U.S. ITC bans SK Innovation from importing batteries for 10 years

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U.S. ITC bans SK Innovation from importing batteries for 10 years

Construction site of SK Innovation's battery factory in Georgia in Jan. 2020. The two factories in Georgia were expected produce batteries enough to power 300,000 electric vehicles per year after starting mass production in 2023. [YONHAP]

Construction site of SK Innovation's battery factory in Georgia in Jan. 2020. The two factories in Georgia were expected produce batteries enough to power 300,000 electric vehicles per year after starting mass production in 2023. [YONHAP]

The U.S. International Trade Commission (ITC) on Wednesday ruled in favor of LG Energy Solution against SK Innovation in a battery trade secret dispute, banning SK from importing batteries and components for 10 years.  
 
The commission, however, permitted SK Innovation to continue to import battery components for a limited time for domestic production of batteries for U.S. clients including Ford, Volkswagen and Kia.
 
It permitted component imports for Ford’s EV F-150 program for the next four years and Volkswagen’s MEB lines for two years. The grace period is to allow the automakers to find another domestic battery suppliers, the ruling said. It also permitted SK Innovation to import components to allow it to repair and replace batteries installed in Kia’s electric vehicle (EV) lines in the United States.  
 
SK Innovation said it “feels sorry” about the ITC ruling and said it will focus on the remaining process including the presidential review to stress that its battery production in the United States is vital to the current administration’s green energy initiative. 
 
LG and SK’s trade secret dispute started in 2019 when LG Chem, before its EV battery unit was spun off, alleged SK Innovation had misappropriated EV battery-related trade secrets by hiring a group of former employees, an accusation that SK Innovation denied.  
 
The conflict then continued as both companies filed multiple patent litigations against each other.  
 
The ITC had made a preliminary ruling in Feb. 2020 in favor of LG, but delayed the final ruling three times.  
 
The conflict extended to a political issue in the United States as well, as the Joe Biden administration has shown strong determination in fighting climate change and quickly adapting EVs is one of the main ways to do it.  
 
SK Innovation was supposed to play a major role in that initiative through its ongoing construction of two plants in Georgia expected to produce enough batteries to power 300,000 EVs per year after going into mass production in 2023. The plant is part of a $2.6 billion investment by SK Innovation into its U.S. battery business. The Georgia plant was also expected to generate 2,600 permanent jobs, with hiring already started.  
 
The U.S. administration has 60 days to review whether to veto the ITC ruling. Over the past three decades, there has been only one time when a president went against the ITC decision.  
 
If the two sides come to an agreement within the review period, the ITC ruling could be overturned and SK Innovation will be free from the 10-year import ban.
 
If the agreement fails, however, the legal conflict will continue at the U.S. District Court of Delaware where LG Energy Solution filed a lawsuit against SK seeking compensation and a ban on use of SK batteries that misappropriated LG's trade secrets in the United States.
 
The latest ITC ruling will inevitably act in favor of LG Energy Solution when deciding on the amount of settlement money.  
 
“The latest ruling is meaningful as it legally protects intellectual property that the company has invested tens of trillions of won in over the past 30 years,” LG Energy Solution said in a statement after the ruling.  
 
“If SK Innovation doesn’t come up with a settlement proposal that corresponds to the trade secret misappropriation and is not acceptable to shareholders and investors, LG Energy Solution will strongly proceed with lawsuits filed with the Delaware Court and local courts.”
 
BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]
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