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A Massive Attack on Body Armor - 1st Round

Posted By JaeWon Lee, Nov 1, 2013

Size matters in a civil case when it comes to the size of the verdict. It surely does matter in trade secret misappropriation disputes where parties compete in market. A plaintiff would naturally seek money damage to compensate lost economic value (a term in Uniform Trade Secrets Act) or advantage (in Restatement of Unfair Competition) caused by defendant’s misappropriation.

Of course, it’s not all about the money. A plaintiff, in one part, would seek any injunctive relief to protect trade secret’s “secrecy” by requiring a defendant to return or destroy any misappropriated proprietary information. A plaintiff would also ask permanent injunction to enjoin a defendant from disclosing or using that information.

But, it’s still money. Money is straightforward. It’s easy to compare and easier to draw attention. So, it’s definitely not a bad idea to start with the “Top 10 Trade Secret Verdicts” list to see what’s going on this category of lawsuits.

DuPont v. Kolon ranks second in this list. The jury awarded DuPont $919.9 million on September 14, 2011. That nine-figure itself is a lot of money and enough to draw attention. But, that wasn’t the end of the bad news for Kolon. On August 21, 2012, the Department of Justice indicted Kolon and five of its executives for conspiracy to convert trade secrets, theft of trade secrets, and obstruction of justice. And, on August 30, 2012, the trial judge ordered permanent injunction shutting down Kolon’s worldwide (“no geographic limitation”) business (related to the products in this dispute) for next 20 years.

The civil case is currently on appeal in the Fourth Circuit and a decision is expected by the end of 2013. Kolon also appealed its antitrust counterclaim after the same judge granted DuPont’s motion for summary judgment and dismissed with prejudice Kolon’s counterclaim.

In the following posting, I will summarize both parties’ arguments and counterarguments in appeal to introduce typical legal issues in trade secret misappropriation cases. I will then focus on these issues: reasonable particularity requirement to identify trade secrets; “use” of trade secrets; unjust-enrichment damage; and permanent injunction. Before that, I'm going to close this posting by introducing some facts of the case.

DuPont is a Delaware based chemical company that manufactures innovative chemicals and polymers. Kolon is a South Korean company that also produces high-tech materials and chemicals. The main product at issue in this dispute is DuPont’s trademarked product called Kevlar. Kevlar is a high-strength para-aramid synthetic fiber best known for its use in law enforcement and military body armor. DuPont invented Kevlar in 1965 and has produced it for more than 30 years. Kolon began basic R&D of para-aramid in 1979 and introduced its Heracron brand in 2005.

On February 3, 2009, DuPont sued Kolon in the U.S. District Court for the Eastern District of Virginia. In its complaint, DuPont alleged that Kolon misappropriated DuPont’s Kevlar trade secrets and confidential information to improve Kolon’s own products and processes. According to DuPont, Kolon had failed to manufacture aramid fiber for over ten years, but Kolon began to improve the key quality of Heracron since 2006. DuPont alleged that Kolon have hired and attempted to hire former DuPont employees to obtain Kevlar’s manufacturing process and marketing information. In specific, DuPont alleged that Kolon have sought and received confidential information from DuPont’s former employee, Michael Mitchell. Later, DuPont found that Kolon engaged more former DuPont employees as consultants to help improve its Heracron production.

Kolon’s unsuccessful defense in trial includes: It developed para-aramid independently since 1979; Many of the DuPont’s alleged trade secrets are not “secret” at all because they were readily ascertainable in public domain; Consulting is quite common in industry, not inappropriate nor illegal; and It is DuPont’s effort to exclude Kolon and monopolize para-aramid market.