In the latest twist in the epic trade secret dispute between DuPont and Kolon, the U.S. Attorney for the Eastern District of Virginia, Neil H. Macbride, has indicted Kolon and a number of its top executives for allegedly engaging in a multi-year campaign to steal trade secrets related to DuPont’s Kevlar para-aramid fiber and Teijin Limited’s Twaron para-aramid fiber. The indictment, issued earlier today, seeks forfeiture of at least $225 million in proceeds from the alleged theft of trade secrets from Kolon’s competitors. A PDF copy of the unsealed indictment is attached below.

As readers of this blog know, a jury awarded approximately $920 million to DuPont last year for the misappropriation of certain of its Kevlar trade secrets and in August, District Court Judge Robert Payne entered a 20-year permanent injunction forbidding Kolon from manufacturing Heracron, the competitive product to Kevlar. For more on these and other developments in the DuPont v. Kolon dispute, see my posts here, here and here.

I am going to quote heavily from the press release below, but here is the meat of the indictment: according to the government, from July 2002 through February 2009, Kolon allegedly sought to improve its Heracron product by targeting current and former employees at DuPont and Teijin, a Japanese competitor, and hiring them as consultants, and then asking them to reveal confidential and proprietary information. 

According to the indictment, in July 2002, Kolon allegedly obtained confidential information related to an aspect of DuPont’s manufacturing process for Kevlar, and within three years Kolon had replicated it.  “This successful misappropriation of DuPont’s confidential information, the indictment alleges, spurred Kolon leadership to develop a multi-phase plan in November 2005 to secure additional trade secret information from its competitors, by targeting people with knowledge of both pre-1990 para-aramid technology and post-1990 technologies.”

Many of the allegations mirror evidence that was presented in the civil action brought by DuPont against Kolon. For example, “Kolon is alleged to have retained at least five former DuPont employees as consultants. Kolon allegedly met with these people individually on multiple occasions from 2006 through 2008 to solicit and obtain sensitive, proprietary information that included details about DuPont’s manufacturing processes for Kevlar, experiment results, blueprints and designs, prices paid to suppliers and new fiber technology. In cases where the consultants could not answer Kolon’s specific and detailed questions, Kolon allegedly requested the consultants to obtain the information from current employees at DuPont.”

The indictment also alleges that “during a meeting with one consultant, a Kolon employee surreptitiously copied information from a CD the former DuPont employee had brought with him that contained numerous confidential DuPont business documents, including a detailed breakdown of DuPont’s capabilities and costs for the full line of its Kevlar products, customer pricing information, analyses of market trends and strategies for specific Kevlar submarkets. This wealth of information was allegedly copied and dispersed among several Kolon executives and employees, and the indictment alleges that many of these documents and others associated with the consultants were deleted by the Kolon executives and employees after DuPont filed a civil suit against Kolon in 2009.”

Kolon also is accused of attempting to recruit a former employee of a Teijin subsidiary, Teijin Twaron.  Teijin Twaron sent a letter to Kolon in January 2008 demanding that Kolon cease and desist from seeking to obtain trade secrets related to Twaron, but the indictment alleges that Kolon continued to try to obtain trade secrets, and took additional steps to attempt to avoid detection of its actions.

The indictment further alleges that, “in August 2008, Kolon employees met with a current DuPont employee in a hotel room in Richmond and discussed how the DuPont employee could provide trade secrets to Kolon without leaving evidence.”

In addition to the corporation itself, Kolon executives and employees from Seoul were charged with conspiring together to steal trade secrets and obstruction of justice for deleting information from their computers, including Jong-Hyun Choi, 56,a senior executive overseeing the Heracron Business Team; In-Sik Han, 50, who managed Kolon’s research and development related to Heracron and was allegedly responsible for overseeing the “consulting” sessions with ex-DuPont employees; Kyeong-Hwan Rho, 47, who served as the head of the Heracron Technical Team beginning in January 2008;Young-Soo Seo, 48, who served as the general manager for the Heracron Business Team beginning in November 2006; and Ju-Wan Kim, 40, who was a manager on the Heracron Business Team. 

According to the press release, the conspiracy and theft of trade secrets counts each carry a maximum penalty of 10 years in prison and a fine of $250,000 or twice the gross gain or loss for individual defendants, and a fine of $5 million or twice the gross gain or loss for the corporate defendant. The obstruction of justice count carries a maximum penalty of 20 years in prison and a fine of $250,000 or twice the gross gain or loss for individual defendants, and a fine of $500,000 or twice the gross gain or loss for the corporate defendant. 

Kolon Indictment.pdf (1.35 mb)