The reason why SK Innovation lost the electric vehicle battery trade secret lawsuit against LG Energy Solution was “due to inadequate response to the US judicial system due to lack of experience in global disputes.” The company’s position is to review the settlement first, but the gap surrounding the settlement amount is still observed to be large.
According to SK Innovation, on the afternoon of the 10th, the company held an expanded audit committee attended by all outside directors and discussed the final decision of the US International Trade Commission (ITC) on the lawsuit for infringing battery trade secrets. The outside directors received a report from the executive in charge and gave such review opinions.
A company official explained, “This audit committee has begun to come up with fundamental supplementary measures to prevent the recurrence of a similar situation by the board of directors, which has the authority to make final decisions on major management issues.”
On the 10th of last month (local time), the ITC made a final decision to ban the US production and import of some lithium-ion battery cells, modules, and packs of SK Innovation for 10 years. Subsequently, in the final judgment released on the 3rd of this month, it specifically stated that’SK Innovation infringed 22 battery trade secrets of LG Energy Solution’.
SK Innovation’s position is that,’In the ITC lawsuit, we were banned from importing without even arguing about the infringement of trade secrets due to the deletion of documents.’
It is known that the Audit Committee strongly rebuked the company for its inadequate handling of US judicial procedures due to lack of experience in global disputes. The committee ordered, “Take this job as a teacher for the other hand, reorganize the global lawsuit response system internally, and at the same time appoint an external global expert to establish a complete compliance monitoring system for the second and third parties.”
In order to improve the compliance monitoring system in the near future, the company decided to proceed with the procedure of appointing an external expert in the field of global compliance in the United States.
SK Innovation CEO Woo-Seok Choi said, “It is very unfortunate that SK Innovation lost its global business further because he did not have an opportunity to defend against the infringement of trade secrets, which is the essence of the lawsuit, and for lack of response to US judicial proceedings.” “It is very urgent and critical to strengthen the compliance system beyond global standards at the point where it needs to be done.”
It was found that the difference between the two companies’ positions on the amount of the agreement still remains. The two companies had negotiated several times regarding compensation, but they ran a parallel line over the size of the settlement amount and whether or not they admitted infringement of trade secrets. According to the industry, it is said that SK Innovation is hoping for a settlement of KRW 500-800 billion, and LG Energy Solution is expected to reach KRW 3 trillion.
The committee also received reports on the progress of the negotiations so far, including the new negotiation conditions proposed by the company and LG Energy Solutions’ reaction to them. The committee said, “We will closely review the requirements of our competitors at the board level in the future.”
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This is interpreted as the position that LG cannot easily understand the request for settlement funds. The amount that SK Innovation invested in the battery plant 1 and 2 under construction in Georgia, USA, is worth 3 trillion won. In addition to Georgia, the amount to be invested in the future to the plant in Seosan in Korea, Changzhou in China, and Komarom in Hungary, as well as the Ibancha plant in Hungary, which has recently decided to make a new investment, is also burdensome.
The board of directors added, “We believe that additional review on major issues is necessary to organize the position and prepare fundamental improvement measures for responding to the ITC litigation.”