One of the biggest issues in the global battery industry recently is the protection of core technology. With electric vehicle demand growing slowly and Chinese battery makers intensifying their low-price offensive, companies are building "technology fences" to defend their market share and profitability.
LG Energy Solution (373220.KS) has filed injunctions seeking to ban patent infringement against Volvo, Nissan and Renault, according to industry sources Thursday. It is unusual for a battery maker to take direct legal action against automakers, which effectively hold the upper hand in the relationship.
What LG Energy Solution takes issue with is the prismatic NCM (nickel, cobalt, manganese) products supplied to these automakers by Chinese battery maker Sunwoda. LG Energy Solution believes Sunwoda is reaping unfair profits through low-cost products that use its patents related to electrode assembly structures. After Sunwoda lost three consecutive patent lawsuits in German courts but refused to engage in royalty negotiations, LG Energy Solution expanded the battle line to the automakers that use the products.
Korea's three battery makers are strengthening their intellectual property organizations and personnel to prepare for a "patent war." LG Energy Solution is known to hold about 51,000 registered patents and about 90,000 patent applications worldwide. Samsung SDI (006400.KS) and SK On also hold about 20,000 and 5,000 registered patents, respectively, in areas such as solid-state batteries and next-generation battery management systems (BMS).
Japan has also joined the patent war against China, forming a Korea-Japan versus China structure. Panasonic, Japan's leading battery company, is responding to China's patent infringement together with LG Energy Solution through patent management firm Tulip Innovation. Korean and Japanese companies have long competed in the global battery market, but they are seen as having chosen a strategic alliance to blunt China's offensive as it seizes the market with low-cost LFP (lithium, iron, phosphate) batteries.
Experts forecast that as the battery industry enters maturity, patent license revenue will become as important a factor in determining corporate value as manufacturing-based profits. "Just as Qualcomm earns massive profits in the global smartphone market through communications patents, a 'patent royalty model' will take full shape in the battery industry as well," an industry official said.
