For Biden, Fear That a Wrong Step In a Big Trade Secrets Case Could Threaten His Battery Hopes
A deadline this week adjudicating a South Korean blood feud
At a fragile moment in the global technological war, President Biden is on the cusp of an extraordinary decision that some say could influence how fast and robustly the U.S. begins to ramp up battery manufacture at a time rivals Europe and China are already well on their way.
By Saturday, Biden must decide whether to step in and set aside a February ruling by the International Trade Commission banning SK Innovation, an important South Korean company, from making lithium-ion batteries in the United States for a decade. The ruling sided with one of SKI’s blood enemies, LG Chemical, which accused SKI of stealing trade secrets in order to produce a battery it has sold to Ford for its coming electric F-150 pickup and to VW for its new ID.4 crossover SUV. SKI planned to make the batteries for both at a new, $2.6 billion plant in the Georgian town of Commerce, part of a battery awakening in the U.S.
But the law allows the President to intervene and set aside the verdict, something that has precedent — President Obama did so in a separate battery case during his administration. SKI is pushing Biden lieutenants hard to overturn the ban, arguing that the Commerce factory has national security implications since the U.S. is competing with China to dominate the technologies of the future.
Until now, it has seemed that Biden is likeliest to do nothing, leaving the order in place and presuming that hard-nosed rationality would lead SKI and LG to strike a deal that would result in the factory going ahead. But a confluence of new, 11th-hour developments have broken SKI’s way and, though I myself would still bet on a settlement that favors LG but allows the Commerce factory to go forward, it’s no longer such a slam dunk.
In a separate ITC ruling last Wednesday, an administrative judge said that SKI’s battery had not violated LG patents. David Callahan, a lawyer for LG, told me yesterday that the two cases — the patent case and the earlier trade secrets ruling — are completely separate and not linked. But SKI is arguing the opposite — in an April 1 letter to Katherine Tai, Biden’s trade representative, an SKI lawyer asserted that the new ruling “demonstrates the unique technological advancements of SK’s lithium-ion battery technology.” The letter, a copy of which was provided by SKI to The Mobilist, argues that Biden should overturn the ITC’s trade secrets decision “rather than rush headlong into the shuttering of this critical [Georgia] plant and the loss of thousands of jobs associated with it.”
Among SKI’s outside lawyers is Sally Yates, the former acting U.S. Attorney General who gained prominence when she was fired by President Trump for insubordination. In a statement to The Mobilist, Yates said, “From a national security perspective, the U.S. can’t afford to let China corner the EV battery market, particularly since it already has approximately 75% of factory manufacturing capacity.”
It’s probably the strongest argument that SKI could make given Biden’s predilections — and the second of the 11th-hour events to favor SKI: Just last week, Biden launched a $174 billion initiative meant to put the U.S. on the global battery-and-electric vehicle map, part of his $2 trillion infrastructure plan.
The SKI plant is not actually under threat — the ITC decision gave SKI up to four years of operation to allow a smooth transition to someone else running it. Two weeks ago, LG said it could build a battery factory in Georgia, or help to run the SKI plant.
In terms of the United States’ chances of competing on an even footing with Europe and China in the battery race, that won’t be decided by a single plant in Georgia. The U.S. is far behind and needs to put a lot of chips on the board — fast.
But SKI’s strategy is interesting. It is pushing Biden not to do away with the LG dispute altogether, but to allow it to be adjudicated in a separate civil suit filed by LG in U.S. District Court on the same trade secrets charges. Such an approach would address the argument that Biden mustn’t enable the transgression of trade secrets and intellectual property.
Clearly, SKI believes it will either have a stronger hand in federal court than it did at the ITC, or at least a second shot at what was a humiliating written dressing down. One might argue that it might simply get a second humiliating dressing down. Whatever the case, one could also imagine Biden — seeing much a bigger game in the global battery race than a single battery dispute in Georgia — finding pragmatism in SKI’s new position.
