The South Korean battery manufacturers are playing some hardball.

LG Chem released a note that its wholly-owned U.S. manufacturing subsidiary LGCMI is a victim of trade secret theft.

The company and its subsidiary filed on Monday (April 29, 2019) a pair of lawsuits (concurrently with the United States International Trade Commission and the United States District Court of Delaware) against South Korean-owned SK Innovation, Ltd. for "misappropriation of trade secrets, tortious interference with prospective economic advantage and other claims".

According to LG Chem's press release, between the end 2016 and early 2019, SK Innovation obtained a significant amount of documents (400 to 1,900 key technical documents) and knowledge through hiring of 77 highly skilled and experienced employees, some of which "traded in LG Chem’s valuable trade secrets to secure employment with SK Innovation".

SK Innovation intends to increase its lithium-ion cell manufacturing capacity from 5 GWh today to 100 GWh annually by 2025 and sell those batteries to many LG Chem customers like Volkswagen. Today's news sheds new light on why LG Chem is reportedly in conflict with Volkswagen about its joint gigafactory project with SK Innovation.

LG Chem adds also that in the past it encountered a similar issue with SK Innovation in Korea and won in the Supreme Court of Korea.

Here is more from LG Chem:

"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."

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

April 29, 2019 04:05 PM Eastern Daylight Time

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.