LG Chemical, a South Korean company, recently filed a lawsuit with the Seoul Central District Court against the Korean subsidiary of China’s Capchem Technology, Zai Shi Energy, accusing them of stealing its charging battery cathode material technology. The court has accepted LG Chemical’s request for evidence protection and initiated relevant procedures at Zai Shi Energy factory. This marks the first time a South Korean company has sued a Chinese company over patented technology for large electric vehicle batteries.
According to the South Korean industry disclosed on October 23, LG Chemical stated that through analyzing Capchem Technology’s cathode material samples, they confirmed that several of their patents were infringed upon. The analysis results showed that Capchem Technology unlawfully used LG Chemical’s NCM (Nickel, Cobalt, Manganese) cathode material technology patent through Zai Shi Energy’s production and sales.
Cathode material represents around 40% of the battery production cost and is a crucial material determining the battery life. LG Chemical first mass-produced NCM cathode material in the world in 2006 and currently holds over 1300 cathode material patents worldwide.
Capchem Technology is China’s largest producer of high-performance cathode material for electric vehicles, specifically high-nickel NCM. In order to benefit from the U.S. Section 301 exclusion, Capchem Technology circumvented battery import restrictions and established a subsidiary, Zai Shi Energy, in South Korea.
Zai Shi Energy currently operates a cathode material factory in Chungcheongbuk-do, South Korea, with plans to produce over 100,000 tons of cathode material annually.
LG Chemical stated that after confirming their patents were infringed upon through the analysis of Capchem Technology’s cathode material samples, they decided to file a lawsuit.
Regarding the first lawsuit by a South Korean company against a Chinese company in the large-sized electric vehicle battery technology sector, experts believe that this lawsuit will set a precedent for future disputes over cathode material patents.
In addition to the legal action taken by LG Chemical, earlier this year, they reported Capchem Technology to the Korean Ministry of Trade, Industry and Energy’s Trade Commission on grounds of unfair trade practices. Two other Chinese companies were also reported alongside Capchem Technology.
South Korea has been a primary target for China’s technology theft globally, particularly in core industries such as chips and batteries.
Data from the South Korean National Investigation Agency of the Police Department showed that over the past decade from 2013 to 2023, the proportion of Korean technology leaked overseas has been increasing annually, with 67% of leaks reported to China.
Additionally, during the first half of this year, a majority of leaks of South Korea’s core technologies, including semiconductors and batteries, went to China. Statistics indicated that there were 12 incidents of advanced technology leaks from South Korea overseas in the first half of this year, with China accounting for the majority at 10 cases, representing 83% of the total.
Earlier this year, South Korean authorities announced the resolution of a case involving Chinese theft of Korean battery technology.
In January, five former and current employees of Samsung SDI and SK On were handed over to prosecutors for allegedly stealing South Korea’s core battery technology. The involved Chinese companies were Honeycomb Energy (South Korea), Honeycomb Energy China Headquarters, and the parent company Great Wall Motors.
The battery industry in South Korea, a major sector, once held the top spot in the global market. However, due to China’s dumping tactics and technology theft, it was surpassed by China as early as 2021, leading to an increasing gap. According to SNE Research, a South Korean energy market analysis firm, in the data from January to August this year, the six Chinese battery companies among the top 10 global market share holders accounted for 65.1% worldwide. In contrast, the market share of South Korea’s top three battery companies – LG Energy Solution, SK On, and Samsung SDI – declined by 3.4 percentage points from the previous year, standing at only 21.1%.
In May, U.S. President Biden announced a significant increase in tariffs on a range of Chinese imports, including electric vehicles, computer chips, and key minerals, criticizing China’s technology theft as “cheating.”
He condemned China for flooding the market with surplus products, causing bankruptcies among companies worldwide. He described China’s actions as “outright theft,” carried out through cyber espionage and other internationally known means. “This is not competition, this is cheating.”
With the increasing competitiveness in the global market and the prevalence of technology theft incidents, the legal actions taken by companies like LG Chemical highlight the importance of protecting intellectual property rights and ensuring fair competition in the industry.