Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
SK-LG trade secret litigation dispute deepening
LG Chem and SK Innovation logos
By Baek Byung-yeul
By Baek Byung-yeul
Following the U.S. International Trade Commission (USITC) delaying a final ruling after its preliminary one that sided with LG Chem in its ongoing industrial espionage dispute with SK Innovation (SKI), industry officials claimed Sunday that LG was making “false claims.”
“LG is making false claims that the Trump Administration intervened in the legal dispute between the two Korean battery makers, which consequently could make it a diplomatic issue,” an industry official said.
“An executive officer of LG Group, one of the leading companies in Korea, wrote an article mentioning the U.S. President and even used the verb should, the implication of which could cause a diplomatic issue,” the official said, adding “The article also said that President Trump would intervene in the battery issue even though he hasn't even mentioned anything about it.”
On Oct. 27, an LG Chem executive wrote an article, “Trump Should Stay Out of Korean Dispute,” for the Wall Street Journal's opinion section. In the contribution, the executive rebutted an Oct. 14 article by Holman Jenkins titled “Biz Doesn't Stop for the Election,” saying Jenkins drew “an unsubstantiated conclusion that President Trump would abandon four years of trade policy and protect a foreign intellectual-property thief from punishment.”
He continued: “At issue is the trade-secret dispute between LG Chem and SKI, two makers of electric-vehicle (EV) batteries. Earlier this year, an administrative law judge at the ITC ruled for LG Chem in an initial determination. Mr. Jenkins speculates that President Trump would overturn action by the commission holding SKI responsible for its wrongdoings, which would set a dangerous precedent.”
A final decision is expected Dec. 10. Reminding the U.S. President that LG Chem was also closely working with renowned U.S. partners, the LG executive said in the article, “SKI is a Korean company that violated America's laws against a company that is actively employing thousands of Americans, paying taxes and partnering with some of America's most important innovators.”
The two companies are waiting a final ruling from the USITC after it suspended this twice from Oct. 5 to Oct. 26 and then to Dec. 10. The USITC did not specify why it delayed the ruling.
Industry analysts have weighed in, saying the battle between LG Chem and SKI has become a political matter because Georgia is increasingly being classified as a swing state in the Nov. 3 U.S. presidential election.
An adverse ruling by the USITC will lead to an import ban for SK's batteries and relevant components, causing big setbacks for its customers including Volkswagen and Ford Motor at a time when the car manufacturers are building new vehicles. The automakers earlier said the patent litigation between SKI and LG could disrupt supplies of key EV parts and also cost U.S. jobs at a when the spread of COVID-19 is continuing.
The USITC could be feeling pressure to finally rule on the case considering the estimated impact that it will have to some industries in the U.S. including job issues.
But legal experts contacted by the newspaper said the delay meant the SK-LG issue has been categorized as a secondary issue because it was very unlikely President Trump would act on the case before the election. The feud was initiated after LG Chem filed complaints with the USITC in April 2019, claiming SKI had stolen trade secrets. In its preliminary ruling in February, the USITC ruled in favor of LG Chem, specifically mentioning that SKI stole LG's trade secrets.
SKI is currently investing billions of dollars to build an EV battery plant in the state of Georgia. LG Chem also operates an EV battery venture with General Motors in Michigan. If SKI loses the suit, the USITC could halt the plants' operation and this may swing some voters in the U.S. presidential election as the facility is expected to provide around 2,600 new jobs for local residents.
Georgia is pinning high hopes on the economic impact of the plant and closely monitoring whether SKI is keeping its promises. In September, U.S. Immigration and Customs Enforcement (ICE) arrested 13 Koreans working illegally at the plant site.
Although the USITC decision will not affect LG Chem's operations in the U.S., the company and its partner General Motors can claim indirect damages stemming from SKI's alleged theft of industrial secrets.