LS Cable, the leading cable manufacturer in South Korea, has announced plans to file a lawsuit seeking damages worth trillions of won against Daehan Cable, the second-largest player in the industry, over allegations of technology theft related to submarine cables. If the prosecution decides to indict those involved, a significant civil lawsuit could unfold alongside the criminal proceedings.
According to industry sources on June 10, LS Cable is preparing a strong legal response following the police's referral of 13 individuals, including Daehan Cable executives and officials from the architectural firm Goun, to the prosecution for alleged trade secret violations.
Daehan Cable is accused of unlawfully acquiring and utilizing key technical information, including design blueprints and production layouts, while constructing a cable manufacturing plant in Dangjin, South Chungcheong Province. The police concluded that Goun, which was responsible for the design of LS Cable's Donghae plants 1 to 4, violated confidentiality agreements by providing internal documents to Daehan Cable. This conclusion came nearly three years after the investigation began.
LS Cable claims that if the allegations are substantiated, the scale of damages could be astronomical. They argue that the costs associated with establishing submarine cable production facilities, technology development, and lost opportunities for domestic and international projects could justify a lawsuit amounting to trillions of won. LS Cable invested approximately 1 trillion won in building its Donghae submarine cable factory, asserting that the technology theft has already resulted in losses amounting to hundreds of billions of won. They emphasize that this issue is critical to national industrial competitiveness, as the technology in question is designated as a core national technology.
An LS Cable representative stated, "Daehan Cable secured contracts for submarine cable supply projects for the Anma Offshore Wind Farm and the Yeonggwang Nakwol Offshore Wind Farm based on the alleged technology theft. The Nakwol Offshore Wind Farm project is already underway, and based on the scale of various projects, we anticipate potential damages reaching trillions of won in the future."
Lawsuits for damages in the trillions of won between domestic companies are rare. The most recent case involved LG Energy Solution (then LG Chem) and SK Innovation, which discussed potential damages in the trillions of won during a trade secret dispute over battery technology. In 2021, SK Innovation settled the dispute by paying LG Chem 2 trillion won.
The initiation of the lawsuit depends on the prosecution's decision. The police have submitted their findings with a recommendation for indictment, and the prosecution plans to review the investigation records before making a final decision on whether to file charges. With the prosecution reform plan set to take effect in October, which separates investigative and prosecutorial functions, it is likely that a decision will be reached before then.
Meanwhile, submarine cables are considered a crucial power infrastructure in the era of artificial intelligence (AI). As the demand for electricity surges due to the expansion of AI data centers, establishing submarine cables capable of long-distance and high-capacity transmission is essential for supplying power generated from offshore wind and nuclear power to metropolitan areas and industrial complexes.
Submarine cables are high-value products where production facilities and process know-how significantly influence quality, with LS Cable and Daehan Cable forming a duopoly in this sector. LS Cable is advancing its submarine cable business centered around its Donghae factory, while Daehan Cable is doing so through its Dangjin plant.
In response, Daehan Cable has countered that the allegations pertain only to a small part of their overall production system. A Daehan Cable representative stated, "The current investigation targets only specific designs and equipment at the submarine cable plant, not the overall production technology or system. Most of the costs for establishing submarine cable production facilities and technology development investments are not included in the scope of this investigation, and the submarine plant in question is unrelated to the designated core national technology."
They also argue that a lawsuit seeking damages in the trillions of won is inappropriate. Daehan Cable emphasized, "The research and development investment costs or total construction costs for the submarine cable business cannot be directly claimed as damages. Major projects such as Anma Offshore Wind Farm and Yeonggwang Nakwol Offshore Wind Farm were secured after rigorous evaluations of technology, quality, and execution capabilities by the clients, and claims linking specific design materials to contract outcomes lack objective evidence. The trillions of won in damages claimed by the competitor are merely unilateral estimates made without confirmed facts or legal judgments."
* This article has been translated by AI.
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