may rule in favor of LG Chem but separately decide on import bans on SK Innovation's products based on public interest and economic evaluations within the U.S., or issue a 'modified' decision that fully reexamines the preliminary ruling.

◇A Battle of Wounds Only, Growing Need for Settlement Between Both Companies

The longer the lawsuit drags on, the more the justification remains but the practical benefits diminish. Both companies secretly hope for a swift settlement even before the final decision on December 10.

It is known that the litigation costs incurred by both companies so far exceed approximately 800 billion KRW. With 1 trillion KRW, a 10GWh (enough for 200,000 electric vehicles) battery factory can be built. Both companies are inevitably conscious of the enormous litigation costs and the public fatigue caused by prolonged legal battles. SK Innovation, facing a likely deficit this year due to the downturn in the refining industry, urgently needs a settlement to secure investment for next-generation battery business. LG Chem also faces urgent tasks such as resolving uncertainties related to the battery business spin-off and electric vehicle fire controversies.

An industry insider said, "K-battery companies are causing a weakening of global competitiveness due to fires and lawsuits," adding, "The prolonged lawsuit between the two companies is a loss for everyone, so they need to take a step back." Another industry source said, "With the increased uncertainty due to the ITC's ruling delay, the two companies are expected to resume serious discussions to reach a settlement before December."