U.S. ITC rushes’SK and LG earned 10 years from battery confidentiality’ [재계 인사이드]

US ITC releases final judgment opinion

“22 secret infringements in 11 categories”

LG “Clearly confirm infringement of trade secrets”

SK criticizes ITC ruling on ’10 year import ban’

Dissatisfaction with “A judgment that has not been substantiated

Expectations to exercise the veto of biden’s import ban

Difficulty in consensus…LG “SK should respect the ruling”

Difference of opinion on the settlement amount between the two sides in 兆

On the 4th (local time), the US International Trade Commission (ITC) unveiled a final decision on a lawsuit for infringement of LG Energy Solutions and SK Innovation battery trade secrets. On the 10th of last month, the ITC made a final decision on banning the import and production of batteries in the U.S. for the next 10 years, saying that it is acknowledged that SK Innovation has infringed on trade secrets. In the opinion, a list of the trade secrets of LG Energy Solutions infringed by SK Innovation was specified. The act of destroying evidence by SK Innovation was also described naked.

When the 96-page English opinion letter was released, LG Energy Solutions welcomed it, saying, “It has been clearly confirmed that the infringement of trade secrets has been clearly confirmed.” SK said, “It is a ruling that lacks substantial verification of trade secret infringement. It can cause a number of problems,” he publicly denied the ITC ruling. At the time the final judgment came out last month, it is more offensive than the position that “we regret that the actual judgment on the infringement of trade secrets was not made”.

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The ITC opinion document contains the process of acknowledging SK Innovation’s infringement of trade secrets, concrete evidence destruction, infringement lists, and even why the import ban was decided for 10 years, and what measures were taken to minimize damage to US automakers. .

Above all, ITC acknowledged all 22 trade secrets that LG Energy Solutions claimed had been infringed. ITC said, “If SK had not obtained 22 trade secrets from LG, it would not have been able to independently develop the technology under the trade secret within 10 years.” I don’t have the ability,” he said. In the opinion, the Unfair Import Investigation Bureau (OUII), an organization under the ITC, submitted an opinion that the import ban should be for five years, but rejected it, and the reason for making this decision is stated. ITC said, “LG’s basic development period should be considered,” and said, “The 10-year import ban period is not unduly.” The intention is to shorten the 10-year development period that LG invested by SK infringing on LG trade secrets. In the opinion, ITC also revealed a list of 11 categories covering 22 trade secrets of LG, which are considered to have been infringed by SK. △ Overall process △ Raw material parts specification (BOM) △ Pre-dispersion slurry △ Cathode and anode mixing and recipe.

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The part that describes SK Innovation’s destruction of evidence is quite specific. The manager of SK Innovation’s battery business unit said, “Hide or remove documents from the company’L’ (assumed to mean LG Energy Solutions). Documents you took from the’L’ company’ and please don’t save this email as well!” ITC stated that “the eradication of evidence was carried out by department heads company-wide under the direction of a high level.” The ITC judged that “SK’s document deletion, an excuse that document deletion is a regular practice, and attempts to conceal document deletion were blatantly committed with flagrant bad faith.”

LG Energy Solutions said, “It was clearly acknowledged that the infringement of trade secrets in all areas of the battery, including development, production, and sales, was clearly acknowledged.”

SK Innovation rebelled. The ITC’s final judgment itself, which imposed a 10-year ban on imports, was a problem. When the final judgment came out on the 10th of last month, it went further from what was said to be’sorry’.

SK Innovation argued that “ITC made a decision based on procedural flaws in the lawsuit without substantive verification of LG’s alleged infringement of trade secrets,” and argued that “the decision will cause several problems.” “The ITC has decided that it is a trade secret infringement, but it is still unable to determine what trade secrets were violated and how they were violated.”

In other words, “the fact that our trade secret infringement was not confirmed. It was simply a ruling based on the destruction of evidence (SK is expressed as’procedural defects’), so he lost.” In fact, the ITC expressed a strong displeasure in the opinion statement, saying, “It explicitly disregarded the legal obligations of ITC and the procedural schedule set by the judge” regarding SK Innovation’s act of destroying evidence. An official of SK Innovation said, “We regularly conduct campaigns to delete unnecessary documents, and ITC accepted LG’s claim of destroying evidence.”

SK Innovation dismissed that “there is no need for a trade secret of LG Energy Solution” when ITC mentioned that it would have been difficult for 10 years to develop technology without LG’s technology. SK Innovation explained, “Based on independent development over the past 40 years, we have already signed a supply contract with a global automobile company in 2011.”

Why did SK Innovation publicly deny the ruling of ITC, a quasi-judicial administrative agency directly under the US President?

On the day that the ITC opinion was released, it seems that the reason for this can be inferred from some of the positions that SK Innovation distributed to the media. In its position statement, SK Innovation said, “We plan to actively address the problems of the ITC decision in the Presidential Review process and strongly request the exercise of the veto.” The “exercise of the right to opt out” here refers to the deterrence that U.S. President Joe Biden can impose on the import ban within 60 days after the final ITC ruling. SK Innovation is calling for the exercise of the veto, appealing that the electric vehicle battery business in the US is in line with the Biden administration’s eco-friendly policy and job expansion policy.

It is significant that SK Innovation has criticized the ITC ruling and linked it with the exercise of the presidential veto. This is because it can be understood as claiming that there is a problem with the ITC ruling in order to increase the likelihood of vetoing. An official in the industry said, “It seems to be a strategy to press the Biden administration with the intention that it is unfair to be banned from imports due to an incorrect ITC ruling.” President Biden can veto the import ban imposed on SK Innovation until the 11th of next month. Until then, if the veto is not exercised, ITC’s actions automatically take effect. However, ITC granted a grace period of 4 and 2 years respectively for the batteries for Ford and Volkswagen that SK Innovation had previously received. As a device to minimize immediate damage, the intention is to look for other battery suppliers during this period.

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If so, what will happen to the agreement between the two companies? LG Energy Solutions said in a conference call to reporters on the day that it has not received any contact from SK after the ITC ruling. SK Innovation also did not deny this. Both sides admitted that there was currently no underwater contact.

Is it possible to agree? In conclusion, the dominant observation is that it is almost impossible for now (at least within the period when the presidential veto can be exercised). Both sides are aware of the necessity of an agreement, and there are many predictions that an agreement will eventually be reached due to the fact that the business uncertainty is too great without an agreement. However, in the current atmosphere, it doesn’t seem easy because a strong fight is unfolding.

First of all, the difference in position regarding the amount of the settlement amount is too large. LG Energy Solutions said in Concall, “The expenditure and investment amount related to R&D over the past 10 years amounted to about 5,300 trillion won, and if facility investment is included, it is close to about 20 trillion won.” “It can be inferred from the ITC ruling that SK steals trade secrets, saving at least 5.3 trillion won in R&D, and so on.” In fact, it is known that LG is asking for 2.5 trillion to 3 trillion won for settlement. LG’s position is that if the total amount of the settlement amount is correct, whether it is cash, equity, or a certain percentage of royalties to future sales, these measures can be mixed even if they are acceptable.

On the other hand, it is reported that SK Innovation is proposing less than 500 billion won as a settlement amount. Regarding LG’s request, Bae Ji-jin is saying, “It’s like not to do business.”

The bigger problem is that SK Innovation is publicly refusing to accept the ITC final decision itself. The common perception of both sides of the ruling is also a prerequisite for them to sit at the negotiating table. In fact, LG Energy Solutions is a “hard question” when asked in the concall, “If SK can make an agreement without acknowledging the infringement of trade secrets,” he said. “Basically, (SK) must respect the ITC decision to reach an agreement. I think it might be.” “The ITC final judgment has been released, but to what extent do we have to acknowledge this and negotiate?” he said. Although LG does not demand an open apology from SK, it is explained that an agreement is possible only when it shows an attitude to accept the ITC ruling sincerely.

/ Reporter Han Jae-young [email protected]

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