LG’s winning consensus “must be reasonable” pressure… SK’s’biden veto’ expectation

View larger-While ITC specified the ’10 years’ import ban period, virtually all import-related activities such as import, sales, sales, and advertisements of SK Innovation’s battery cells, modules, packs, and related parts and materials in the United States were prohibited. It is evaluated as a strong punitive measure for infringement of trade secrets. The operation of the battery plant 1 and 2 under construction in Georgia, US by investing KRW 3 trillion by SK, has also become uncertain. A US legal expert who requested anonymity said, “Sk batteries loaded in finished vehicles made outside the United States are not immediately subject to ITC sanctions, but the automakers will have a potential lawsuit against LG.” However, ITC imposed a deferral measure to minimize damage to the US automobile industry. As the battery supply contract with SK Innovation has already been completed, it has been allowed to supply batteries for two and four years, respectively, for some electric vehicle models of Volkswagen and Ford, which are starting mass production in 2022 and 2023. It also allowed limited imports for battery replacement and repair of Kia electric vehicles exported to the US with SK Innovation batteries. Regarding the ITC’s decision, LG Energy Solutions said, “We are protected by the intellectual property rights accumulated by investing tens of trillions of won over 30 years.” SK Innovation said, “It is regrettable that ITC’s decision was not to disclose the fact of the infringement of trade secrets. During the presidential deliberation period, SK Batteries and the Georgia plant in the US are planning to intensively convey that they are essential to the eco-friendly automobile industry that the US government is strongly pursuing.”

○ Will the gap in settlement amount of trillion won narrow?

There are three scenarios left. First, if President Biden exercises his veto, the effect of the import ban will be lost. In this case, the’battery lawsuit’ of both companies is judged by a civil lawsuit pending in the Delaware Federal Court.

According to a report by Reuters on the 12th, Governor Brian Kemp of Georgia, where the SK plant is located, said, “ITC’s recent decision puts SK’s 2600 clean energy jobs and investments in innovative manufacturing at risk in a pandemic situation.” Asked him to veto.

However, out of 600 ITC lawsuits in the last 10 years, only one case has been vetoed by the president. In 2013, Samsung Electronics won the patent infringement lawsuit filed against Apple, but the US President Barack Obama at the time gave the hands of its own company, Apple. Some analysts say that ITC has put a grace period to protect the US industry, reducing the cause of the veto.

If President Biden does not exercise his veto and the import ban goes into effect, SK Innovation can appeal to the Federal High Court. However, for a year or so after the final trial, SK Innovation must bear the damages caused by the import ban.

For this reason, there are many prospects that the two companies will reach an agreement immediately. If the two companies agree, the ITC import ban will be nullified. SK, which is expected to hit hard, has no choice but to actively engage in negotiations. LG believes that considering the legal costs, it is better to leverage the ITC decision and agree on it as soon as possible. LG said, “We must actively work to close the lawsuit as soon as possible with a proposal that meets the judgment.” SK said, “We plan to find a solution to protect the interests of our customers even during the grace period.”

The problem is settlement money. During the past two years, the negotiations have been broken, with LG offering up to 3 trillion won and SK offering up to 500 to 600 billion won. LG Energy Solutions pressed SK Innovation to raise the settlement amount. LG held an online press conference on the 11th, right after the ITC decision, and said, “It is difficult to say that SK Innovation’s technology takeover and damage is limited to the US region. I think that lawsuits in other regions basically depend on SK’s attitude.” Investment Bank Credit Suisse also came up with a prospect that “the settlement is expected to be over 5 trillion won” in the report after the final decision of the ITC.

However, SK Innovation said, “Last year’s battery division sales reached 1.6 trillion won and are still in the red, and the settlement amount of trillions of won means that the business should actually be stopped.” It is difficult to realistically accept LG’s request.

Doyoung Kwak [email protected]Go to reporter page>Reporters Dongil Seo and Seokho Hong