LG-SK Battery Dispute Ends: "Agreement Includes Not Only Cash but Also Royalties" (Comprehensive)

Yangsa Currently Negotiating Agreement... Announcement Expected by Morning at the Earliest

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] LG Energy Solution and SK Innovation are putting an end to their electric vehicle battery dispute after about three years.

On the 11th, representatives from both companies stated, "We understand that a sudden agreement was reached yesterday," and added, "We plan to announce the finalized wording regarding the settlement amount this morning."

It is known that the two companies are currently finalizing the joint announcement. The compensation method has been decided through various means, including cash and royalties, and the announcement is expected as early as this morning.

The U.S. International Trade Commission (ITC) ruled in favor of LG Energy Solution in the final judgment of the battery trade secret infringement dispute on February 10. When the ITC imposed a 10-year import ban on SK Innovation in the U.S., SK Innovation argued that it could not legally contest the trade secret infringement and made every effort to have the U.S. President exercise a veto against the ITC's final ruling.

Procedurally, the U.S. President can exercise a veto on the ITC's final decision. If the veto is exercised, the ITC sanctions are nullified. The deadline for the President to exercise the veto is within 60 days from the ITC's final decision, which was by 1 p.m. Korean time on the 12th.

This agreement is reportedly the result of a sudden decision based on the judgment that it was practically difficult for President Joe Biden to exercise the veto. The U.S. Trade Representative (USTR) also mediated the agreement between the two companies behind the scenes. Internally, SK Innovation considered withdrawing its U.S. operations if the presidential veto failed.

If President Joe Biden does not exercise the veto, it would impact jobs in Georgia, where SK Innovation has made large-scale investments, as well as the electric vehicle battery supply chain in the U.S. Conversely, exercising the veto would conflict with Biden’s usual emphasis on intellectual property rights. For this reason, in the U.S., this agreement is being interpreted as a victory for President Biden, who effectively protected jobs and the battery industry supply chain.

As a result, both LG Energy Solution and SK Innovation have resolved their risks. SK Innovation can proceed with its battery business in the U.S. as planned since the import ban has been nullified. LG Energy Solution also relieves the burden of prolonged litigation.