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Thursday, 15 September 2011

How much is a secret worth?

A jury in Virginia District Court has awarded damages of US$919 million for trade secret misappropriation against a South Korean company, Kolon Industries. Returning a verdict finding that Kolon illicitly made use of 149 such secrets, this works out at over $6 million per secret.

Kolon competes with market leader DuPont in the lucrative market for aramid fibers.  If that chemical name does not set your whiskers twitching, you might be familiar with the DuPont trademarks Kevlar and Nomex, which are the best known examples of aramids. These high-strength, lightweight materials are used most famously in bulletproof armour (Kevlar) and fireproof clothing (Nomex), but nowadays can be found in everything from racing canoes to the laces on football boots.  

(If Kevlar football laces are the answer, what on earth could the question have been, Merpel wonders? The days of jumpers for goalposts are long gone indeed.)

As reported by  Bloomberg, DuPont alleged in their trade secrets action that Kolon had hired former DuPont executives and engineers as consultants, and then conspired with them to steal DuPont's trade secrets relating to the manufacture of these fibers. The jury agreed.

A 'Nomex' hood - perfect for concealing your
features if you're planning to indulge in a spot
of economic espionage.
It seems DuPont became particularly suspicious when Kolon hired former DuPont engineer Michael Mitchell, who had previously been in charge of DuPont's marketing of Kevlar. Following a complaint to the FBI (who handle such cases under their economic espionage jurisdiction), Mr Mitchell's home was searched, and the Feds found proprietary DuPont information on his computer. Last year, Mitchell pleaded guilty to theft of trade secrets and obstruction of justice, resulting in an 18 month prison sentence and an undoubted strengthening of DuPont's case against Kolon.

Given the size of the award (which represents about a third of Kolon Industries' annual turnover, and a full four years worth of its operating profits), it is not surprising that Kolon plans to appeal.

Kolon, responding to the jury's verdict, denies that it sought or solicited any trade secrets from the ex-DuPont consultants it hired, or that it was aware that any information it received was in fact a trade secret. Kolon also claims that at least some of the information was in the public domain, presumably in the hope of at least whittling down the number of items regarded as secrets on appeal, leading to a corresponding reduction in damages.

2 comments:

Derek said...

Re: Kevlar in bootlaces - to stop people shooting themselves in the foot?

Anonymous said...

"to stop people shooting themselves in the foot?"

Sort of like improving the examination quality by ading more post-grant ways to challange a patent...

As the famed Homer Simpson would say, D'Oh!

Kevlar shoelaces won't prevent people from shooting themselves in the foot, but would only minimize any potential damage from doing so.

In fact, if the protection is enabled sufficiently, people just won't care about shooting themselves inthe foot and the incidence of such behavior is likely to increase.

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