Overview
According to the statements made at a confirmation hearing by Polly Trottenberg, President Biden's pick for deputy transportation secretary, the Department of Transportation (DOT) will likely review a 10-year import ban issued by the US International Trade Commission (ITC). This ban, which is directed to electric vehicle batteries from SK Innovation Co., Ltd. and SK Battery America, Inc. (together "SK"), could impact the IP strategy of companies in the automotive industry.
Technology has redefined the way we use automobiles – from fuel, with electric and hybrid technology replacing the combustion engine, to computers, which are being incorporated in autonomous vehicles to replace drivers. Significant technological innovation is underway throughout the automotive industry. And this innovation comes not just from traditional car manufacturers, but from companies with expertise in batteries, sensors, processors, and software. Given the breath of technology used in today's automobiles, getting your IP strategy right is essential. Using the ITC should be part of this strategy.
The ITC is a popular venue to litigate intellectual property disputes. With its expedited schedule, the ITC resolve issues quickly, and its Administrative Law Judges (ALJs) have extensive experience with IP cases and are comfortable with technical issues. Additionally, it has broad jurisdiction over imported products and can issue exclusion orders to ban products found to be in violation from entering the country.
In ITC Investigation No. 337-TA-1159, Certain Lithium Ion Batteries, Battery Cells, Battery Modules, Battery Packs, Components Thereof, and Processes Thereof, LG Chem alleged that SK misappropriated its trade secrets relating to lithium batteries used in electric vehicles. The ALJ determined that SK had destroyed evidence and concluded that the scope of destruction was so pervasive and severe that the appropriate remedy was to find the company in default and prevent it from presenting any defense on the misappropriation claims. The ITC affirmed the ALJ's decision, finding the destruction of evidence was extraordinary, had been ordered from a high level of the company, and was carried out by department heads throughout the company.
Before the ITC issues a remedy, it must consider the impact of any such remedy on the public interest. The Commission's analysis looks at the public health and welfare, competitive conditions in the US economy, the production of competitive goods in the US, and US consumers. In the Lithium Ion Batteries case, the Commission issued a ten-year exclusion order prohibiting the import of certain lithium ion batteries and related components, but in view of concerns regarding the public interest, it made an exception for domestic production of the batteries for certain Ford and Volkswagen vehicles, which rely on batteries supplied by SK. Specifically, the order allows Ford to continue importing batteries and components from SK for four years and Volkswagen for two years. Such exceptions are infrequent, but the Commission determined they were necessary to give these companies time to transition to new domestic suppliers.
Given the importance of the technology at issue, it appears that the DOT will review the ITC's 10-year importation ban. While the Commission applied what it considers a carefully tailored approach, the DOT is evaluating how this ruling might impact the Administration's clean transportation goals. It has also been argued that excluding electric vehicle batteries will hinder the Administration’s efforts to tackle the climate crisis. A decision by President Biden on whether he will veto the exclusion order is expected within 60 days.
The White House's decision could impact the litigation strategy of future vehicle-related technologies with respect to the potential scope of remedies available from the ITC. An auto manufacturer or supplier evaluating whether to assert its IP rights, whether patent, trade secret, or some other form, should consider how to address any potential public interest issues to ensure you obtain a satisfactory remedy from a successful case at the ITC.
