LG Chem sues SK Innovation over allegedly stealing electric car battery trade secrets

LG Chem, one of the top battery suppliers for electric vehicles, filed federal lawsuits against SK Innovation (SKI), another top battery supplier for electric vehicles, over allegedly stealing trade secrets.

In the suits, LG alleges that SK Innovation “accessed trade secrets” by hiring 77 employees from their lithium-ion battery division of LG Chem, which they claim “developed the world’s first commercial pouch-type Li-ion battery for automobiles.”

They claim that some of those employees stole some trade secrets before leaving for SK Innovation:

“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 is the world’s leading supplier.”

LG Chem claims to have evidence of the employees conspiring with SK Innovation.

The company filed similar lawsuits against SKI in Korea, both companies are based in South Korea, and they won in Supreme court.

They are asking for injunctive relief to block SKI from importing its battery cells and modules in the US.

Electrek’s Take

Obviously, I am against intellectual property theft, but I am also for accelerating the advent of electric transport, which I would argue is a much bigger problem than IP theft.

I feel like there would be a way to resolve this without blocking them from importing their batteries, which will stop some electric vehicle programs.

SK Innovation is building a new electric vehicle battery gigafactory in the US and it supplies batteries to Mercedes-Benz and Hyundai-Kia Motors.

I’d be really disappointed if those lawsuits actually affect the production of the Mercedes-Benz EQC, Kia Niro EV, or Hyundai Kona EV.

It will be a story to follow in the coming months.

Here’s the full press release about the lawsuit:

LG Chem Alleges Trade Secrets Theft, Files Federal Suit against SK Innovation

ATLANTA–(BUSINESS WIRE)–The wholly-owned US manufacturing subsidiary of LG Chem, Ltd., the global leader in pouch-type lithium ion battery manufacturing whose unique technology underpins a significant share of the American electric vehicle market, filed on Monday a pair of lawsuits against South Korean-owned SK Innovation., Ltd. 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.

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 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.

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 is 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 specially 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. Even worse, some of these employees 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 contract has increased by more than fourteen 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 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 favor 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 result, SK Innovation continued to poach LG Chem’s employees even to this point.