The result of SKC KOLON PI's patent litigation with KANEKA Japan that has been going on for 10 years is expected in the first half of this year. If SKC KOLON PI loses in this lawsuit, both Kolon Industry and SKC must each pay half of the damages. KANEKA argues that SKC KOLON PI has infringed its patents, claiming the damages of 16.22 million dollars (about 18.4 billion won).
Kolon Industry announced the above in its sales report distributed at the 9th general shareholders' meeting held in Magok, Seoul on the 26th. The Kolon Industry said about the lawsuit filed against SKC KOLON PI-KANEKA that "the Interlocutory Appeal had been processed prior to the first trial judgment by a California court judge in the United States," and added that "we expect that the Interlocutory Appeal will be finalized in the first half of this year." Earlier, the jury of the trial court in 2015 found that SKC KOLON PI indirectly infringed a portion of the KANEKA patents and the court ruled that SKC KOLON PI should reimburse 13.5 million dollars (about 15.3 billion won). However, there was no trial court decision after the jury's verdit, SKC KOLON PI has made the Interlocutory Appeal.
Then, on the 15th, the US Federal Court of Appeals (CAFC) announced on its website that it has decided to dismiss SKC KOLON PI's Interlocutory Appeal (Case No. 2:11-cv-03397-JGB-RZ). The SKC KOLON PI official explained, "The appeal court determined that the appeal itself would be meaningless because the trial court's judgment has not been made yet. It means that the trial court should finalize its judgment first." The official also added, "It will be difficult for the trial court to delay longer. So, we expect that the trial court's decision will be made this year."
As for the part of the trial progress not being reflected in the disclosure and the Kolon Industry's business report, the official said, "the fact of facing a lawsuit must be disclosed; however, the appeals proceeding in which a company is participating as a plaintiff is not subject to the obligation to disclose. However, we plan to reflect this in the disclosure and business reports after the middle of April when the deadline for appeals for the Appeals lapses. In addition, we cannot disclose the future strategic response planned by SKC KOLON PI."
Previously, Kolon Industry, in a Letter of Commitment submitted to the Korea Exchange, said, "SKC and Kolon Industry will pay the liability at the rate of 5 to 5 if the damages to be borne by the companies are confirmed after the case is decided against the companies." In addition, the Letter explained, "The scope of damages is not limited to KANEKA's damages claim of 16.22 million dollars, and if the actual damages that the company will be prompted to pay as a result of the lawsuit increase, then the amount will also be borne by the two companies." The dispute began in 2010 when KANEKA filed a lawsuit against SKC KOLON PI in violation of five patents. Since then, some patents and items of claims have been dismissed, but both parties have been in dispute for 10 years.
Meanwhile, Kolon Industry passed the entirety of the agendas as the original draft at the shareholders' meeting. The agendas passed were: △ approval of the 9th financial statement and consolidated financial statements △ partial amendment of the articles of incorporation △ the appointment of directors △ the appointment of a member of the Audit Committee and △ the approval of the remuneration limits. Last year, Kolon Industry posted sales of 4.75 trillion won and an operating profit of 145 billion won. The sales grew 3.2% YoY and operating profit fell 26.6% YoY. As the reasons for the decrease in operating profits, the company suggested a decrease in spreads due to the rise in raw materials prices and a slump in the operating performance of some of its subsidiaries. In the shareholders' meeting, the number of directors has decreased from nine to seven, and the remuneration limit has also been reduced from 7 billion won to 5.5 billion won.