LG Chem gets default win in US ITC suit after SK Innovation’s contempt of court

The US’ International Trade Commission has made a default judgment in favor of LG Chem in its suit against SK Innovation, LG Chem said Sunday, hinting that the end is near in the legal tug-of-war between the two Korean battery makers.

A default judgment occurs when a court rules in favor of the plaintiff in default following the defendant’s failure to fulfill due responsibility in a legal case. The US ITC might disclose the reason for its decision in the coming week.

If the ITC determines that SK Innovation did violate LG Chem’s trade secrets, SK Innovation’s battery cells, modules, packs and components will be banned in the US market, undermining the firm’s electric vehicle-related business.

The case dates back to April 29 last year, when LG Chem sued SK Innovation for unlawfully acquiring trade secrets related to rechargeable lithium ion batteries and components by poaching staff.

The day after LG Chem raised the suit, SK Innovation internally ordered its staff to delete any evidence on their PCs that might work against the company in the legal case, according to the ITC’s investigation.

It was also found that on April 8, when LG Chem sent out the first of its warnings, SK Innovation had proceeded to destroy some 34,000 files and emails.

Despite the subsequent ITC order to run digital forensics on 75 Excel sheets, SK Innovation only did so for one while carrying out furtive, independent forensics on the rest of the sheets.

LG Chem appealed for a default judgment with the ITC on Nov. 5. 

The US court upheld LG Chem’s complaint about SK Innovation’s violation of the forensics order and contempt of court, LG Chem said. It acknowledged the malicious, extensive destruction of evidence on SK Innovation’s part. 

The case will bypass the hearing scheduled for early March, and instead proceed straight to the ITC’s final determination on Oct. 5. The ITC decision will affect another ongoing suit in the US state of Delaware, LG Chem said.

“We regret that SK Innovation’s actions obstructed (a) fair suit so much so that a default judgment had to be made,” LG Chem said, “Our argument against SK Innovation’s violation of trade secret stands validated, and we will continue to act with due diligence for the remainder of the suit.”

Hours later, SK Innovation issued an official statement to say that the company had been duly following the legal process.

“We regret that our arguments were not fully reflected. Only after we receive the official judgment from ITC we will know the specific reason why they have decided on the default judgment,” SK Innovation said.

“We will review this judgment and proceed to due legal appeals process,” the company added, stressing that SK Innovation and LG Chem have competition in good faith and that for the development of the overall industry they must collaborate.

SK Innovation’s Georgia plant is set to be completed in 2021.

By Lim Jeong-yeo (kaylalim@heraldcorp.com)