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| Seen is construction site of SK Innovation's battery plant in Georgia, which is scheduled to begin mass production in 2022. / Courtesy of SK Innovation |
By Baek Byung-yeul
After the U.S. International Trade Commission (USITC) gave a preliminary ruling in favor of LG Chem over its battery rival SK Innovation (SKI) on Feb. 14, the two South Korean battery makers are expected to seek a settlement to end their prolonged legal dispute, industry officials and analysts said Monday.
Chances are increasing that the two battery firms will attempt to settle their electric vehicle (EV) battery trade secret litigation as the USITC officially ruled in favor of LG's claim that SKI attempted to conceal evidence of infringement on its battery-making patents, according to the analysts.
They added the two companies will try to seek out a settlement in the end because neither of them want to lose business generated from Volkswagen's plan to launch EVs in the U.S. market starting in 2022.
What matters most will be the terms and conditions they agree to. Clearly, LG Chem has the upper hand in the possible settlement process.
"There will be no change in that LG Chem will be sincere in the remaining litigation process. However, we won't nail down our decision. We are also open to talking with SK Innovation for a possible settlement" an LG Chem official said.
LG and SKI have been in legal battle since April 2019 after the former filed a pair of lawsuits with the USITC and a U.S. court, respectively, against the latter for allegedly stealing battery technology through employee poaching.
LG also asked the USITC in November for an early ruling against SK after it found over 34,000 files and emails that show SK tried to tamper with evidence that it stole confidential battery-making trade secrets from LG.
The default judgment is an interim ruling ― the USITC is scheduled to make a final ruling by October 5.
If the final determination is in favor of LG, SK will be unable to sell its battery cells, modules and all related components and materials in the U.S. ― a hard blow to the latter, which is building a plant in Georgia to supply batteries for Volkswagen's electric vehicles to be sold in the U.S.
Though there will be no change in its stance that it will keep focusing on the lawsuit, LG Chem said it is open to talking about making progress towards repairing its relationship with the SK Group affiliate.
SKI was hoping to see quick action to initiating an exit strategy to settle the legal tussle with the company hinting that it is also opening its door for dialogue.
Stating that the company will do its utmost to enhance its customer value and develop the battery industry, SKI added there will be no change in its business base and that LG Chem is still its "business partner to develop the battery industry's ecosystem together."
"Both LG Chem and SKI want to reach a settlement ending their long legal tussle because neither of them want to lose their customers, which are EV makers," an analyst in the local battery industry said.
Given Volkswagen is scheduled to source EV batteries from SK Innovation in the U.S. and Ford also wants to source batteries for its electric trucks from SK's new plant in Georgia, carmakers don't want this situation to go bad," he added.
Roh Woo-ho, an analyst at Meritz Securities, said the ITC's ruling in favor of LG will be a hard blow to SK in the short term but a chance exists that SK could win a reversal because the U.S. Trade Representative can exercise veto authority.
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