Nippon Steel sues Posco over alleged technology theft

NIPPON Steel has filed a US$1.25 billion lawsuit against South Korea's Posco over claims it stole key technology for a niche product, the Japanese firm and reports said yesterdat.

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

Posco disputes the claims, describing the lawsuit as "disappointing".

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 (US$1.25 billion) in damages, the Nikkei business daily reported.

The company did not specify the amount of the claim in a statement issued yesterday, and a spokesman declined to discuss the case.

But the statement accused Posco of "illicitly acquiring and using NSC's trade secrets", with a separate lawsuit filed against the former employee.

Nippon Steel said it has also sued Posco in the United States over the alleged infringement of some US patents, 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 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."

About one million tons of the specialised steel sheet 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.

AFP