LG-SK Battery War in Quagmire... The Emerging Need for a Third-Party Mediation Institution

SK Innovation Begins Preparing Appeal for Higher Court After Analyzing Defeat Verdict…Large Gap in Settlement Amounts and Mutual Defamation Deepen Emotional Rift

[Asia Economy Reporter Park So-yeon] The 'battery litigation war' between South Korea's leading electric vehicle battery companies, LG Chem and SK Innovation, has fallen into a prolonged deadlock without finding a breakthrough. Although LG Chem gained the upper hand in patent lawsuits held in Korea following the U.S., SK Innovation immediately vowed to appeal, effectively halting settlement negotiations. Industry insiders express concerns that this dispute between Korea's top battery companies could negatively impact the 'K-Battery' industry amid increasingly harsh external conditions surrounding the Korean economy, such as the strengthening of global protectionism due to COVID-19 and technological advances by Chinese battery companies. There are calls for the owners of both groups to directly resolve the issue and for the involvement of a third-party arbitration institution.

According to industry sources on the 28th, SK Innovation began preparing an appeal for a higher court after analyzing the verdict in the 'LG Chem's Breach of Non-Filing Agreement Lawsuit' held yesterday at the Seoul Central District Court. Previously, the Civil Division 63-3 of the Seoul Central District Court (Presiding Judge Lee Jin-hwa) dismissed SK Innovation's claims in the 'Patent Infringement Related Lawsuit for Withdrawal and Damages' filed against LG Chem, stating, "The claim seeking enforcement of SK Innovation's withdrawal procedure and indirect enforcement lacks legal interest, and the agreement between SK Innovation and LG Chem does not include LG Chem's obligation not to file U.S. patents," thereby rejecting SK Innovation's claims.

The industry evaluates that this ruling has given LG Chem the initiative in the battery war, while also raising concerns that the gap in settlement amounts between the two companies will widen further. Although this ruling is not directly related to the core issue of trade secret infringement in the dispute between the two companies in the U.S., it could affect several ongoing patent lawsuits between them.

Both companies secretly hope to find a settlement before the U.S. ITC issues its final decision on trade secret infringement on October 5, but the gap in the settlement amounts desired by each side is very large. LG currently insists that the settlement amount should be calculated based on U.S. trade secret protection laws and precedents, with securities analysts estimating the settlement amount at around 2 trillion won. On the other hand, SK has not disclosed a specific amount but insists that proving the leaked technology and calculating damages should come first. The prolonged litigation between the two companies, which has lasted over a year, has led to extreme fatigue on both sides. It is known that the litigation costs incurred by the two companies in the U.S. alone have reached 300 billion won.

Low Likelihood of Grand Settlement by Both Group Heads… Third-Party Arbitration Led by Experts Needed to Assist in Settlement Amount Calculation

Recently, the battery litigation between the two companies has escalated into mutual defamation through complaints to domestic and international media and influential institutions, deepening emotional rifts. The conflict nearly exploded when it became known that LG Chem submitted a petition to the ITC regarding SK's illegal employment at its factory and urged sanctions against SK Innovation. Amid this 'fratricidal conflict' between domestic battery companies, major competitors like China's CATL are expanding their territory through ultra-cooperation by strengthening partnerships with global electric vehicle companies such as Tesla, backed by massive financial resources.

The industry sees only two solutions to end this 'chicken game' that is holding back K-Battery. One is for the heads of the two groups to meet amid the COVID-19 situation and reach a grand settlement. However, this is unlikely to be realized as it could raise issues of 'breach of fiduciary duty.'

The other proposed solution is mediator intervention. Experts in the battery field, led by the government, should form a mediation committee to assist in the rational calculation of the settlement amount. Some argue that government intervention could lead to accusations of abuse of power, and that mediating a dispute between domestic companies during ongoing trials at the U.S. ITC is impossible.

An industry insider said, "This is a very critical time as the global battery chain is rapidly evolving, and neither the government nor large corporations can afford to just watch each other," adding, "LG needs to quickly resolve the situation and expand its territory, and SK must also move on to the next stage."

This content was produced with the assistance of AI translation services.