Nippon Steel Sues S. Korea's Posco on Theft Claim

Company alleges Posco stole steel sheet technology through an ex-Nippon engineer.

Nippon Steel Corp. (IW 1000/96) said Wednesday it is suing South Korea's Posco (IW 1000/65) for $1.25 billion over claims it stole key technology for a niche product, amid intense competition in the steel sector.

The complaint, filed in Tokyo District Court, alleges Posco obtained the technology for a type of steel sheet used in products such as transformers through a former engineer at Nippon Steel (NSC).

Posco, the world's third largest steelmaker by output, denies the claim, and says the lawsuit appear aimed at keeping it steelmaker from growing its presence in the market.

"I don't think our company has breached intellectual property rights," a Posco official in Seoul told AFP on condition of anonymity.

Nippon, which is set to merge with smaller rival Sumitomo Metal Industries to create the world's second-biggest steelmaker, is demanding 100.0 billion yen ($1.25 billion) in damages, Soichiro Sakuma, a Nippon Steel managing director, was quoted as saying by Dow Jones Newswires.

The Japanese firm, which accused Posco of "illicitly acquiring and using NSC's trade secrets", said it 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 U.S. patents.

The claims come amid rising global demand for "grain-oriented electrical steel sheet" which is used heavily in electricity infrastructure projects.

"In order to secure NSC's advanced technology, the origin of its global competitiveness, NSC will continue to take robust action against acts of unfair competition," it said.

Despite the legal battle, however, the two steelmakers will maintain an existing capital alliance in which each side holds a stake in the other.

"Since NSC and Posco executed a strategic alliance agreement in 2000, both companies have achieved results in many fields, including research and development, technology exchange and procurement of raw materials," the statement said.

"This alliance relationship remains unchanged," it added.

About one million tons of the specialized steel is produced annually, with Nippon the biggest producer, accounting for as much as 30.0 percent of that.
Posco, however, has become a significant rival in the business in recent years and accounts for about 20.0 percent of the global market.
Competition in the steel industry has intensified in recent years with demand spurred by emerging economies such as China and India, which are undertaking huge construction, infrastructure and manufacturing projects.

Copyright Agence France-Presse, 2012

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