The wholly-owned US manufacturing subsidiary of LG Chem, Ltd. filed a pair of lawsuits against South Korean-owned SK Innovation., Ltd. for misappropriation of Li-ion battery 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 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, suggested these employees traded in LG Chem’s valuable trade secrets to secure employment with SK Innovation, according to the charges.
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. Some of these employees downloaded 400 to 1,900 key technical documents from LG Chem’s data server before their move to SK Innovation, the company charged.
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
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.
LG Chem is one of the world’s largest lithium-ion battery manufacturers with a market-leading position in advanced batteries for grid-scale, residential storage and automotive applications. Its advanced lithium ion battery technology is the product of 23 years of experience in the development and production of mobile batteries and large-format batteries for automotive and energy storage systems (ESS).