LG Chem’s Win In $1 Billion Electric Vehicle Trade Secret Dispute Upheld By International Trade Commission – Intellectual Property

Global competition in high-tech industries is as intense as
ever, and U.S. administrative agencies continue to find themselves
at the center of global disputes between foreign companies seeking
to vindicate trade secret and intellectual property rights. That
outlook was confirmed this month in a highly-anticipated ruling by
the International Trade Commission (“ITC”) in a trade
secret dispute between two South Korean manufacturers of electric
vehicle batteries.

On February 10, 2021, the ITC issued its final determination (Inv. No. 337-TA-1159)
affirming an administrative law judge’s (“ALJ”)
initial determination that the South Korean company SK Innovation
had violated Section 337 of the Tariff Act of 1930 by
misappropriating trade secret information regarding electric
vehicle batteries from LG Chem, Ltd., also from South Korea. The
ALJ had entered a default judgment against SK Innovation on
February 14, 2020, finding that SK Innovation had spoliated
evidence by destroying documents relevant to the case. As a remedy,
the ITC barred the imports of SK Innovation’s lithium-ion
battery products for 10 years. However, the ITC made a number of
important exceptions in light of public interest considerations.
First, the ITC permitted SK Innovation to continue importing
components for domestic production of lithium-ion battery products
for Ford Motor Co.’s electric F-150 production for four years
and for Volkswagen of America’s MEB line for the North America
Region for two years, in order to permit the auto-makers to
transition to new domestic suppliers. Second, the ITC permitted SK
Innovation to import articles for repair and replacement of
electric vehicle batteries for Kia vehicles equipped with SK
Innovation batteries that were sold to American customers before
February 10, 2021. The Biden Administration has 60 days to review
the ITC’s order.

The ITC’s investigation was initiated in June 2019 based on
a complaint filed by LG Chem, Ltd. and LG Chem Michigan, Inc.
against SK Innovation with the ITC and the District of Delaware,
alleging that SK Innovation had violated the Defend Trade Secrets
Act and the Delaware Uniform Trade Secrets Act by misappropriated
its electric vehicle battery trade secret information. LG Chem
alleged that SK Innovation had systematically stolen the
information by poaching former LG employees, including scientists,
engineers, and business individuals, and improperly obtained trade
secret information from the employees. LG Chem alleged that the
misappropriation had cost them over $1 billion in revenue.

This case highlights the relationship of ever-expanding
globalization with U.S. trade secret law, especially in high-tech
industries such as electric vehicles. The case has established U.S.
administrative agencies as a potential forum for foreign companies
doing business with U.S. companies to litigate trade secret and
intellectual property disputes. It is foreseeable that other
foreign companies competing in the U.S. may use similar avenues for
litigating trade secret disputes in future cases.

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