The patent in the lawsuit covers ceramic composite layer lithium-ion battery separators developed by Celgard for high-energy rechargeable lithium-ion batteries. This lawsuit has been filed following a lengthy period of unsuccessful discussions with LG regarding various business terms of its relationship with Celgard, including infringement of Celgard’s patent. Celgard is represented by the law firm Kilpatrick Townsend & Stockton, LLP.

Celgard battery separators are polypropylene (PP), polyethylene (PE), or trilayer PP/PE/PP electrolytic separator membranes.

Earlier in January, LG announced that it obtained a patent for its safety-reinforced separator (SRS) in Europe and Japan. LG Chem now has SRS patents in five regions, including South Korea, the United States and China. SRS uses nanoscale ceramic particles to prevent internal short circuits. LG Chem is also embroiled in litigation with another S. Korean company, SK Innovation, over the separator technology. (Earlier post.)

Separately, Polypore announced that Celgard and Samsung SDI Co., Ltd. have entered into a long-term supply agreement under which Samsung will purchase Celgard brand separator to be used in its electric drive vehicle and energy storage system lithium-ion batteries. (Earlier post.)

Celgard has a long history of innovation in lithium-ion battery separators and is a proven world leader in this technology. We value long-term customer relationships, and we are interested in partnerships that reflect the value of our products in applications such as electric drive vehicles (EDVs), where exceptional safety and performance characteristics are critical.

We supported LG for years under a formalized memorandum of understanding that was intended to result in a long-term supply agreement, investing substantial capital at their request and developing and qualifying high quality products with unique attributes. Unfortunately, after a long period of support and discussions, LG's recent approach and demands were simply unacceptable.

Legal action is not a decision we take lightly. However, LG’s recent approach in both consumer electronics and EDV applications leaves us with no choice. While LG has not confirmed this in writing to us as we requested, representatives of LG have verbally stated that they are attempting to qualify alternate sources of supply to Celgard separator—an action we believe constitutes further infringement of our coating patents. We are taking this action on behalf of our company and our shareholders to safeguard our assets, and we will continue to take appropriate steps to protect our intellectual property.

—Robert B. Toth, President and CEO of Polypore

During the fourth quarter of 2013, Polypore recorded no revenues from LG and expects to report fourth quarter sales for the Electronics and EDVs segment to be in the low- to mid-$30 million range.