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electric vehicle battery

Korean manufacturers tangled in EV battery feud; Korean court rules in favor of LG Chem

Aug 28, 2020 (Gmt+09:00)

The Seoul Central District Court has upheld the validity of LG Chem Ltd.'s patent infringement case in the US against SK Innovation Co. in its first ruling August 27.

The feud between the South Korean manufacturers began in April 2019 when LG Chem filed a lawsuit in the US against SK Innovation on charges of misappropriating trade secrets, after discovering that nearly 100 employees of LG Chem's battery division had moved over to the rival company.

The lawsuit was filed to the US International Trade Commission and the District Court of Delaware.

SK Innovation retaliated by filing a patent infringement lawsuit against LG Chem to the same legal authorities. This prompted LG Chem to file another patent infringement lawsuit against its rival, which SK Innovation took to the Korean court in October 2019 to determine its validity.

Battery separator manufacturing line (Photo from SK Innovation)

SK Innovation claimed that the patent lawsuit brought on by LG Chem is invalid because it violates the agreement made between the two companies in 2014 to not take legal action against the other over the ceramic-coated separator.

LG Chem, however, stated that the 2014 agreement was confined to battery separator patent KR310, separate from the US517 patent at the center of the patent infringement case in the US.

While the Korean court ruled in favor of LG Chem, it may have little impact on the ongoing trade secret misappropriation case in the US. But it may be a catalyst for the two companies to reach a settlement prior to the final October 5 ruling by the ITC.

In February of this year, the ITC made a default judgment in favor of LG Chem. If the trade commission does not change its decision by the final ruling, then SK Innovation would face blocks importing products to supply its US-based partners, which would be a heavy blow to the company's business.

Industry peers say that LG Chem has the advantage, meaning that SK Innovation will need to be more aggressive in the settlement process since the trade secret infringement case could rack up billions of dollars in compensation.

Although LG Chem and SK Innovation have held talks, they have found it difficult to reach an agreement. According to industry sources, LG Chem expects a settlement worth billions of dollars whereas SK Innovation's expectations are much lower, in the millions.

LG Chem posted 6.93 trillion won ($5.83 billion) in revenue and an operating profit of 576.1 billion won during the second quarter of this year. The year-on-year revenue saw a 7.5% increase, but the operating profit dropped by 15.9%. The electric vehicle battery business played a pivotal role in boosting the company's Q2 earnings.

SK Innovation posted 7.19 trillion won in revenue and an operating loss of 439.7 billion won during the second quarter, which is a 75% gain from the 1.3 trillion won in operating loss from the first quarter of the year.

By Jae-kwang Ahn and Jeong-min Nam



Danbee Lee edited this article

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