ITC confirms SK Innovation stole trade secrets

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ITC confirms SK Innovation stole trade secrets

                        [YONHAP]

[YONHAP]

SK Innovation could not have independently developed its lithium-ion batteries for electric vehicles (EVs) without misappropriated trade secrets from LG Energy Solution, the U.S. International Trade Commission (ITC) stated in its judgement Thursday.

 
The trade panel accepted LG Energy Solution’s claim that SK Innovation misappropriated 22 trade secrets related to EV battery technology, essentially giving SK a 10-year head start on the business.
 
The full judgement came a month after the U.S. ITC on Feb. 10 ruled in favor of LG in its prolonged battery dispute against SK and issued a 10-year "limited exclusion order" on SK, banning the company from importing batteries and components to the United States.
 
The Thursday disclosure provided a detailed explanation for the decision.
 
“The duration of relief in a case of misappropriation of trade secrets should be the time it would have taken the respondent [SK Innovation] independently to develop the technology using lawful means,” the ruling read.
 
The misappropriated trade secrets encompass the overall manufacturing process, mixing recipe of chemicals as well as “bill of materials,” which according to LG is a vital part of its business, including a list of materials, where they are sourced from and their prices.
 
The commission condemned SK for destroying evidence related to the case.
 
“What is most remarkable about SK’s spoliation is the combination of the scope of the spoliation and its frequency,” the ruling read.
 
“Corporate culture of collecting and destroying records was rampant, well-known and condoned at SK. The destruction was ordered at a high level and was carried out by department heads throughout SK.”
 
LG Energy Solution said that such misappropriation lead to an estimated 5.3 trillion won ($4.7 billion) in illicit gains to SK over the past 10 years.
 
“The company has poured 5.3 trillion won in research and development for the past 10 years related to batteries, and when including facility investment, LG Energy Solution spent a total of 20 trillion won,” Han Woong-jae, head of legal affairs at LG Energy Solution, said.
 
LG said it is willing to receive compensation from SK in any method ranging from a one-time payment, royalty payment or in the form of shares, but hasn't heard from SK Innovation since the ruling was first announced last month.

 
SK Innovation expressed regret towards the ITC’s explanation Friday saying that the ruling focuses on the defects found in the process of the investigation rather than the trade secrets, which lack evidence.
 
The oil refining and battery making company is banking on the White House to veto the ITC ruling which has to be done within 60 days of the decision.
 
It said Joe Biden's green initiative could be threatened if the ITC's ruling goes through, as the import ban would jeopardize operation of its Georgia EV battery plant in which SK promised to invest $2.6 billion and create 2,600 jobs. The plant would be able to charge 430,000 units of EVs annually once completed.
 
Soon after the ruling, Georgia Governor Briam Kemp called on Biden to intervene the ruling, followed by Georgia's junior senator Raphael Warnock, a nominee for the U.S. Transportation Department's secretary, saying the ITC ruling "serious threatens" the planned investment in Georgia.
 
The ITC allowed SK Innovation to import battery components necessary for its existing U.S. clients including Volkswagen and Ford. It granted a two-year grace period for Volkswagen and four years for Ford to find other battery suppliers.
 
"[The ITC's decision] would harm the U.S. economy by destroying thousands of high-tech green energy jobs," SK Innovation said Friday.
 
"It would frustrate U.S. plans to protect the environment by producing batteries for EVs and stationary storage."
 
BY JIN EUN-SOO   [jin.eunsoo@joongang.co.kr]
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