Battery Battles: EV trade secret dispute comes to an end with the help of law firm Hogan Lovells

May 9, 2021

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2 min read

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What's going on here?

International law firm Hogan Lovells represented LG Energy Solution as it accused SK Innovation of stealing trade secrets and technology. The dispute between the South Korean companies ended in a last-minute settlement. 

What does this mean?

The long battle between two of the world’s largest electric vehicle battery manufacturers resulted in SK Innovation agreeing to pay around $1.8bn. In addition to the cash payment, the settlement included ongoing payment of royalty, a legally binding payment made to an individual or company typically for the use of their assets or work, and an agreement to withdraw all related legal disputes for 10 years. 

Hogan Lovells expressed that leading this settlement was a team effort across the regulatory and IP teams, also highlighting their role in orchestrating lobbying efforts through the highest levels of the US government. 

President Biden’s administration was involved as the US International Trade Commission announced a 10-year import ban on SK Innovation over the allegations. The settlement deal came only hours before the deadline in which Biden had to decide whether to overturn the ruling. This threatened the $2.6bn investment by SK Innovation in a new electric vehicle battery plant in Georgia and contracts to provide batteries for Volkswagen and Ford.

What's the big picture effect?

As the automotive industry shifts its energy towards electric vehicles, the resolution provides confidence in the big players’ ability to provide batteries and meet their responsibilities as suppliers. However, this also highlights the issue of dependency of the automotive sector on outsourcing crucial elements of the supply chain from a select few companies and foreign businesses. 

Hogan Lovells’ emphasis on their lobbying work reinforces the important political ramifications of business decisions, particularly with the move towards decarbonisation being high on political agendas. The factory in Georgia, a key election battleground, is expected to provide 2,600 jobs and represents the largest investment in the state’s history. President Biden called the settlement “a win for American workers and the American auto industry”. 

The settlement comes after LG, LG Energy Solution’s parent company, announced that it would leave the smartphone market to focus on electric vehicles, pledging to invest over $4.5bn in the US (to see a LittleLaw report on that, click here). LG Energy Solution also recently faced questions about the safety of its products as its batteries caught fire and triggered the costliest recall for electric vehicles by Hyundai Motor.  

Although the ban by the ITC left SK Innovation with little choice but to settle, the size of the settlement will hopefully deter future theft and goes to show just how much IP can be worth.

Report written by Yaeno Fernandez

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