Massive government subsidies have led to a huge amount of activity in China’s electric vehicle sector. But key foreign suppliers like LG Chem have faced obstacles in the country as official policies favour local firms. Now, the Korean company and its Japanese partner Toray have filed a US patent suit and an ITC complaint seeking to keep one of these Chinese firms out of the US market. But that is just one of the signs that patent activity in the battery field may be increasing.
LG Chem filed the complaint, its first as a plaintiff in the US, on October 25th. The defendant, Amperex Technology Limited, is a Chinese lithium-ion battery manufacturer with its legal headquarters in Hong Kong. LG filed the case in the Eastern District of Michigan, where its plants produce batteries for clients including GM and Chrysler. It accuses Amperex of “flooding the US market with inexpensive low-quality batteries made entirely in China”, all while infringing three US patents covering an LG-developed technology related to battery components called separators.
Lithium-ion batteries, which are used in electric and hybrid vehicles, as well as a range of electronics, are big business for LG Chem. In the auto sector, it and Panasonic have locked up about 70% of the global market. To focus more on the batteries themselves, the Korean company outsourced production of its separators to Tokyo-based Toray in 2015. Toray continued to supply the parts to LG Chem, which also assigned a 50% interest in 69 related US patents to the Japanese company. The two are co-plaintiffs in the US suit.
But the booming Chinese market, which accounts for a third of its sales, has been tougher going. LG Chem has substantial battery production levels in China, but government policies favour local manufacturers like Amperex and BYD, and recent tensions between China and South Korea saw LG removed from an approved list of battery suppliers eligible for subsidies. In its US suit, LG Chem seeks to direct national sentiment in the other direction, contrasting its facilities and employment in Michigan with the “virtually zero investments in the US economy” made by Amperex.
LG Chem and Toray also filed a complaint with the ITC, and the list of companies targeted for an exclusion order shows that the batteries at issue are being used in the electronics rather than automotive sector. Drone maker DJI and smartphone maker Oppo are each named alongside Amperex.
Interestingly, the separator technology on the line in this case, which LG Chem calls Safety Reinforced Separator (SRS), has previously been an IP moneymaker for LG Chem. It was able to license the technology to UBE Maxell, a Japanese joint venture, back in 2014 (not before UBE Maxell tried and failed to IPR one of the patents now being asserted against Amperex).
LG Chem is not the only company seeking to license-out battery-related technology. UBE itself assigned two US patents for a “Cell electrode sheet with displaced electrode depolarizing mixes” to a Japanese licensing firm called Ryujin Patent & Licensing in 2014. One of them is now facing an IPR filed by Dell, HP, Asus and LG Chem, indicating the range of companies it may be approaching as potential licensees.
Given the way that it applies to both electronics companies and automakers, the lithium-ion battery space is one to watch. LG Chem is a big player – of its 25,000 global IP rights, more than 10,000 are in its energy solutions division. This blog has profiled the company’s IP strategy before, and it seems to be quickly shifting gears. Along with its first plaintiff-side litigation, it recently made a rare foray into the transactions market, assigning 11 US patents to Chinese company called Shengyi which makes copper clad laminates. Little wonder that it walked away from IPBC Asia with the award for the Asian Chemicals and Materials Team of the Year.