On February 10, the U.S. International Trade Commission (“ITC”) issued a final determination finding South Korean lithium-ion electric vehicle battery maker SK Innovation misappropriated the trade secrets of its Korean competitor LG Chem in violation of Section 337 of the Tariff Act of 1930. The ITC issued a 10-year exclusion order blocking SK’s imports into the U.S. of lithium-ion batteries and related products, but with substantial exceptions: SK is permitted to continue importing these products specifically for Ford Motor Co.’s EV F-150 program for four years, for Volkswagen of America’s modular electric drive line for two years, and for the repair and replacement of EV batteries for Kia vehicles sold to U.S. customers. President Biden and his U.S. Trade Representative—Katherine Tai has been nominated but not yet confirmed—now have 60 days to review the ITC’s electric vehicle battery exclusion order, an order that could be seen as in tension with the new administration’s promotion of green energy.
As we noted several months ago, this investigation began in April 2020 when LG filed a complaint with the ITC alleging SK misappropriated LG’s trade secrets by hiring over 100 former LG employees, including 70 engineers. LG alleged these former employees were asked to disclose confidential information during the recruitment process and downloaded 1,900 confidential documents from LG’s database. According to the ITC’s final determination, SK defaulted in the case by failing to comply with an order directing it to allow forensic examination of its computer system, and such default entitled LG to the aforementioned exclusion order.
LG’s related lawsuit against SK in the District of Delaware was stayed in June 2019 pending the ITC’s determination and any appeals pursuant to 28 U.S.C. § 1659(a). It remains to be seen whether the broad exceptions to the ITC’s exclusion order may ultimately facilitate a global settlement of the claims.
The ITC’s final determination in this case is part of an increase in the ITC’s attention to trade secret misappropriation in recent years. It is also part of a recent push by South Korean businesses at the ITC. In December, the ITC found trade secret misappropriation by a South Korean manufacturer of an anti-wrinkle beauty treatment, excluding imports for 21 months.