Seoul court favors LG over SK in battery dispute

LG Chem CEO Shin Hak-cheol, left, and SK Innovation CEO Kim Jun

SK says it will appeal to the higher court

By Baek Byung-yeul

A Seoul court has ruled in favor of LG Chem over a case in which SK Innovation requested LG Chem to withdraw its patent lawsuit filed in the United States, the court said Thursday.

In October 2019, SK Innovation filed a lawsuit against LG Chem with the Seoul Central District Court requesting LG to withdraw its patent lawsuit filed with the U.S. International Trade Commission (USITC) and a local U.S. court over alleged battery technology theft because LG violated the two sides' agreement made in 2014 that they wouldn't take this matter to the court for the next 10 years.

In 2014, SK and LG agreed not to take legal action against each other for a decade over battery separator technology patents. The two electric vehicle (EV) battery makers have been in a legal battle since April 2019 after LG filed multiple lawsuits with the USITC and a U.S. court against the SK Group affiliate for allegedly stealing battery making technology through employee poaching.

However, the court dismissed SK's request saying the two sides' 2014 agreement only applied to “patented technologies registered in Korea.”

After the court ruling, LG Chem issued a statement, saying it respects the court's ruling.

“The Seoul Central District Court confirmed that the agreement made between LG Chem and SK Innovation can be applied only to patented technologies registered in Korea. With this ruling, it has become clear that SK's filing of a lawsuit against us with the Seoul court turned out to be a farfetched allegation,” LG Chem said.

SK Innovation expressed its regret over the ruling and said it will appeal to the higher court.

The Seoul court ruling won't affect the two companies' ongoing legal disputes in the U.S., but the ruling showed that LG Chem has the upper hand over SK Innovation.

The USITC already decided in favor of LG Chem in its preliminary ruling in February, specifically saying that SK stole LG's trade secrets. The USITC is scheduled to issue its final determination on Oct. 5 this year, which if adverse, could block SK from importing equipment to outfit its Georgia plant which in turn could seriously jeopardize contracts with EV manufacturers such as Volkswagen.

During a recent conference call with investors upon announcing its second-quarter performance, LG Chem admitted it was hoping to reach a settlement with SK Innovation, saying the company expects that it “can settle the case through negotiations before the U.S. ITC's final decision in October.”

Legal representatives for the two sides are discussing details related to the final contract terms. A source familiar with the matter said SK Innovation wants to make a one-off payment of just below 2 trillion won to LG, while LG Chem is seeking a cross-licensing agreement to consistently receive intellectual property royalties from SK.

“In the legal negotiation process, LG Chem wants to sign a cross-licensing deal with SK to generate intellectual property profits consistently. On the other hand, SK seeks a one-off charge to handle the expenses more easily,” a top official in the battery industry here said.

SK Innovation seems to have a headache as its goal to become one of the top EV battery makers has hit a series of bumps. Other than the legal fight against LG, the company has been embroiled with illegal employment issues in the U.S., after Rep. Doug Collins, representing Georgia's ninth congressional district, asked U.S. Immigration and Customs Enforcement and the U.S. Customs and Border Protection recently to probe what he referred to as "an ongoing effort to illegally employ foreign nationals" at the SK Innovation battery plant in the state of Georgia.

SK Innovation is currently constructing its battery plant in the U.S. state and is scheduled to begin mass production of EV battery cells in 2022.