DuPont v. Kolon Industries

DuPont v. Kolon Industries is an intellectual property lawsuit centering on the allegation that Kolon Industries (of 코오롱그룹), a South Korea-based company, stole trade secrets concerning the production and marketing of Kevlar from DuPont, an American chemical company. Kevlar is a high strength synthetic fiber used in applications as diverse as bicycle tires and body armor. On September 14, 2011, a jury found in favour of DuPont and awarded damages of $919.9 million. A 2015 settlement reduced the damages to $275 million.

DuPont v. Kolon Industries
United States District Court for the Eastern District of Virginia
Full case nameE. I. Du Pont De Nemours and Company v. Kolon Industries, Incorporated
Date decidedSeptember 14, 2011
Docket nos.3:09-cv-00058
Judge sittingRobert E. Payne
Case history
Prior actionsCounterclaims dismissed, 683 F. Supp. 2d 401, 688 F. Supp. 2d 443 (E.D. Va. 2009); reversed, E.I. DuPont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435 (4th Cir. 2011); spoliation motion granted, 803 F. Supp. 2d 469 (E.D. Va. 2011).
Subsequent actionsPermanent injunction granted, 894 F. Supp. 2d 691 (E.D. Va. 2012); dismissal of antitrust counterclaims affirmed, 748 F.3d 160 (4th Cir. 2014); cert. denied, 135 S. Ct. 437 (2014); verdict reversed, E.I. DuPont De Nemours & Co. v. Kolon Indus., Inc., 564 F. App'x 710 (4th Cir. 2014); cert. denied, 135 S. Ct. 439 (2014).

Background

Kevlar is a registered trademark for a para-aramid synthetic fiber developed at DuPont in 1965[1] and used commercially from the early 1970s onwards. On February 3, 2009, DuPont filed suit against Kolon for "theft of trade secrets and confidential information" relating to its product, Heracron.[2][3] The suit alleged that Michael Mitchell, a Kolon employee who formerly worked at DuPont, had "retained certain highly confidential information on his home computer" that he illegally passed to his new employer.[4] Following an investigation by the Federal Bureau of Investigation, Mitchell pleaded guilty to the theft of trade secrets and was sentenced to 18 months imprisonment in March 2010.[5]

Destruction of evidence

On July 21, 2011, the court found that Kolon had intentionally destroyed relevant evidence.[6] Kolon was sanctioned for this behavior when evidence was produced of screenshots showing explicit instructions to delete potentially relevant emails and documents in violation of litigation holds supposedly in effect. According to a forensic analyst acting for DuPont at least 17,811 files and emails were deleted, many of which were deemed relevant to the case.[7] As a result of this finding the jury was given an adverse inference instruction, and Kolon was ordered to pay DuPont's costs in connection with the motion.[8] District Judge Robert E. Payne explained that "the actions taken by the key employees discussed herein were intentional, in bad faith and quite serious."[9]

Judgment and reactions

On September 14, 2011, a jury in the U.S. District Court for the Eastern District of Virginia found in favor of DuPont which was awarded damages of $919.9 million.[10] Kolon announced that it intended to appeal and described the judgment as "the result of a multiyear campaign by DuPont aimed at forcing Kolon out of the aramid fiber market", adding "Kolon had no need for and did not solicit any trade secrets or proprietary information of DuPont, and had no reason to believe that the consultants it engaged were providing such information. Indeed, many of the 'secrets' alleged in this case are public knowledge."[4] It also confirmed that it intended to continue a retaliatory antitrust case alleging monopolistic practices on the part of DuPont.

Thomas G. Powell, President of DuPont Protection Technologies, said "The size of this award is one of the largest in defense of business processes and technologies. It also sends a message to potential thieves of intellectual property that DuPont will pursue all legal remedies to protect our significant investment in research and development and our proprietary information for the benefit of our shareholders and customers... Not only are the technologies and processes of Kevlar important to DuPont, but also to the thousands of soldiers, law enforcement officers and first responders globally whose lives Kevlar protects." In a press release DuPont further stated that it intended to seek the award of costs and injunctive relief, requiring Kolon to return the stolen information and cease production of products made using the information.[11]

Appeal and settlement

In 2014, a federal appeals court overturned the 2011 verdict.[12][13] On April 30, 2015, Kolon Industries settled and agreed to pay $275 million in damages to DuPont. The company also pleaded guilty to a federal charge of conspiracy to convert trade secrets, for which they will pay $85 million in criminal fines. [14]

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References
  1. "What is Kevlar". DuPont. Archived from the original on March 20, 2007. Retrieved September 15, 2011.
  2. "DuPont Accuses Kolon of Stealing Trade Secrets". Industry Week. Archived from the original on March 24, 2012. Retrieved September 15, 2011.
  3. Rushe, Dominic (September 15, 2011). "DuPont Wins $900m Kevlar Spy Case". The Guardian. London. Retrieved September 16, 2011. Kolon's rival product is called Heracron.
  4. "Kolon Loses $920 Million Verdict to DuPont in Trial Over Kevlar". Washington Post. Retrieved September 15, 2011.
  5. "Former DuPont Worker Sentenced 18 months for Trade-Secrets Theft". ICIS.com. Retrieved September 15, 2011.
  6. DuPont v. Kolon Industries, 803 F. Supp. 2d 469 (E.D. Va. 2011).
  7. "DuPont v. Kolon: A Lesson in How to Avoid Sanctions for Spoliation of Evidence". E-Discovery Law Alert. Retrieved September 15, 2011.
  8. "DuPont v. Kolon Industries: Deletion of E-mails Leads to Sanctions and Spoliation of Evidence Instruction". Hahn Loeser. Archived from the original on April 2, 2012. Retrieved September 15, 2011.
  9. "Kolon Sanctioned for Spoliation First Day of Trial: Adverse Inference Instruction Forthcoming". Virginia IP Law. Retrieved September 15, 2011.
  10. "DuPont Awarded $920m over Stolen Trade Secrets". BBC News. September 14, 2011. Retrieved September 15, 2011.
  11. "DuPont Wins Trade Secret Case Against Kolon Industries" (Press release). DuPont. Archived from the original on January 17, 2014. Retrieved September 15, 2011.
  12. E.I. DuPont De Nemours & Co. v. Kolon Indus., Inc., 564 F. App'x 710 (4th Cir. 2014).
  13. Bunge, Jacob (April 30, 2015). "DuPont Settles Trade-Secrets Case Against Kolon Industries". Wall Street Journal. Retrieved July 23, 2015.
  14. "Kolon Industries Inc. Pleads Guilty for Conspiring to Steal DuPont Trade Secrets Involving Kevlar Technology". FBI. April 30, 2015. Retrieved July 23, 2015.
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