[FETV=김창수 기자] While the US International Trade Commission (ITC) raised the hands of LG in a lawsuit for infringing battery trade secrets between LG Energy Solutions and SK Innovation, a sharp war between the two companies is taking place over the size of the settlement.
According to the battery industry on the 16th, before the final decision by ITC, LG presented a settlement amount of 2.5 trillion won to 3 trillion won, and SK presented a minimum of 100 billion won, up to 500 to 600 billion won, including some of its subsidiary listed shares. It is known that one.
In the industry, it is highly likely that LG, which occupied an advantageous position in negotiations with the final decision of the ITC, will present a higher level of settlement money. LG argues that, given the US Federal Confidentiality Protection Act and recent precedents, if this lawsuit goes to a Delaware civil lawsuit, SK may pay more than 9 trillion won, including punitive damages in addition to the actual damages.
The standard for calculating settlement payments that LG has always emphasized is the US Federal Confidentiality Protection Act (DTSA). This law provides that actual damages and unfair gains, expected future damages, punitive damages, and attorneys’ fees can be compensated.
In relation to’past damages and unfair gains’, LG claims that it won a project worth about 40 trillion won only in 2017 to 2019, when SK took over its trade secrets in earnest. It is known that only the order volume in the US is 20 trillion won. In addition, the current order backlog is estimated at 550GWh, approximately KRW70tr, when considering orders for Hyundai Motor Company and Europe.
Regarding the’expected damage in the future’, LG estimates that it will win orders of at least KRW 50 trillion over the next five years, even if it is conservatively predicted based on SK’s past orders. As a basis, LG heard that on January 29th, SK Innovation announced that it aims to achieve a 10% global market share and a high single-digit operating margin in 2025 at a conference call for earnings announcement. LG claims that the amount of compensation for future damage amounts to trillions of won, even assuming that only about 5% of the royalties used in the market are applied based on its share.
Global Investment Bank Credit Switzerland released a report that predicted that the agreement between the two companies could reach 5 trillion won or more immediately after the final ITC decision, and that if an agreement is not reached, LG will be able to sue in Europe as well.
LG said in a conference call to reporters on the 11th, “According to the standards for damages under the US Federal Trade Secret Protection Act, legally, you can receive punitive damages up to 200% of the amount of damages.” Whether or not to include this in the amount of negotiations with SK is entirely up to SK’s attitude.”
On the other hand, SK’s position is that the estimate of such compensation is too high given the previous ITC trade secret damages and should refer to the amount of compensation for trade secret lawsuits in the US so far.
According to SK, the average of the fines in the top 10 lawsuits is about 27.7 million dollars, which is about 25 billion won. The highest amount was about 1,139 billion won (US$990.99 million) from a lawsuit between DuPont and Kolon in 2011. This was also destroyed and repatriated in 2014, ending with a settlement of 285 billion won. The lower the rank, the lower the amount, and the second place was $420 million (about 463 billion won) between Epic Systems and Tata Consultancy Services in 2017. Third place was $265 million.
In particular, SK believes that the amount of compensation in the trillions of won is difficult to bear given the current scale and financial position of SK Innovation’s battery business. SK Innovation’s electric vehicle battery business last year recorded sales of KRW 1.61 trillion and an operating loss of KRW 4265 billion, which has yet to achieve a break-even point.
Since the ITC ruling on the 11th, SK Innovation has expressed its position that “if it is reasonable, we will negotiate an agreement.”
The two companies met several times before the ITC ruling and negotiated whether or not to agree, but it is known that they could not find a contact point. It seems that there is a calculation to lower the settlement amount as much as possible to say that it will not rush negotiations even though SK is in a more disadvantageous position with this loss.
An official from SK Innovation said, “There are many views on whether we should agree within 60 days, the deliberation period of the US president, but we are also considering an appeal procedure in the future, and we report the two-year period for supplying batteries to Volkswagen to be agreed with LG There is.”
An official from LG Energy Solutions said, “SK Innovation’s customers Ford and Volkswagen are urging for an agreement. In particular, SK is concerned that Volkswagen is practically suspended for two years, asking for an extension of the import ban to four years. “You have to keep in mind.”