Jury awards DuPont $919M in trade secrets case

[September 15, 2011]  DOVER, Del. (AP) -- A federal jury awarded $919.9 million in damages to the DuPont Co. on Wednesday in a trade-secrets lawsuit involving high-strength synthetic fibers used in products such as Kevlar body armor.

The ruling was handed down by a jury in Richmond, Va., following a trial that pitted Delaware-based DuPont against South Korean competitor Kolon Industries. The jury found that Kolon had maliciously and willfully misappropriated 149 DuPont trade secrets related to the technology, known as aramid fibers.

DuPont Senior Vice President and General Counsel Tom Sager said Kolon's actions represented perhaps the most egregious case of trade-secrets theft he had seen in his more than 30 years at DuPont. Sager said it was obvious to the jury that Kolon and its senior management had engaged in an orchestrated and persistent effort to steal DuPont business information.

After the verdict was read, DuPont attorney Michael Songer asked the court to award the company $350,000 in punitive damages for each of the 149 trade secrets. He also moved to freeze Kolon's assets and sought a permanent injunction prohibiting Kolon's continued possession and use of the trade secrets.

U.S. District Judge Robert Payne directed the parties to submit written briefs on those issues in advance of a Nov. 2 hearing.

Kolon attorney Jeffrey Randall declined to comment. The company released a statement saying it disagreed with the verdict and is confident that a favorable decision will be reached on appeal.

"Today's verdict is the result of a multiyear campaign by DuPont aimed at forcing Kolon out of the aramid fiber market," Kolon's said in its statement, adding that it has a long history of research and development in various fiber industries, including work in aramid fibers dating back to 1979.

"Kolon had no need for and did not solicit any trade secrets or proprietary information of DuPont," the company said, adding that many of the alleged trade secrets in the case are public knowledge.

DuPont shares rose 1.9 percent Wednesday to close at $45.52.

DuPont's lawsuit against Kolon, filed in 2009, stemmed from dispute that began years earlier after Michael Mitchell, who worked in sales and marketing of Kevlar, was terminated by DuPont in 2006. According to court records, Kolon approached Mitchell a short time later about a possible consulting arrangement. Mitchell subsequently began working with Kolon on production and marketing of its Heracron aramid fiber.

After learning of Mitchell's arrangement with Kolon, DuPont contacted the FBI and the U.S. Commerce Department, both of which launched investigations. Mitchell was sentenced last year to 18 months in federal prison after pleading guilty to theft of trade secrets and obstruction of justice. He has since been released from custody.

Kolon, meanwhile, said it will continue to pursue antitrust claims against DuPont that are scheduled to go to trial in March 2012. A federal appeals court panel in Virginia ruled earlier this year that DuPont must defend itself against Kolon's counterclaims that DuPont has monopolized or tried to monopolize the market for aramid fibers.

[Associated Press; By RANDALL CHASE]

Associated Press writer Larry O'Dell in Richmond, Va., contributed to this report.

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