WTO Intellectual Property
Nippon Steel Corp (NSC), the world's second-biggest steelmaker, has sued POSCO Japan Co. Ltd. (collectively known as "POSCO, etc.") for $1.25 billion over the claims that it stole trade secrets of the company.
The complaint, filed in Tokyo District Court, alleges POSCO obtained the technology regarding Grain Oriented Electrical Steel Sheets ("GOES").
According to this lawsuit, NSC claims compensation for damages and an injunction against the manufacture and sale of GOES by POSCO, under the Unfair Competition Prevention Act, based on illicitly acquiring and using NSC's trade secrets etc.
Moreover, the Japanese firm has also filed a lawsuit against the former employee as well as a claim in the United States alleging its Asian rival infringed on some of US patents.
POSCO, the world's third largest steelmaker by output, has denied the claim and said that the lawsuit aimed at keeping the steelmaker from growing its presence in the market.
Further, it added that the lawsuit has been filed to "guard against POSCO's rapid growth" in the global steel sector.
However, despite this legal battle, the two steelmakers shall maintain an existing capital alliance in which each side holds a stake in the other.
The two companies have a strategic alliance through which they supply each other with semi-steel products. The alliance does not, however, cover downstream products such as grain-oriented electrical steel sheets.
Notably, about one million tons of the specialised steel is produced annually, with Nippon the biggest producer, accounting for as much as 30% of that.
POSCO, however, has become a significant rival in the business in recent years and accounts for about 20% of the global market.
Nippon Steel's decision to sue POSCO, despite the companies' strategic alliance, highlights intensifying friction as a high yen erodes the competitiveness of Japanese manufacturers compared with their Korean competitors.
Nippon Steel Corporation also referred to as Shinnittetsu, was formed in 1970. Nippon Steel Corporation is the world's second largest steel producer in volume.
Grain-Oriented Electrical Steels (GOES) are iron-based alloys containing silicon as the major alloying addition. These steels are used generally in applications such as power transformers where electrical conductivity and magnetic properties are paramount.
Unfair Competition Prevention Act No.47 of 1993: The purpose of this Act is to provide for matters such as measures for the prevention of unfair competition and compensation for damages caused by unfair competition, in order to ensure fair competition among business operators and accurate implementation of international agreements related to, and thereby contribute to the sound development of the national economy.