LS Cable & System and Taihan Cable & Solution, the first and second largest players in the domestic wire and cable industry, won the second trial in a patent infringement lawsuit. The compensation amount the court ordered Taihan Cable & Solution to pay nearly tripled compared to the first trial. Taihan Cable & Solution plans to decide whether to appeal after reviewing the judgment.
On the 13th, the 24th division of the Patent Court (Director General WOOSUNG) partially accepted the claims of LS Cable & System and dismissed the claims of the defendant, Taihan Cable & Solution, in the second trial of the patent infringement damages lawsuit filed by LS Cable & System. The court overturned the first trial ruling that ordered Taihan Cable & Solution to pay 496.23 million won to LS Cable & System and increased the compensation amount to over 1.5 billion won.
LS Cable & System stated, "We respect the court's ruling, and we believe this decision is important as it recognizes LS Cable & System's technological capabilities and rights. We plan to respond firmly and sternly to any acts of technology theft and infringement to protect the core technologies developed by our employees over decades of effort and dedication."
The lawsuit began when LS Cable & System filed a complaint against Taihan Cable & Solution in August 2019. LS Cable & System claimed that the 'joint kit for bus ducts' manufactured and sold by Taihan Cable & Solution infringed its patent rights. A bus duct is a distribution means that reliably transmits large amounts of electrical energy to buildings, and a joint kit is one of the main components of a bus duct.
LS Cable & System obtained a patent in 2007 for a third-generation bus duct that improved assembly accuracy and work efficiency and commissioned a subcontractor to produce joint kits for bus ducts the following year. However, it raised suspicions of technology leakage when an employee of this subcontractor moved to Taihan Cable & Solution in 2011 and then began making similar products.
During the litigation process, Taihan Cable & Solution argued that it did not infringe on LS Cable & System's patents and claimed it could produce products solely with its own technological capabilities. They stated, "In countries like the United States and Japan, there are already many prior patents related to joint kits, and LS Cable & System's patent is merely a simple modification of these prior inventions, lacking novelty. Furthermore, since patents are publicly disclosed on the official website of the Korean Intellectual Property Office, there is no reason for Taihan Cable & Solution to acquire the relevant technology through employees of its partner companies."
The Seoul Central District Court, which handled the case, ruled partially in favor of LS Cable & System in the first trial on September 1, 2022. At that time, the court stated, "The sale of Taihan Cable & Solution's products constitutes an infringement of LS Cable & System's patent rights, and the relevant products in possession must be destroyed," and ordered Taihan Cable & Solution to pay 496.23 million won, which is 12% of the 4 billion won in damages claimed by LS Cable & System. However, LS Cable & System appealed the first ruling, claiming the compensation amount was too low, while Taihan Cable & Solution denied having infringed on any patents.
Recently, the conflict between the two companies has escalated into allegations of technology leakage regarding undersea cable technology. In November last year, police launched an investigation after receiving reports that design know-how from LS Cable & System's undersea cable factory had been leaked to Taihan Cable & Solution and conducted a search at Taihan Cable & Solution's headquarters.
In this situation, the parent company of Taihan Cable & Solution, Hoban Group, was reported to have acquired about 3% of the equity of LS Cable & System's parent company, LS Corp. Hoban stated that the reason for the equity acquisition was for "simple investment purposes," but industry analysts interpret it as a strategic move to gain an advantage in the dispute. Securing 3% equity enables rights such as reviewing accounting books and convening extraordinary general meetings. It could also allow them to directly constrain management by proposing agendas at shareholder meetings in conjunction with other shareholders.
Taihan Cable & Solution noted, "We believe there are issues regarding the determination of the principles of problem-solving under patent law and the assessment of damages, so we will closely review the judgment text and decide whether to appeal," adding, "Taihan Cable & Solution has been using a modified joint kit for several years, so the impact of this ruling on business and operations is negligible."