Cases from Federal Statutes

American Arbitration Association
Halliburton Served with $300 Million Demand for Arbitration over Trade Secret Theft

On February 21, 2013, Ecosphere Technologies, Inc. (“Ecosphere”) put industry giant Halliburton Energy Services, Inc. (“Halliburton”) on notice of a Demand for Arbitration ("Demand") that Ecosphere filed with the American Arbitration Association. The Demand alleges that “Halliburton took and disclosed Ecosphere’s trade secrets and proprietary technical, business and strategic information.”

Ecosphere is a water engineering, technology licensing and innovative manufacturing company that develops non-chemical water treatment solutions for industrial markets throughout the world. According to a press release from Ecosphere's counsel, Haliburton misappropriated Ecosphere's trade secret information related to hydro-fracking liquids, in violation of a non-disclosure agreement between the companies. Ecosphere had initially contracted to share the information with Haliburton. However, after Haliburton made a failed attempt to purchase Ecosphere outright, Haliburton continued to use Ecosphere’s trade secrets without authorization “to immediately market itself as an environmentally friendly company . . . .” The Demand claims $300 million in damages.

The issue of trade secrets in hyrdo-fracking has become a hotbed for litigation and legislation. TSI recently covered state attempts to legislate the issue. It was also a main topic at the 2012 TSI Symposium, “Private Data/Public Good: Emerging Issues in Trade Secrets Law.

United States District Court for the Eastern District of Virginia
Department of Justice Brings Criminal Trade Secret Misappropriation Charges Relating to Alleged Theft of DuPont's Kevlar™ Technology

On October 18, 2012, the Department of Justice unsealed an August 21st indictment against Kolon Industries, Inc. and five its executives (“Kolon”) in relation to Kolon’s alleged theft of E.I. du Pont de Nemours and Company’s (“Dupont”) Trade Secrets. The government brought criminal trade secret misappropriation charges pursuant to the Economic Espionage Act, accusing Kolon of engaging in massive industrial espionage over a six-year period in an effort to steal Dupont’s proprietary Kevlar™ technology.

DuPont had previously brought civil charges against Kolon in relation to the same alleged misconduct, which resulted in a damage award of almost $920 million and injunctive relief. In a statement responding to the charges, Kolon’s counsel accused the DOJ of “effectively assist[ing] DuPont in improperly extending [the company’s] monopoly over [Kevlar] technology beyond the limited term provided by the U.S. Patent laws.”

United States District Court for the Western District of North Carolina
Huang Pleads Guilty to Theft of Trade Secrets

On October 1, 2015, Chinese businessman, Xiwen Huang, pled guilty to theft of trade secrets under 18 U.S.C. 1835(a)(2). According to the Bill of Information, between September 2006 and May 2015, Huang "schemed and stole trade secrets from companies within the United States and intellectual property from the United States government...to further his aspirations of forming and operating his own company in the People's Republic of China." Huang received his Bachelor's of Science and Masters Degrees in chemical engineering from Tianjian University in China, and then came to the United States to obtain a doctorate in chemical engineering from Auburn University. According to the Bill of Information, while an undergraduate student, Huang wrote that he "'had a dream of learning more advanced technology to serve [his] homeland' China and decided that to 'fulfill [his] wish' he needed to go abroad and then 'return to China with [his] newly acquired methodology and research skills to teach in China.'"

In 2009, Huang became a naturalized citizen of the United States. Huang worked for numerous companies in the United States as well as a research facility operated by the United States government. Beginning in 2012, Huang incorporated a company in North Carolina and began negotiating with various Chinese companies to bring the technology he learned back to China. Huang engaged in a joint venture arrangement with a Chinese company where Huang was responsible for providing the technology, including the stolen United States intellectual property, and the Chinese company was responsible for supplying the necessary capital. In April of 2014 Huang moved back to China to work for the newly created company, taking stolen confidential and proprietary information with him. Upon attaining his previously stated goals, Huang wrote a document titled, "Trip of Dream Realization" in which he described his "scheming" and "planning" to steal United States Intellectual Property. Huang also stated that "As the main thrust during [China's] development, it is necessary and obligatory for our generation to fulfill our share of responsibility in contributing towards the societal progress of China." Huang was arrested in May of 2015 when he returned to the United States.

The stolen trade secrets are valued between $65 million and $150 million. During the plea agreement hearing, "prosecutors revealed that Huang has also agreed to now help the U.S. government," though Huang's attorneys would not comment on how Huang will help.

U.S. District Court California Northern District (Oakland)
Real-estate data analytics startup, HouseCanary Inc., alleges that Quicken Loans Inc. attempted to steal its data and technology through a sham licensing agreement so it could develop competing appraisal software