In SK Plant, Trade Secret Thief Gives Georgia False Choice Between Jobs and Justice
Tuesday, February 16th, 2021
The future is electric, and Georgia has spent a great deal of energy—and hundreds of millions in development incentives—to secure its position in the economy of tomorrow as a high-tech manufacturing corridor.
Thanks to a historic $300 million subsidies package, the state convinced in 2019 Korean electric battery maker SK Innovation to build a $2.6 billion manufacturing facility in north Georgia. The company had previously said it would employ 2,600 workers by 2024, but a decision last week by a federal trade agency that it stole a competitor's trade secrets has prompted concerns that the plant could have the plug pulled.
That speculation makes for sensational headlines and interesting watercooler talk, but it's just not true: the federal government is not going to close the plant, not now, not ever; only SK Innovation can do that by refusing to make amends.
At issue is a complicated legal dispute between SK and rival LG Energy Solution, another electric battery maker. For the last two years, the US International Trade Commission was investigating claims that SK had stolen its competitor's trade secrets. Last week, the agency sided with LG and issued a ten-year exclusion order blocking the importation, domestic production, and sale of SK batteries that unlawfully relies on stolen technology.
Crucially, however, the ITC provided a four-year term in which SK can still produce batteries at its Georgia plant for one of its customers. That exception is important because it ensures no interruption in America's electric vehicle market—electric car batteries aren't exactly D Cells, after all, but specialized components that require bespoke engineering—and provides time for the two companies to settle the dispute.
All ITC decisions are subject to a 60-day review by the president. Already, Governor Brian Kemp, who deserves credit for shepherding the largest jobs deal in the state's history, has urged President Joe Biden to veto the decision or for the two companies to settle.
Understand: while a veto of the ITC decision might allow SK to operate the plant pending further litigation in the courts, it would almost certainly chase away future opportunities. Settling is the only course that secures the SK plant while fostering a business climate in which other companies will want to operate.
Imagine a foreign firm stole the closely guarded Coca-Cola formula—a trade secret worth billions—and used that information to underwrite a massive new plant in South Carolina. Imagine Coke went to court and won a decisive victory that prevented the thief from using the syrup formula unless fairly compensated. Now, imagine folks in South Carolina urging that theft be excused because the company has promised to create jobs.
That's a devil's bargain, and the devil always gets his due.
As long as there is continued demand for electric vehicles, there will be a need to manufacture electric batteries at that plant, whether under SK Innovation’s name or another battery manufacturer. But SK Innovation's illegal acts, which include obstruction of justice, deserve serious penalties. Selfishly, they would have you believe that this is a binary choice between economic development and intellectual property protection, that Georgia can either have jobs or justice can be served. The people of Georgia understand that's bunk.
Quite the opposite, economic development that is not fundamentally undergirded by intellectual property protection is not sustainable because innovators large and small will go elsewhere. Companies need confidence that their secrets cannot be stolen no matter how well-connected or well-lobbied the culprit.
Trade secret theft isn't a victimless crime. In this case, there are about 2,600 victims: all the Georgians that SK Innovation promised to employ. Their future singularly depends on SK's willingness to pay for what they stole.
More than stealing its rival's intellectual property, SK Innovation betrayed Georgia's trust and taxpayers, who provided one of the biggest subsidy packages in the state's history to a company we believed would do right by us.
Unrepentant thieves don't deserve massive tax breaks when schools and roads could use those funds. SK Innovation needs to do right by its victims, all of its victims, and do what is necessary to keep the plant open: pay for what you stole.
Gordon Giffin is the former US Ambassador to Canada under President Clinton and Eric Tanenblatt is the former chief of staff to Governor Sonny Perdue. They serve as advisors to LG Energy Solution.