ITC Limited Exclusion Order in LG Battery Dispute Awaits Presidential Action
Mar. 23, 2021
By: Michael N. Coopersmith
In a recent action initiated by LG Chem, Ltd. of Seoul, South Korea, and LG Chem Michigan, Inc. of Holland (LG), the U.S. International Trade Commission (ITC) found that certain SK Innovation (SK) lithium-ion batteries imported into and for sale within the U.S. were produced utilizing LG trade secrets. . The finding has led the ITC to issue an exclusion order for the items in question, effectively barring them from entering the U.S. customs territory. The products at issue are of particular importance because they are used in electric vehicles and are a necessary component for electric cars to qualify as originating under USMCA.
The action was the result of a Section 337 investigation. Section 337 investigations involve claims concerning intellectual property rights. In the initial complaint, which requested the issuance of a limited exclusion order along with a cease-and-desist order, LG alleged that SK had misappropriated electric vehicle battery trade secret information. In part, LG alleged that SK had stolen trade secret information by strategically hiring former LG scientists and engineers, and then improperly using their knowledge of LG products and processes. LG has alleged that the misappropriation has cost them over $1 billion USD in revenue.
The case has once again shown the ITC to be an attractive forum for foreign companies doing business with U.S. companies. Because an exclusion order can block infringing products from entering the U.S. market, section 337 actions may be used as a powerful tool for complainants looking to litigate trade secret and intellectual property disputes. Due to the comparative speed of a section 337 action, such a strategy often represents an attractive alternative to the U.S. federal court system.
The final ITC exclusion order issued in the LG case is now before the President, awaiting his final approval or denial as required by Section 337. While presidential vetoes of section 337 exclusion orders are rare, the Biden Administration has made it clear that it views an increase in electric vehicle production and adoption as a critical component of its green transportation goals, and SK has argued approval of the exclusion order will negatively impact the ability of U.S. automakers to expand their EV offerings. President Biden is now several weeks into a 60-day window in which he is to decide whether he will approve or deny the final ITC exclusion order. If the President takes no action during the 60-day window, the ITC determination will be deemed to be approved and will become final.
If you have any questions or would like more information about Section 337 investigations do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.