SK Innovation Inc.’s board members on Thursday advised the South Korean electric vehicle battery maker not to pay hefty compensation for a settlement with LG Energy Solution Ltd. over the two companies' trade secret infringement dispute and instead, called on its top management to hire a global conflict expert and bolster its compliance monitoring system.
SK Innovation convened an extended audit committee meeting on Mar. 11, which all of its board members attended, to address the
US International Trade Commission's (ITC) ruling last month against SK over alleged trade secret misappropriation.
At the meeting, the committee members reprimanded SK’s top management for failing to properly handle the judicial proceedings in the US. They claimed that the US commission didn't touch on the core issue of the dispute – whether SK infringed on LG’s trade secrets – but called into question SK deleting relevant documents.
“It was regretful that SK lost the case without having an opportunity to defend itself against the allegations of trade secret misappropriation, the key issue of the lawsuit,” said Choi Wooseok, head of SK Innovation’s audit committee and a Korea University accounting professor.
"What is the most urgent and important thing for SK Innovation is to upgrade its compliance system to the global level, at a time when it is pushing for global expansion," Choi said during the meeting.
After reviewing proposed options to reach a settlement with LG Energy, the committee concluded not to accept LG's demand if it would significantly undermine SK’s business competitiveness.
LG Energy is demanding around 3 trillion won ($2.7 billion) in compensation to settle the dispute.
They called on SK Innovation executives to hire a global conflict expert from outside and revamp its response system to global lawsuits so that the company can build a perfect compliance monitoring system.
The decision by SK Innovation's board drew backlash from LG Energy Solution, which issued a statement on Thursday criticizing SK's response to the ITC ruling.
But LG left a door open for negotiation with its local rival, saying: “If they come to the negotiating table with sincerity, there are various ways to pay compensation such as cash, royalties or an equity stake.”
SK Innovation has asked the US government to veto the ITC's verdict by the Apr. 11 deadline. If denied, industry watchers said the company may threaten to withdraw from the US where it is currently building two EV battery plants in the state of Georgia.
Write to Jae-Kwang Ahn at
ahnjk@hankyung.comYeonhee Kim edited this article.
