"Admit Fault and Increase Settlement Amount"... LG Steps Up Pressure

LG Energy States Position on Agreement During Conference Call
Disagreements Over Confidentiality Breach and Total Settlement Amount During Negotiations

Seoul LG and SK Headquarters Buildings

[Asia Economy Reporter Choi Dae-yeol] LG Energy Solution announced on the 11th that it could enter into a settlement if SK Innovation acknowledges trade secret infringement as per the final decision of the U.S. International Trade Commission (ITC) and presents a sufficient amount of damages.

Jang Seung-se, Executive Vice President of LG Energy Solution's Business Strategy Division, said during a conference call held that day, "(This final ruling) means that the trade secret infringement we have claimed so far has been acknowledged," adding, "(SK's side) had taken a stance of not acknowledging this, which caused difficulties in negotiations." He further stated, "We do not expect a situation where (SK's battery) business cannot proceed, and for orders and such, a settlement on damages must be reached," adding, "If they approach negotiations with sincerity, business opportunities will continue."

Following the ITC's decision, the two companies are expected to negotiate over the next 60 days. During this period, the U.S. President will also review the ITC decision, and President Biden may exercise a veto against the import ban administrative order. Exercising the veto involves a political judgment considering the 'public interest' regarding the ITC's administrative order. However, since the ITC has already granted grace periods for import bans to automakers like Ford and Volkswagen, it is a delicate situation to exercise the veto. Therefore, more attention is focused on a settlement between the two companies rather than the President's veto. If a settlement is reached, SK Innovation's plant operation will be possible, but if no agreement is made within the review period, the import ban will be enforced immediately.

SK Innovation may also appeal to the U.S. Federal Circuit Court within 60 days after the review period. However, in this case, the import ban and injunction against trade secret infringement will remain in effect. Even if the court reviews the case again, the industry expects a low possibility of overturning the ITC decision.

According to LG Energy Solution, since 2010, there have been six trade secret infringement lawsuits resulting in import bans by ITC final decisions, and five of these were appealed with no changes in outcomes. Given SK's expectation of business expansion, including investing trillions of won in local plant establishment, the background suggests a high possibility of entering into a settlement.

"Damages Amount Could Increase by Up to 200%
LG Holds Negotiation Advantage... 'May File Lawsuits Outside the U.S.'"

Neither company has officially disclosed specific settlement amounts. According to industry sources, SK proposed several hundred billion won, while LG's figure is reportedly in the 2 to 3 trillion won range, showing a significant gap. This difference stems from how the core issue of trade secret infringement is viewed, and with the ITC ruling in favor of LG, the negotiation leverage has tilted toward one side.

Regarding whether the settlement amount will be increased considering punitive damages under U.S. law, LG stated that it depends on how SK acknowledges its wrongdoing and proceeds with negotiations. Depending on the situation, there is also a possibility of additional lawsuits in regions outside the U.S., such as Europe or Korea, where damages may be recognized.

Han Woong-jae, Head of Legal Affairs at LG Energy Solution, said, "Under the U.S. Federal Trade Secrets Act, damages can legally be increased by up to 200%," adding, "Whether this is reflected in the settlement amount depends on SK's negotiation attitude." Assuming the rumored LG settlement offer is about 2.5 trillion won, the amount could increase up to 7.5 trillion won.

SK's Large-Scale Investment in the U.S... Ford and Volkswagen New Car Supply Contracts Also
Future of Local Business Depends on Negotiation Results Over the Next 60 Days

Regarding the import ban imposed on SK this time, with a grace period of about 2 to 4 years granted to supply local automakers, LG expects that even if the plant operates during this period, the actual supply period will not be long. This is because the models Ford and Volkswagen are developing are expected to be released in the first half of next year. Executive Vice President Jang said, "(The ITC granting) a grace period means providing time to find alternative battery suppliers."

SK still shows reluctance to acknowledge trade secret infringement. SK Innovation stated, "We regret that a substantive judgment on trade secret infringement has not been made," and "We will do our best to rectify the decision through the remaining procedures."

They also plan to actively communicate the significant damage to the local economy and potential electric vehicle consumers if SK's battery plant in the U.S. does not operate properly due to this decision. Lim Soo-gil, Head of SK Innovation's Value Creation Center, said, "If the conditions are reasonable, we are always willing to negotiate for a settlement," adding, "Let's end the lawsuit early and cooperate for the development of the industrial ecosystem and the national economy."

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