By: Stephen Agnatovech
One of the policies President Joe Biden has promised to uphold amidst his election is a sweeping $2 trillion climate plan that emphasizes an inextricable link between economic recovery and climate change. Built into the Biden plan is a focus on zero emission vehicles — both battery-electric and fuel cell electric — and the potential they bring to helping Americans recover jobs, income, and clean air. At 28 percent of overall emissions in the United States, the transportation sector is the leading source of the United States’ carbon emissions, and a major contributor to poor air quality and safety issues, especially in low-income communities and communities of color.
The economy-wide net-zero carbon emissions standard is set to be achieved by 2050 and a 2035 target date for a carbon pollution-free American utility sector has been predicted as well. However, since Biden has taken office there has been a slight bump in the road in regard to imports of lithium ion batteries used to make electric vehicles and there may be some difficulty for Biden’s 2035 projection if it isn’t taken care of.
Pressure is mounting on two South Korean companies that are the world’s largest manufacturers of electric-vehicle batteries; SK Innovation Co. (“SK”) and LG Energy (“LG”). The South Korean companies’ battle over lithium ion batteries and their components goes back to April 2019, when LG Energy entered complaints with the International Trade Commission (“ITC”) and a federal court in Delaware. Last month, the ITC sided with LG Energy and banned the importation of SK Innovation’s electric vehicle batteries for 10 years.
LG had accused SK of a “multicompany international conspiracy” to poach its employees and steal trade secrets. SK is lobbying the Biden administration to overturn the ban due to their significant business ties with the U.S. that would cost thousands of jobs. The import ban goes into effect in mid-April unless President Joe Biden takes the unusual step of overturning it on public policy grounds. Since 1987, this has only been done once by President Obama on behalf of Apple who was fighting with South Korea based Samsung Electronics Co.
Both Ford and Volkswagen also have a stake in this dilemma of SK’s 10-year import ban. Currently, Ford and Volkswagen both plan to buy SK’s batteries and would be severely behind in the pursuit to meet Biden’s zero emissions plan in their production of fully electric vehicles if they weren’t able to obtain batteries from SK. The ITC thankfully allowed SK to continue to ship battery components for up to four years to meet Ford’s demand on lithium batteries, but only two years for Volkswagen, which is concerning. Other factors are also forcing Biden’s hand to overturn the ITC decision.
Georgia’s current governor, Brian Kemp, has called on Biden to overturn the decision citing SK’s battery making plant that promises to create 2,600 jobs for people in Georgia. Moreover, SK has warned it would be forced to halt construction of a $2.6 billion battery plant in Georgia if Biden does not use a 60-day presidential review period to overturn the decision. These factors certainly make Biden overturning the ITC decision reasonable.
Neither SK or LG can be sure where the Biden administration will land on the competing interests of promoting more home-grown battery making amid a global supply shortage and fears of being seen as soft on the theft of trade secrets, which is a key problem in trade battles with China. Due to the fact that there has been serious misconduct in the misappropriation of trade secrets by the defendant, it makes it unlikely for Biden to reverse the course taken by the ITC. Biden, in the upcoming months, will have to determine if his climate change policy is more important than upholding the seriousness and importance of trade secret misappropriation.
The best-case scenario for Biden is to hope that both SK and LG come to a settlement rather than SK appealing the ITC’s judgment. While each side has said they are willing to reach a settlement, there’s no indication they’ve had talks since the ITC ruling. SK Innovation said it “hopes LG Energy will come to the table with an open mind.” LG Energy reiterated that it’s open to talks with SK Innovation. The best thing for the battery industry here is a financial settlement by SK to LG for its misappropriation so that both parties can move on and continue to be a supplier in the market.
Ultimately however, if a settlement is not reached in the next few weeks, Biden will have to make the decision to either sweep the trade secret misappropriation under the rug and let his climate change policy come to fruition, or uphold the sanctity of trade secret law.
Student Bio: Stephen Agnatovech is a second-year law student at Suffolk University Law School. He currently serves as a staff member on the Journal of High Technology Law. Stephen received his Bachelor of the Arts in Political Science from Stonehill College.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
