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EV batteries

US' ITC says 10-year import ban on SK not excessive

Mar 05, 2021 (Gmt+09:00)

US' ITC says 10-year import ban on SK not excessive

The US International Trade Commission (ITC) has stated that the 10-year exclusion order prohibiting SK Innovation Co. from importing battery products to the US is not excessive, in a public opinion report on the trade secret dispute between LG Energy Solution Ltd. and SK Innovation.

Last month, the ITC ruled in favor of LG Energy in the electric vehicle battery trade secret infringement case, making it almost impossible for SK Innovation to continue its EV battery operations in the US, including the $2.6 billion battery plant project in Georgia.

In the report released on Mar. 5, the ITC wrote that it would have taken over 10 years for SK Innovation to develop battery products without the trade secrets stolen from LG Energy.

The ITC cited SK Innovation's destruction of evidence to be the most problematic, noting it was “ordered at a high level” and carried out by department heads throughout the company. Previously in February 2020, the ITC had issued a preliminary ruling in favor of LG -- criticizing SK for turning a blind eye to the issue of destroying evidence.

The US trade panel also criticized SK for using LG trade secrets to win an order from Volkswagen in 2018 as the lowest bidder.

According to LG, it has injected around 5.3 trillion won ($4.7 billion) in battery research and development and 20 trillion won for facility investments.

“SK made unfair profit worth 5.3 trillion won via trade secret misappropriation,” LG said.

Meanwhile, SK remains steadfast that it is clear of trade secret violations. The company released a statement saying that the ITC called into question certain procedures, such as deleting documents, without substantial verification of trade secret misappropriation.

“ITC ruled that SK exploited trade secrets, but the commission has not gauged exactly what trade secrets were violated and how they were misappropriated," said an SK official, adding that there is no clear evidence in the findings.

SK Innovation says the trade panel's vague ruling will deliver serious economic and environmental consequences to the EV battery industry in the US. The company plans to urge US President Joe Biden to veto the ITC ruling after the 60-day review period.

US state politicians have also raised their voices against the ITC ruling, calling for a review of its impact on Biden's green transportation goals.

SK Innovation's battery plant under construction in Georgia, US
SK Innovation's battery plant under construction in Georgia, US

STALEMATE IN SETTLEMENT TALKS 

It has been almost a month since the US ITC ruled in favor of LG, but there appears to be virtually no progress in the settlement talks between the two Korean EV battery makers. During a media conference call on Friday, LG said it has not heard from SK since the final verdict.

The two companies met at the negotiation table on several occasions before the ITC ruling but could not reach an agreement over the indemnity amount. It is understood that LG requested 2.5 trillion won to 3 trillion won ($2.7 billion), but SK upheld its stance that it would not cough up any more than 1 trillion won.

But after winning the case, LG is firm that it will no longer settle for its originally requested amount; whereas SK argues that it does not accept the verdict.

Now LG is seeking over 3 trillion won in a settlement, which SK says is an absurd amount.

Industry watchers expected the ITC ruling to facilitate a settlement between the two companies, but the two remain in a fierce tug of war.

Write to Jae-kwang Ahn and Man-su Choe at ahnjk@hankyung.com

Danbee Lee edited this article.

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