WASHINGTON--(BUSINESS WIRE)--The US International Trade Commission on Thursday published the agency's findings following its two-year investigation into SK Innovation's unfair trade practices, concluding that it misappropriated 22 of LG Energy Solution's trade secrets worth billions of dollars spanning the entire electric vehicle battery business.
This public release follows the USITC's orders last month blocking the importation, domestic production, and sale of SK batteries with certain exceptions to prevent job losses or any interruption or delay in the domestic supply chain. The exceptions were unprecedented and allow SK Innovation to continue to exploit the trade secrets it stole for a period of several more years.
"LG Energy Solution's multi-billion dollar investment in its lithium-ion battery business was a down payment on a carbon-free future and an investment we believed was safe from intellectual property thieves," stated Denise Gray, President of LG Energy Solution Michigan Inc. Tech Center. "SK Innovation stole a technology that required tens of thousands of hours of careful and costly engineering. The release of the ITC's decision puts to rest any questions of whether SK Innovation did anything wrong—they did, repeatedly, and now they must be held accountable."
The 96-page final determination provides indisputable evidence of SK Innovation's deliberate, repeated illegal actions and extraordinary bad faith efforts to hinder the Commission's investigation.
The Commission wrote that "SK has a history of collecting documents about LG and SK's competition with LG, and then destroying those documents. For one example, among many, as recently as 2018 ... an SK battery supervisor, ordered his team to hide or destroy 'the documents you took from 'L' company' and 'please don't save this email as well!!'... What is most remarkable about SK's spoliation ... is the combination of the scope of spoliation with its frequency. It was not enough for SK to destroy or hide its records once, because SK then, unchastened, collected more LG propriety information, only to destroy or hide those records as well."
The Commission wrote that it considered "SK's destruction of evidence in this case to be extraordinary" and that "[t]he destruction was ordered at a high level and was carried out by department heads throughout SK."
The Commission found that "[a]s the evidence indicates, SK misappropriated LG's business trade secrets, including LG's competition pricing information. It is therefore consistent with the record that SK's proposal would be the lowest cost." It added that "the record supports the Commission's finding that it would take ten years for SK to develop products without the 22 trade secrets. Accordingly, the Commission finds that the duration of any orders issued should cover a period of 10 years from their effective date."
Finding a violation of Section 337 of the US Tariff Act, the Commission imposed a 10-year-long exclusion order preventing SK Innovation's importation of batteries, battery cells, battery modules, battery packs, and components. The USITC, however, provided a carve-out to allow SK to import identified technology for use in the manufacturing of batteries for Ford and VW at its Georgia facility for four and two years, respectively. The carve-outs protect Ford and VW by providing a window to transition to a new supplier or for SK to develop its own technology or reach a settlement.
"LG Energy Solution is a 20-year partner to America's automotive sector and is working diligently to scale to meet the needs of the country's electric vehicle ecosystem," Denise Gray, President of LG Energy Solution Michigan Inc. Tech Center said. "The protection of trade secrets, as the ITC has provided, will allow those critical investments to continue apace."
In 2019, LGES entered into joint venture with General Motors to build a $2.3 billion manufacturing facility in Ohio to mass-produce battery cells. It also operates an additional battery plant in Michigan and will presently announce further US operations.
For more information, please visit www.LGESvSKI.com.
