[넘버스]Previous-class patent litigation… Patent competitiveness of three battery companies of LG, SK and Samsung in terms of numbers

Let’s interpret business, economy and technology with numbers. Numbers are a source of information. Information is open to anyone, and numbers can be seen by anyone, but not everyone has an eye to see the truth behind it. Let’s easily solve the number story with so that everyone can relate.

LG Energy Solution and SK Innovation’s electric vehicle battery patent competition is getting fierce. Last year alone, there were many observations that the two companies would agree on an appropriate level. Rather, we are striving to camp each other this year and push each other to the edge of the cliff. It got worse after LG won the final ruling of the US International Trade Commission (ITC) infringement of trade secrets on March 5th.

In addition, the situation has become even more dizzy in recent years as LG lost the preliminary judgment of a lawsuit filed for alleging SK patent infringement. In response to this ruling, SK stated that “LG’s SK ankle separation membrane patent litigation was all won in 10 years”, while LG “regarded the preliminary decision, expressing it as if it was a victory, and took over the ruling. I interpreted it as” he refuted.

Since last year, as the two companies have made conflicting arguments over the same issue, complaints have come from around them that it is difficult to judge what is right and what is wrong. There are a lot of people who watch the fight between the two companies with curiosity at first, but now look at them with worries.

However, there is also an expectation that in the future, such fierce battles over patents will occur. It means that LG and SK have radically changed the domestic patent rights culture through this dispute. It is said that companies are focusing on securing patents to avoid technology infringement, and also changing organizational structure to generate profits through preoccupied technologies.

A business official said, “It has not been well known, but there have been many large and small patent litigations among material development companies.”

Then, apart from this lawsuit, how is the patent competitiveness of LG Energy Solution, SK Innovation, and Samsung SDI that lead the domestic electric vehicle battery market? Patent competitiveness is also seen as an important factor for domestic companies to take the lead in the global market in the future. It seems that we can directly and indirectly compare the current situation of the three domestic battery companies through various indicators of who has the many patents, how much is invested in research and development (R&D), and how much manpower they have.

First of all, LG overwhelms the number of patents. According to Wips On, an online patent search service in Korea, as of the end of last year, LG’s battery-related patents were about 23,600. Samsung has 20,000 patents, similar to that of LG. The number of registered patents of SK is 1800, which is a big difference compared to LG or Samsung. That’s more than 10 times the difference.

Even globally, the number of LG and Samsung patents is substantial. Panasonic, a global competitor, has 17,200 patents, which is less than that of LG and Samsung. The number of CATL patents in China is only 2200. In particular, CATL only differs by 400 cases compared to SK, a latecomer.

Let’s also look at the research and development (R&D) costs that affect patent acquisition. However, R&D expenses include not only electric vehicle batteries, but also petrochemicals, advanced materials, lubricants, and electronic materials, depending on the circumstances of each company. This means that only the battery sector cannot be compared separately. I think we can only assess how actively each company is engaged in R&D and how its investment strategy has changed in the meantime.

Looking at the trends in R&D expenses of the three companies over the past 10 years, LG, which also has the highest number of patents, has invested the most. From 2011 to 2020, we have increased our investment almost every year. Last year’s R&D investment cost was 1,1392 trillion won, which is about three times higher than that of 3418 billion won 10 years ago. The cumulative investment amount is over 7 trillion won. In particular, it is noticeable that the R&D investment cost has increased rapidly from 2016.

Samsung had a similar level to LG in the early 2010s, but since 2016, the gap has widened as LG has greatly increased its investment. Last year, Samsung’s R&D investment cost was 800 billion won, which is more than 300 billion won compared to LG. In 2015, Samsung and LG invested 540 billion and 560 billion respectively, showing no significant difference, but since then, Samsung has not made a significant change in the size of the investment.

SK devoted the least cost to R&D among the three companies. Last year’s R&D investment cost was 250 billion won, which is an increase compared to 150 billion won 10 years ago, but it is difficult to say that it has made a large investment due to its small size. The cumulative investment cost over the past 10 years is 1.8 trillion won, which is less than 2 trillion won.

The number of employees in each company’s battery business is also different. The number of employees in the energy solution division that manufactures small and medium-sized batteries at Samsung was 9,000 last year, which was approximately 1,500 more than the 7500 employees of LG Energy Solutions. Since SK does not disclose the number of employees by business division, it is not possible to confirm the number of employees in the battery business in detail. However, the number of employees across the company was 2,400 last year, and it can be seen that there is a difference in manpower compared to LG and Samsung.

However, it seems that the number of patents cannot be judged as a factor that has a decisive influence on winning business orders based only on the numbers revealed. According to SNE Research, the cumulative global electric vehicle battery usage until February this year is ranked first with CATL with a 31.7% share. LG took 2nd place with 19.2%. Samsung and SK ranked 5th and 6th with 5.3% and 5.0% of market share, respectively. In fact, in the electric vehicle market demand, SK is doing well.

Instead, SK is pouring huge amounts of money into facility investment. Since 2018, SK has decided to invest a total of 7.7 trillion won for the construction of domestic and overseas battery production lines. The amount invested by the end of last year was 4.8 trillion won, which is comparable to the size of LG’s facility investment. It would be a proof that SK is actively winning business orders in the global electric vehicle battery market. LG has set up an investment plan of 6.8 trillion won from 2016 to 2022 for the expansion of automobile battery facilities in China and Poland. Until last year, I spent a total of 5.2 trillion won.

Samsung does not disclose investment plans or results for each project in its business report. It only shows how much you spent in the business year. Last year, it is reported that a total of 1.5 trillion won was spent on facility investment in the energy solution sector.

Also, just because you have many patents does not mean that you will unconditionally win a patent lawsuit. One of the three patent lawsuits SK filed with LG through ITC was defeated, and one in the preliminary judgment. Of course, the lawsuit for infringement of trade secrets won by LG is much more important as it is directly related to whether SK can do business in the United States.

US President Joe Biden may veto the ruling. The deadline is until the 11th, so both the eyes and ears of the industry stick to the White House across the sea. How will this patent war between LG and SK conclude, and what changes will it bring?