SEOUL (Reuters) - A feud between two South Korean battery makers escalated on Friday as SK Innovation Co Ltd 096770.KS said it plans to sue bigger rival LG Chem Ltd 051910.KS in the United States over alleged patent infringement related to electric vehicles (EV).

FILE PHOTO: The logo of SK Innovation is seen in front of its headquarters in Seoul, South Korea, February 3, 2017. REUTERS/Kim Hong-Ji/File Photo

The proposed new lawsuit by SK Innovation drew a swift denunciation from LG Chem, which called the action “groundless” and said it would seek compensation.

The two companies have been at loggerheads since LG Chem sued SK in the United States in April for alleged theft of trade secrets by hiring former LG Chem employees. SK Innovation denied wrongdoing and the litigation is ongoing.

Firing the latest round, SK Innovation said it was preparing to file lawsuits against LG Chem and LG Chem Michigan Inc through the U.S. International Trade Commission alleging patent breaches.

SK Innovation declined to provide further detail, including specifics of when the case would be filed but said the action was imminent. The company said a substantial amount of LG Chem’s battery products were likely to be affected and a win would prohibit LG Chem from selling those products.

“These lawsuits are not relevant to LG Chem’s lawsuit against us accusing misappropriation of trade secrets, but they are rightful lawsuits to protect our intellectual property,” said YS Yoon, president of SK Innovation’s battery business, downplaying any suggestion of a tit-for-tat move.

In reply, LG Chem said the planned lawsuit was “groundless”, “very regrettable” and “unnecessary”.

“If the competitor admits its fault, and promises to prevent the recurrence with a sincere apology, we will agree to dialogue when they are willing to seriously talk about compensation,” LG Chem said in a statement.

SK Innovation stock was up 6.4% at 0510 GMT. LG Chem gained 1.5%, trailing the market's .KS11 1.8% rise.

GOVERNMENT INTERVENTION?

The South Korean government is nurturing the domestic EV battery sector to make the industry as big an export item for the country as memory chips and display panels.

A source with direct knowledge of the matter said there was concern the lawsuits could weaken local battery makers at a time of heightened global competition. Those worries meant the government may act as mediator to secure a swift resolution, the source said, requesting anonymity due to the sensitivity of the matter.

SK Innovation also said it plans to file a separate U.S. lawsuit against LG Electronics Inc 066570.KS, another affiliate of LG Group, claiming unauthorized patent use in EV battery production.

LG Chem makes battery cells in the U.S. state of Michigan, which LG Electronics uses to make finished batteries nearby.

SK Innovation, South Korea's biggest oil refiner, is a latecomer to an EV battery market led by LG Chem and Samsung SDI Co Ltd 006400.KS as well as Japan's Panasonic Corp 6752.T. It started mass production in 2012 with customers including Germany's Daimler AG DAIGn.DE and Volkswagen AG VOWG_p.DE.