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UPDATE 2-SK Innovation intensifies LG Chem feud with EV battery patent lawsuit

Heekyong Yang and Ju-min Park

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* SK Innovation plans to sue cross-town rival LG Chem in the U.S.

* Comes four months after LG Chem alleged trade secrets theft

* Feud weakens S.Korean makers; could draw in government -source (Adds shares, LG's U.S. manufacturing bases, government EV policy)

SEOUL, Aug 30 (Reuters) - A feud between two South Korean battery makers escalated on Friday as SK Innovation Co Ltd said it plans to sue bigger rival LG Chem Ltd in the United States over alleged patent infringement related to electric vehicles (EV).

The announcement comes four months after LG Chem sued SK Innovation in the United States for alleged theft of trade secrets by hiring former LG Chem employees. SK Innovation denied wrongdoing.

After Friday's news, SK Innovation stock was up nearly 5.5% at the midday trading break. LG Chem gained 1.2%, trailing the market's 1.8%.

SK Innovation in a statement said it is preparing to file lawsuits against LG Chem and LG Chem Michigan Inc through the U.S. International Trade Commission.

It also said it plans to file a separate lawsuit against LG Electronics Inc in the United States, 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.

"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.

An LG Electronics spokeswoman said the company was checking details of the matter but felt "no need" to respond to SK Innovation's claims. LG Chem did not have an immediate comment.

LATECOMER

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 as well as Japan's Panasonic Corp. It started mass production in 2012 with customers including Germany's Daimler AG and Volkswagen AG.

If courts find in favor of SK Innovation, LG Chem and LG Electronics will no longer be able to sell affected battery products.

Such legal feuds could weaken South Korean battery makers at a time of heightened global competition, to the extent that the government may even act as mediator to secure a swift resolution, one industry source told Reuters.

The government is nurturing the domestic EV battery sector to make EV batteries as big an export item as memory chips and display panels.

(Reporting by Heekyong Yang and Ju-min Park; Editing by Christopher Cushing)