LG Energy Solution to Take Firm Stance Against Patent Infringers

• A surge in patent infringement by latecomers in the battery industry, and subsequent market distortion caused by unlicensed use of patented technology, calls for strong countermeasures to level the playing field
• LG Energy Solution believes that at least 500 patents directed to its first through third-generation battery technologies cover the current state-of-the-art battery products
• The company intends to lead the establishment of a battery patent licensing market by creating a global patent pool

SEOUL, South Korea, April 24, 2024 /PRNewswire/ — LG Energy Solution (KRX: 373220), a battery pioneer that has led technology innovation and development in the global battery industry over the past 30 years, announced it will take strong countermeasures against "patent free riders."

LG Energy Solution is evaluating all options in this regard, including issuing warning notices or filing patent infringement lawsuits against those infringing on its patents. At the same time, it will also commit to driving fair competition in the industry by establishing a legitimate battery patent licensing market.

The company sees a rising tide of latecomers' deliberate and blatant unauthorized use of its patents across a wide range of commercialized products, including batteries for consumer electronics, energy storage systems (ESS), and electric vehicles (EV).

[Example 1] EVs. Battery manufacturers supplying batteries to automakers that market EVs in Europe. After only a preliminary review of competitor EV batteries, LG Energy Solution has discovered these manufacturers may have violated more than 30 of its patents covering major components and manufacturing technologies, including coated separator, cathode material, structures of battery cells and electrodes. Analysis is on-going.

[Example 2] Consumer devices. Battery manufacturers supplying batteries to world-renowned electronics companies. Laptops and cellphones that are powered by these batteries are actively sold in Europe and China. Again, after only an initial investigation, LG Energy Solution has identified more than 50 potential instances of unauthorized use of its patents on technologies including coated separator, cathode material, and electrolyte additives.

LG Energy Solution has previously taken significant measures to protect its intellectual property (IP), including filing successful trade secret misappropriation and patent infringement lawsuits against its competitors with the United States International Trade Commission, German courts, and others.

Nevertheless, the company says its patent rights are continuously being violated by "patent free riders" who reap the benefits of LG Energy Solution's and other market leaders' R&D and proprietary rights by offering infringing products without license. Major multinational manufacturers of end-products containing these infringing batteries appear to be overlooking their suppliers' non-compliance with patent rights. Such widespread disregard within the industry has led to severe market distortions, now demanding industry leaders like LG Energy Solution to take action and adopt stronger countermeasures.

"LG Energy Solution is the 'original innovator' in the global battery industry, and we have pioneered the global market through continuous technological development and breakthrough innovations since the inception of the industry," said Han Sun Lee, Head of the IP Center at LG Energy Solution. Lee further stated, "To safeguard our technological leadership and promote collective growth in the industry, we will commit ourselves to establishing a fair patent licensing system and take strict measures against unlawful infringements."

• Infringement of LG Energy Solution's core patents are on the rise, and next-generation technologies may face similar threat

As a pioneer of the industry, LG Energy Solution has already secured patent protection for core technologies across all areas of the battery industry, including battery materials, manufacturing, battery pack and battery management systems (BMS). From the first-generation technologies that are already commercialized for mass-production to cutting-edge third-generation technologies, the company has filed more than 58,000 patent applications worldwide, and secured more than 30,000 issued patents.

The global battery industry has also seen exponential growth in the past decade: the size of EV battery market has increased by approximately 25 times from 2015 (28GWh) to 2023 (706GWh), and it is expected to reach 5,256GWh in 2035.[1]

Such rapid market growth has intensified the competition, leading to a surge in IP infringement. Many latecomers have not been diligent in obtaining patents, and yet, are trying to enter major markets such as Europe, China, India, and Southeast Asia through patent "free riding".

LG Energy Solution has begun review of its portfolio and has identified over 1,000 patents in its portfolio as being "highly strategic" patents[2] of which 580 are likely infringed by competing battery manufacturers. By all indications, it would be nonsensical for a latecomer to ignore the risk of patent infringement and develop batteries without licensing LG Energy Solution's foundational patent rights. Some examples of this include:

• LG Energy Solution's patents relating to increased adhesiveness of the ceramic coated separator, which enables the adaptation of various sophisticated designs of electrode assembly structures;
• LG Energy Solution's patented Double Layer Slot Die Coating (DLD) process for anode (world's first commercialization by LG Energy Solution in 2018) and pre-dispersion process for carbon conductive materials in their electrode design;
• LG Energy Solution's patents on electrolytes for high voltage and high efficiency batteries and Mid-Ni NCM[3] (NCM523, 622) cathode materials;
• LG Energy Solution's patents on important surface treatment methods for cathode materials and useful compositions of mixed cathode materials (NMC mixed with LFP[4], LCO[5], and/or LMO[6]), both of which LG Energy Solution was the first to commercialize; and
• LG Energy Solution's patents on silicon anode technologies.

The risk of patent infringement by latecomers extends to next-generation battery technologies, as the company holds many core patents in these areas. For example, LG Energy Solution has secured core patents directed to the dry coating process, an environment-friendly and price-competitive technology that does not use organic solvents, and the next-generation cylindrical 46-Series battery technology. It also holds core patents on BMS, with key emphasis on safety diagnosis technology developed using decades of accumulated R&D data, all of which will be essential for the growth of EV market in the future.

• LG Energy Solution to lead the establishment of a global patent pool in the battery industry

After decades of market leadership, LG Energy Solution now aims to lead the establishment of a fair battery patent licensing market to protect its innovative technologies and uphold fair market competition. To achieve this objective, the company will consider utilizing various patent monetization models such as patent pooling or sales.

The company will first form a global patent pool using its patents that are currently believed to be infringed by commercialized products in the market, and then efficiently manage its licensing activities by licensing out key patent portfolios in phases. Similar to how patent licensing has taken an active role in the advancement of major industries including semiconductors and IT, LG Energy Solution believes that a fair patent licensing opportunity is essential for the overall advancement of the global battery industry.

Such fair licensing would lead to a virtuous cycle, as leading players will be able to utilize their royalty proceeds to increase their investments in new technologies, while latecomers could further enhance their product competitiveness by adopting advanced technologies through licensed use, eliminating their exposure to patent infringement risk.

However, if LG Energy Solution's patent licensing efforts are not appreciated by latecomers to the market, it will have to resort to other countermeasures to aggressively enforce its patent rights, including filing patent infringement lawsuits in a court. To this end, LG Energy Solution will enhance its global litigation capabilities by securing experts in major markets such as the U.S., Europe, and China. At the same time, it will expand and invest in its regional IP offices abroad in charge of the systematic management and oversight of global IP prosecution and enforcement activities.

"Respecting intellectual property rights is essential for fostering fair competition in the global market. To ensure the advancement of the overall industry and the company, we will protect our intellectual properties and take bold countermeasures on patent infringements," said David Kim, CEO of LG Energy Solution. "As an industry leader, we will also lead the establishment of a legitimate battery patent licensing market. By utilizing fair return on our IP, we will actively pursue the development of core future technologies, providing differentiated values to our customers."

About LG Energy Solution

LG Energy Solution (KRX: 373220), a split-off from LG Chem, is a leading global manufacturer of lithium-ion batteries for electric vehicles, mobility, IT, and energy storage systems. With 30 years of experience in revolutionary battery technology and extensive research and development (R&D), the company is the top battery-related patent holder in the world with over 58,000 patents. Its robust global network, which spans North America, Europe, and Asia, includes battery manufacturing facilities established through joint ventures with major automakers. Committed to building sustainable battery ecosystem, LG Energy Solution aims to achieve carbon neutrality across its value chain by 2050, while embodying the value of shared growth and promoting diverse and inclusive corporate culture. To learn more about LG Energy Solution's ideas and innovations, visit https://news.lgensol.com.

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