Battery Chats: Sam Bailey, Mewburn Ellis
A review of the LG vs SK case + a conversation with Sam Bailey, Partner and Patent Attorney at Mewburn Ellis
In this issue, we work with Mewburn to bring an overview of the LG vs SK case, and a conversation with Sam Bailey, Partner and Patent Attorney at Mewburn Ellis. If you enjoy this newsletter please give us a share and subscribe! For business inquiries, please reach out!
Mewburn Ellis is a European IP firm with expertise across all stages of the IP life cycle, advising clients about patents, trademarks and designs, as well as any IP-related disputes and legal and commercial requirements.
LG Chem vs SK Innovation: Law & Politics in the EV Market
Co-authored by the team at Mewburn Ellis: Sean Jauss, Head of Legal Service, and Alex Cavell, Patent Attorney.
Sales of electric vehicles are booming. With global stock up from less than 1 million in 2014 to more than 10 million in 2020, there is a real and ongoing shift in the automotive industry, fuelled by relentless innovation, government incentives and consumer eco-awareness.
And you know that it is big business when the President of the United States gets involved. In April 2021, President Biden released a statement on an electric battery dispute settlement between South Korean firms LG Chem and SK Innovation. The dispute, which had initially resulted in the US International Trade Commission imposing a 10-year ban on SK battery imports, was resolved after SK agreed to pay LG Chem USD 1.8 bn plus ongoing royalties, together with a 10-year mutual covenant not to sue.
The dispute arose after 77 employees moved from LG to SK and allegedly misappropriated trade secrets, which coincided with a 14-fold increase in SK’s battery supply contracts. Trade secrets are often a delicate, but increasingly critical, intellectual property (IP) asset involving confidential information which is of commercial value and which the owner has taken “reasonable steps” to protect (see our article here). But there is a balance between the scope of the right and the extent a worker can practise their acquired skills and expertise when he/she moves job. In the present case, the US authorities ruled that SK had indeed infringed LG’s rights.
Not just a legal matter
President Biden’s statement showed that this dispute was more than just a legal matter – there was also a political edge. Before the ruling, SK had planned to build a USD 2.6 bn battery factory in the state of Georgia and to supply batteries for American-built electric Ford and Volkswagen vehicles. At the same time, the Biden administration was pledging an infrastructure plan that supported a greener US car industry, with USD 174 bn set aside for increasing electric vehicle sales and production. Yet the import ban resulted in SK considering withdrawing its battery business in the USA.
In what appears to be a positive result for the US economy, the settlement deal was struck shortly before the deadline for the President to review the decision. The court upheld LG’s trade secret rights thereby underlining the potential value of trade secrets as an IP asset, while the settlement resolved SK’s position and allowed competition in the battery sector, which should lead, according to popular economic axioms, to greater innovation, lower prices, and more choice for customers.
What next for the industry?
With companies spending a great amount of resources both in innovation and the protection of IP assets, the automotive industry and other sectors want certainty that their rights are properly and consistently enforceable. Despite the political backdrop, this case ultimately played out in accordance with IP infringement dispute theory, with LG’s trade secret rights being upheld and an injunction being placed on SK, which then lead to commercial licensing via the settlement agreement with compensation being considered a fair resolution by both parties to the conflict, and the market benefitting from competition.
Of course, the electric vehicle industry is no stranger to different approaches of enforcing intellectual property rights. Since 2014, Tesla have vowed to “not initiate patent lawsuits against anyone who, in good faith, wants to use our technology”. As we discussed in our previous article, there are unsurprisingly several caveats to this open-source pledge and Tesla have continued to file a multitude of patent applications to protect their IP, but this philosophy has arguably assisted the monumental growth in this field.
It will be interesting to observe over the coming years whether these factors influence how IP rights are enforced in the electric vehicle industry. In view of the initial ruling, it can be expected that companies will want to keep a close watch on their trade secrets and the know-how that their employees exploit once they leave the business. The effect on patent enforcement is less clear, but patents will certainly remain a powerful tool to block competitors from infringing and to facilitate asset value.
The LG Chem versus SK Innovation case has underlined the EV industry’s status as a big player on the world stage. And whether it is batteries, motors or charging stations, there seems to be no handbrake on exciting new ideas and products in this fast-moving and fast-growing area. However, that growth means more investment and more competition, which (like the telecoms industry) also probably means more scrapping and complex IP litigation, especially between the bigger players. While at first glance this may seem like a negative, competition in fact tends to drive further innovation, to accelerate products to market, and to drive the evolution of effective market regulations and standards that, somewhat counterintuitively, can benefit agile smaller players and consumers, and all of which will hopefully lead to a cleaner and greener future.
🧑⚖️📝 Battery Chats: Sam Bailey, Partner and Patent Attorney at Mewburn Ellis
This week we chatted with Sam Bailey!
Sam works principally on chemistry and materials science patents. He has particular expertise in managing IP strategies for clients in the advanced materials sector. His PhD in carbon nanotechnology provides an excellent technical basis for this work and has led to him leading the firm’s specialist technology group focusing on Energy Storage technology; including battery chemistry, separators, electrolytes, and cell architecture. Sam joined Mewburn Ellis LLP in 2002 qualifying as a European Patent Attorney in 2006 and a UK Chartered Patent Attorney in 2007. He became a partner in 2010.
Intercalation: How did you get into batteries and patent law?
Sam Bailey: I did a PhD in materials chemistry and while I enjoyed the work, I was looking for a slightly more stable career. My supervisor mentioned patent law as an interesting option that would continue to use my scientific knowledge but in a commercial setting rather than research. I applied and ended up taking a trainee job with Mewburn Ellis.
The job is very varied in terms of the technologies that you work on; particularly while you are training and are still forming your own relationships with clients. So my work on battery technology really took off when I qualified as a patent attorney and my client base became more stable. Quite a lot of the battery work that I’m doing now comes from Japan but as a firm we handle battery technologies from all over the world. The battery work that I do is also something that I take a huge personal interest in; both because I find the technology fascinating but also for the massive part that batteries are going to play in the energy systems of the future.
Intercalation: What’s your role at Mewburn and what does your typical week at the firm look like?
Sam: I’m now a partner at Mewburn so alongside my patent work I have other responsibilities involved with running the firm and training new attorneys in my team. Most of the work involves a lot of reading of technical documents and then producing a piece of analytical writing about them. This may be arguing with a patent office about why our client’s invention should be given a patent, it could be interpreting letters from the patent office for a client, or it may be writing a new patent application for an invention that a client has developed.
From time-to-time we also attend patent office hearings on behalf of our clients either to defend their patents or to attack those of competitors.
Alongside the technical analytical work, the training aspect of my role means that I spend quite a lot of time discussing work with trainees in the firm and working to develop their skills as patent attorneys to allow them to take the professional qualifying exams.
Intercalation: Have you experienced and observed the increase in innovation in the battery sector, and has a particular emerging technology like silicon anodes, solid-state batteries, lithium-sulfur, lithium-air, etc caught your attention, what do you think things will look like in 5 years?
Sam: Quite a lot of new patent applications are incremental improvements on existing technologies. So it is rare to see totally new concepts in the battery space. However there has been a clear large increase in the overall number of patents filed in the energy storage area (the statistics indicate about a seven-fold increase in the last 20 years and more than doubling since 2010).
Lithium-ion technologies are still clearly the dominant chemistry from a patent point of view outnumbering other chemistries by more than 5 to 1. However we do see some of the more unusual battery systems emerging in the patent literature, such as redox flow cells; and the steady increase in patent applications for solid state electrolytes is indicative of the continued interest in solid state batteries. There is also a lot of research going on into solving the volume expansion issues surrounding silicon anodes and we are starting to see some of that filter through into patent applications.
In the next five years I think the electric vehicle applications of batteries will likely drive a lot of the research and therefore the patenting of battery technology. So a focus on power density will of course be vital and the attractive electrochemistry of silicon-containing anodes could well lead to their playing a more significant role.
The other angle that is hugely significant at the moment is the environmental impact of battery technology. We all know that batteries will play a big role in implementation of alternative energy sources, not least to smooth out supply issues. However the impact of the batteries themselves will become a focus. The recent European Commission proposal for regulations controlling the sustainability of batteries with a particular focus on recycling will certainly drive innovation in that area and I would expect to see patents arising in the next five years driven by that regulatory framework.
Intercalation: How would you compare the patenting strategies between large corporations like Panasonic & CATL, compared with smaller startups and University groups? Is it purely a numbers game, and do the financials in protecting IP play a role?
Sam: Ultimately patents are commercial tools; once granted they allow you to stop somebody from using the invention that you have patented. However to get a patent granted and keep it in force in multiple countries is an expensive process. So financial considerations do often drive the patent strategies, irrespective of the size of the company. For smaller companies and research groups, the key is to get the best protection for what may be relatively limited funds; or to push the large costs as far into the future as possible with the aim of finding a suitable licensee or source of investment to fund a broader patent strategy. So smaller companies will often file fewer, more focussed patent applications and may be more tempted to abandon them if financial backing is not available. Larger companies will often have a bigger patent budget and so have the luxury of being able to explore more elaborate strategies. This may involve filing more patent applications (making it harder for competitors to assess the protection that they have and find a way past it), and could include a more aggressive element such as trying to knock-out key patents that may be held by competitor companies to clear the way for their own products to get to market.
Intercalation: If you could wave a magic wand and change something about battery-related IP, what would you change and why?
Sam: It would be great to see some of the smaller companies and university research teams have access to the funding to allow them to pursue a broader patent strategy. We quite often see really interesting inventions being abandoned through lack of funding at the early stages. Of course there is an element of “survival of the fittest” here and in some cases abandoning a technology might be the correct decision but there are a number of times when we are told that the funding isn't there for a project when the science still seems really interesting.
Intercalation: What would your advice be for early career battery scientists interested in pursuing a career in patent law?
Sam: The main thing is to keep your interest and knowledge of science as broad as possible. While large battery companies do employ attorneys who only work on battery patents, the more common route into the profession is through a private firm where you will be expected to work on a whole range of technology in a field as broad as “chemistry”. So you find yourself drawing on undergraduate knowledge more than specialist technical understanding.
Intercalation: Thank you so much for your insights, Sam!
🌞 Thanks for reading!
📧 For tips, feedback, or inquiries, please reach out!
🌐 Follow us on Twitter, LinkedIn, and our website for more information.
Mewburn Ellis is the forward-looking European IP firm. We are a business that puts our clients, our people and our values at the heart of everything we do. With more than 150 years' experience in the IP profession, our focus is on providing clear, honest, strategic advice to maximise the potential of IP as an asset and so increase the value of our clients’ business. The result is a firm with a stellar national and international client list that builds strong and long-standing client relationships – over a third of our clients have worked with us for over 20 years. Our approach is always personal and client-focused. We work hard to ensure our clients benefit from “joined up” thinking when it comes to their IP strategy working alongside them as trusted partners in order to support their business ambitions and growth plans. With expertise across all stages of the IP life cycle we advise about patents, trade marks and designs, as well as any IP-related disputes and legal and commercial requirements. We have a reputation for excellence that we believe cuts across the entire intellectual property community.