Kolon charged with stealing Kevlar trade secrets from US DuPont

18 October 2012 20:36  [Source: ICIS news]

A vest made with KevlarHOUSTON (ICIS)--The US accused South Korea-based Kolon Industries and five employees of stealing DuPont's Kevlar trade secrets, the Department of Justice (DOJ) said on Thursday.

Kolon is also accused of stealing Twaron trade secrets from Teijin, a company based in Japan.

The indictment seeks forfeiture of at least $225m (€171m), the department said.

A lawyer representing Kolon Industries contested the allegations and said hin a prepared statement that the company would defend itself.

Twaron and Kevlar are para-aramids used to make body armour as well as automotive and industrial products.

The indictment was initially filed on 21 August in US District Court, Virginia Eastern District. The indictment was unsealed on Thursday.

The indictment charges Kolon with one court of conspiracy to convert trade secrets, four counts of theft of trade secrets and one count of obstruction of justice, the department said.

Kolon makes its own para-aramid called Heracron. From July 2002 through February 2009, Kolon allegedly sought to improve Heracron by attempting to hire current and former employees of DuPont and Teijin, the department said. The employees would serve as consultants, and Kolon would ask them to reveal confidential and proprietary information about Kevlar and Twaron, the department alleged.

In addition to Kolon, the US also accused five of the company's employees of stealing trade secrets and obstruction of justice.

Those employees include Jong-Hyun Choi, who was a senior executive overseeing the Heracron business team; In-Sik Han, who managed Kolon’s research and development for Heracron; Kyeong-Hwan Rho, who served as the head of the Heracron technical team; Young-Soo Seo, who served as the general manager for the Heracron business team; and Ju-Wan Kim, who was a manager on the Heracron business team.

Kolon attorney Jeff Randall contested the allegations made by the department.

"The DOJ’s allegations unfairly damaged Kolon’s reputation as a company that respects intellectual property rights and has developed its own aramid fibre product over the past 30 years," Randall said. "Kolon is also concerned that DOJ’s allegations undermined its freedom to benefit customers through legitimate competition in the United States and elsewhere."

The indictment followed a lawsuit that DuPont had filed against Kolon, accusing the company of trade-secrets theft.

DuPont prevailed, winning a $919m.9m judgment against the company last year.

Kolon plans to appeal that judgement.

Randall alleged that DuPont had resorted to litigation in an attempt to block what he called legitimate competition.

Now that DuPont's key patents have expired, Randall said Heracron should be free to compete in the US and the rest of the world.

"DuPont’s aramid fibre technology is the subject of hundreds of expired patents that have been in the public domain for dozens of years for any competitor to use legitimately. It is disturbing that the DOJ would bring charges that effectively assist DuPont in improperly extending its monopoly over aramid fibre technology beyond the limited term provided by the US patent laws.”

In fact, Heracron is the result of research and development dating back to 1979, work done in conjunction with the Korea Institute of Science and Technology.

Regarding the indicted employees, Randall said companies such as Kolon and DuPont frequently hire consultants − including those who had worked for competitors.

"Doing so is not a crime but simply part of what constitutes vigorous competition," Randall said.

The employees face up to 10 years in prison and a fine of up to $250,000 if convicted of stealing trade secrets. They face up to 20 years in prison and a fine of up to $250,000 if convicted of obstruction of justice, the department said.

Kolon Industries faces a fine of up to $5m if convicted of stealing trade secrets and a fine of up to $500,000 if convicted of obstruction of justice, the department said.

The US is pursuing another trade-secrets case against China-based Pangang Group, which it accused of stealing DuPont's titanium dioxide (TiO2) technology.

It accused a US-based executive of acting as a middle man. The case is pending.

($1 = €0.76)

By: Al Greenwood
+1 713 525 2645

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