Espionage on the big screen typically involves new gadgets, fast cars and archenemies. In some respects, the EV world experienced just that ─ although without the Vesper martinis and superyachts that movie audiences have come to expect.
In a trade secrets dispute before the U.S. International Trade Commission (ITC), LG Chem accused long-time rival SK Innovation of industrial espionage by headhunting more than 70 of LG Chem’s employees in order to steal its lithium-ion battery technology. The ITC recently ruled in favor of LG Chem, finding that SK Innovation was at least a decade behind LG Chem technologically, citing “the very large volume of stolen trade secret documentation and the expertise improperly acquired by (SK Innovation) from the former LG Chem employees it hired away.” The ITC also found that SK Innovation had engaged in the planned and intentional destruction of evidence in the time period leading up to and during the ITC proceedings. The ITC specifically called out “SK’s eagerness to destroy documents [and] SK’s callous disregard to ascertain the scope of the destruction after the commencement” of the ITC proceedings.
The ITC then imposed a ten-year ban on the import of batteries, battery cells, battery modules and battery-making equipment having the misappropriated technology. Although the length of the ban has made headlines, the ITC provided two exceptions that soften the ban’s effect. First, SK Innovation received a four-year limited exception to continue to supply lithium-ion batteries to Ford for the manufacture of the 2022 F-150 EV. Second, SK Innovation received a two-year limited exception to supply lithium-ion batteries to Volkswagen for the ID.4 crossover SUV being manufactured in its Chattanooga plant.
In the short term, the ITC decision does not appear to impact day-to-day EV production. But where does the decision leave SK Innovation and its customers, long term? If the Biden Administration does not overturn the ITC decision, many expect SK Innovation to negotiate an end to the long-standing dispute with LG Chem (which preexisted the ITC litigation), potentially allowing for the import of at least some batteries to U.S. customers. If a settlement is not reached, domestic market share is likely to grow for LG Chem and other battery suppliers, including for example CATL or Panasonic ─ which supplies batteries for Tesla (the Tesla Cybertruck was inspired by a Bond movie, but I digress).
In sum, it remains especially important that companies closely guard unpatented technologies as trade secrets, while being careful to respect the trade secrets of others. As exciting as espionage thrillers can be on the big screen, espionage in the business world can be expensive to resolve and result in lasting harm to customer relationships.
If you would like more information regarding the protection and enforcement of trade secrets, or have questions regarding the value of trade secrets for your business, please contact Vito Ciaravino or any of the intellectual property attorneys in our Automotive Industry Group.