$275 Million Awarded in Kevlar Case
In 2015, Kolon pleaded guilty to conspiracy to steal trade secrets and agreed to pay $360 million in fines and restitution.
This case underscores the critical importance of Non-Disclosure Agreements (NDAs) in protecting proprietary information. NDAs serve as enforceable legal instruments that can lead to substantial financial remedies when breached, highlighting their role in safeguarding intellectual property across industries.
Below is a brief breakdown of the case:
What Happened:
In 2009, DuPont filed a lawsuit against Kolon Industries, alleging the misappropriation of trade secrets related to DuPont's Kevlar® para-aramid fiber, a material used in bulletproof vests and other protective gear. DuPont claimed that Kolon engaged in a multi-year scheme to steal confidential information, including manufacturing processes and pricing data, to develop a competing product. In September 2011, a jury found Kolon liable for misappropriating 149 trade secrets and awarded DuPont $919.9 million in damages.
Role of NDAs:
Non-Disclosure Agreements (NDAs) were central to the case, as DuPont alleged that Kolon violated these agreements by using confidential information improperly. The case underscores the importance of NDAs in protecting proprietary information, especially in industries where trade secrets are critical to competitive advantage.
Impact:
The case highlighted the significant financial and reputational risks associated with trade secret misappropriation. It set a precedent for the enforcement of NDAs and the protection of trade secrets in the corporate world. In 2015, Kolon agreed to a settlement, including a $275 million restitution payment, to resolve the dispute.
For a more in-depth read, here is an excerpt from a Reuters article written by Lindsay Dunsmuir:
Kolon Industries Inc has pleaded guilty to conspiring to steal DuPont Co's trade secrets, the U.S. Justice Department said on Thursday, bringing to a close a long-running dispute involving a fiber used to make Kevlar bulletproof vests.
The South-Korea based company will pay $360 million, of which $275 million is restitution to DuPont and $85 million in criminal fines, as part of the deal, U.S. prosecutors said.
Kolon pleaded guilty to one count of conspiracy to convert trade secrets before U.S. District Judge Anthony Trenga in federal court in Alexandria, Virginia.
DuPont had accused Kolon of the theft of 149 of the U.S. chemical maker's trade secrets relating to the latter's Kevlar para-aramid fiber, used to make body armor, fiber-optic cables and tires.
DuPont said in a statement it had entered a settlement agreement with Kolon that resolves all outstanding litigation between the two companies.
"The financial terms of the settlement include up-front and ongoing payments to DuPont," the statement said. Further terms and conditions of the settlement are confidential, the company added.
DuPont had won a $919.9 million jury verdict in a Virginia federal court in September 2011, but that ruling was tossed on appeal and a new trial ordered.
The separate criminal case was brought by U.S. federal prosecutors in August 2012, in which Kolon and five executives were criminally charged.
Kolon's President and CEO Dong Moon Park said in a statement that the settlements allowed the company to focus on its business operations "while ensuring that appropriate protections are in place so as to avoid comparable disputes in the future."
The case against the five executives remains ongoing as none of the individuals has come to the United States to face the charges, the U.S. Justice Department said.
DuPont began litigation in February 2009, claiming that Michael Mitchell, a 24-year DuPont veteran, had taken proprietary information about Kevlar when he left in 2006 to start his own fiber business, and later shared it with Kolon.
Works Cited:
Dunsmuir, Lindsay. “Kolon Industries Pleads Guilty in DuPont Kevlar Trade Secrets Case.” Reuters, 30 Apr. 2015, www.reuters.com/article/legal/kolon-industries-pleads-guilty-in-dupont-kevlar-trade-secrets-case-idUSL1N0XR2KA/. Accessed 4 May 2015.
