LG Chem sues SK Innovation over Li-ion batteries for EVs, SKI terms claims as 'without merit'

by Autocar Pro News Desk , 30 Apr 2019

Lithium-ion batteries from LG Chem

LG Chem, the South Korea-based producer of lithium-ion batteries, has filed a lawsuit against SK Innovation, a South Korea-based petroleum refining company for misappropriation of trade secrets, tortious interference with prospective economic advantage and other claims. Brought jointly by LGCMI, the US-subsidiary, and its parent corporation, the suits were filed concurrently with the United States International Trade Commission and the United States District Court of Delaware.

According to a report in Businesswire, the suits allege that defendants accessed trade secrets by SK Innovation’s hiring of 77 highly skilled and experienced employees in the lithium-ion battery division of LG Chem, which claims to have developed the world’s first commercial pouch-type Li-ion battery for automobiles. This technology has been adopted by automotive manufacturers worldwide as well as other consumer electronics applications.

Representational image of the Nissan Leaf's 62kWh li-ion battery.

These employees include dozens of engineers involved in the research and development, manufacturing and assembly, and quality assurance testing of Li-ion batteries, including the newest and most advanced generation battery technology. The lawsuits allege that a significant number of these workers engaged in the theft of LG Chem’s trade secrets to benefit SK Innovation in the development and manufacturing of pouch-type Li-ion batteries, of which LG Chem claims to be the world’s leading supplier.

An internal audit of company communications and other data revealed that these employees openly conspired not only to steal LG Chem’s trade secrets but to leverage that information in employment considerations before SK Innovation. Applications and curriculum vitae, written especially for SK Innovation and stored on LG Chem computers, found these employees traded in LG Chem’s valuable trade secrets to secure employment with SK Innovation. For example, one of these employees inserted LG Chem’s key technical trade secret information regarding electrode manufacturing process on his curriculum vitae for SK Innovation. Also, some of these employees are alleged to have downloaded 400 to 1,900 key technical documents from LG Chem’s data server before their move to SK Innovation.

Coincidentally, from the end of 2016 – when the move of these 77 employees began – to the beginning of this year, SK Innovation’s aggregated amount of EV battery supply in the contract has increased by more than 14 times.

“SK Innovation has taken LG Chem’s highly skilled engineers and other critical business services staff, thereby gaining access to LG Chem’s highly valued lithium-ion battery trade secrets. As a direct consequence of that theft, SK Innovation has begun manufacturing and selling imitation Li-ion batteries to LG Chem’s customers and prospects across the world,” Hak Cheol Shin, vice chairman and chief executive officer of LG Chem, said. “SK Innovation’s blatant disregard for the rule of law damages the integrity of the free market and disrespects the innovators whose blood and sweat created a technology that’s proven vital to a greener world.”

LG Chem is seeking injunctive relief to cease any importation of Li-ion batteries, including both commercial Li-ion battery cells and modules, and to bar SK Innovation from importing the manufacturing and testing equipment necessary to build Li-ion batteries, as the machinery similarly relies on LG Chem’s trade secrets. Additionally, the company is seeking to prevent further disclosure and use of trade secrets and significant monetary damages.

LG Chem says it has already dealt with SK Innovation on a similar issue in Korea, where it sued five of its former employees who moved to SK Innovation for breach of their non-compete obligations. The Supreme Court of Korea ruled in favour of LG Chem, holding that the actual threat of potential disclosure of LG Chem’s valuable trade secret information justified the enforcement of the non-compete obligations. Despite such a result, SK Innovation continued to poach LG Chem’s employees even to this point, says LG Chem.

SK Innovation to defend itself against LG Chem’s lawsuit
Meanwhile, SK Innovation plans to defend itself against the lawsuit filed by LG Chem. As per a statement issued by the company, it says, “SK Innovation (SKI) has reviewed the lawsuit filed by LG Chem and has determined the claims are spurious and without merit. The company will vigorously defend itself against LG Chem in a court of law. SKI has invested nearly 1 trillion Korean won, approximately $860 million US$ in battery research and development. Not only do SKI and LG Chem have very different approaches to producing electric vehicle batteries and developing related technology, but SKI is already an industry leader.” 

“SKI hires its employees around the world through open and transparent recruiting processes, and insists all prospective and existing employees not disclose any information which may be even remotely considered confidential or of trade secret in nature.”

“This is not the first time LG Chem has initiated frivolous lawsuits full of baseless claims – all of which have been found meritless. We are confident this is yet another of LG Chem’s attempts to try to stem our growth and position in the industry as a leading battery maker and the proven choice of top partners and customers across the globe.

"If LG Chem continues to make groundless accusations without stopping, we will strongly respond to them with all possible means, including legal measures, to secure customers and the market," said Su-kil Lim, a spokesman for SK Innovation. 

Also read: SK Innovation goes bullish on European EV market

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