DuPont Inc. v. Kolon USA Inc.

3:09-cv-58
February 3, 2009
Federal Court
Virginia
US District Court for the Eastern District of Virginia

In a February 2009 compliant, DuPont (US) outlined a proprietary “para-amid fiber” manufacturing process for their Kevlar™ product, unique for its durability and strength and utilized notably in police, military and even in sports equipment throughout the US. DuPont alleged that competitor Kolon Industries (South Korea) engaged in purposeful and deliberate theft of the proprietary and trade secret information integral to successfully manufacturing para-amid fiber material as Kevlar™ is processed. DuPont alleged that Kolon executives recruited DuPont employees to reveal information, even paying cash in direct exchange for the specifications of DuPont’s Kevlar™ technology. Of those with access or knowledge of the Kevlar™ product, the complaint specifically alleged misappropriation of information related to the trade secret Kevlar™ manufacturing process by former DuPont Kevlar™ developer Michael Mitchell, sought out by Kolon soon after his termination. Mitchell ostensibly provided paper documents, electronic files and data, and personal knowledge to Kolon, intending to address the company’s difficulties in quality control and production of para-amid fiber products in the US market.

After over two years of litigation, a September 2011 jury issued a verdict in favor of DuPont, finding Kolon liable for misappropriation of trade secrets. On August 30, 2012, Justice Payne assessed a remarkable $919M in compensatory damages against Kolon, an additional $350,000 in punitive damages, and enjoined Kolon from selling para-amid fiber products in the U.S. for twenty years.

The district court also issued a permanent injunction against any further use or disclosure of DuPont trade secrets used in their Kevlar™ product. Kolon filed an emergency motion to stay the injunction pending appeal the following day, which was granted by the Fourth Circuit on August 31, and so-ordered by the District Court on October 5. The matter was then timely appealed.

On April 3, 2014 the Fourth Circuit overturned the jury verdict in which DuPont had been awarded significant damages against a defendant and competitor – Kolon – which had allegedly misappropriated DuPont’s proprietary manufacturing process for Kevlar. In its opinion, the Fourth Circuit ruled that “the district court abused its discretion, to Kolon’s prejudice, when it granted one of DuPont’s pre-trial motions in limine and thereby excluded relevant evidence material to Kolon’s defense.” At issue, was evidence offered by Kolon which it hoped would show that many of the alleged trade secrets at issue were publicly available, specifically that they had been the subject of previous litigation and were thus part of the public domain. Rule 403 of the Federal Rules of Evidence is clear that the probative value must be “substantially outweighed by the danger of confusion …. or of misleading the jury” and that this “standard [was] not satisfied on this record.” Since DuPont’s motion to exclude was highly prejudicial to the defendant, the Fourth Circuit has vacated and remanded the case back to the district court.

E.I. du Pont de Nemours and Company
Kolon USA Inc.
Uniform Trade Secrets Act