Troutman Sanders LLP: Kevlar® Trade Secret Theft Trial to Begin July 21

Troutman Sanders LLP: Kevlar® Trade Secret Theft Trial to Begin July 21

by Dabney Carr

Jury selection for the trial of DuPont's claims against a Korean competitor, Kolon Industries, for the alleged theft of trade secrets relating to DuPont's Kevlar® fiber is set to begin July 21 before District Judge Robert E. Payne, culminating years of criminal and civil litigation and two Fourth Circuit appeals (so far). E.I. du Pont de Nemours and Co. v. Kolon Industries, Case No. 3:09CV58- REP (E.D.Va.). The trial is set for a very un-Rocket Docket length of 27 trial days spread over eight weeks, but the public is not likely to see much of it, as the Court has issued a Notice that it will close the trial proceedings when confidential trade secret evidence is presented.

The case involves a former DuPont engineer and sales rep, Michael Mitchell, who worked for more than 25 years at DuPont, including two years in the sales and marketing of Kevlar®. As stated in a Department of Justice press release in 2010, Mitchell began to work as a consultant for Kolon after he was terminated by DuPont in 2006. Mitchell provided proprietary information regarding Kevlar® to Kolon, and a search warrant executed in 2008 revealed that Mitchell had hundreds of pages of DuPont proprietary documents stored on his home computer. Mitchell agreed to cooperate with the government and even set up a meeting in a Richmond hotel between three Kolon employees and another cooperator posing as a "disgruntled" senior scientist at DuPont. Mitchell eventually pled guilty to theft of trade secrets and obstruction of justice in March, 2010 and was sentenced to 18 months in prison. He's due to be released this fall, but he'll get some time off, as Judge Payne has ordered him to be present at trial.

In early 2009, DuPont brought suit against Kolon for theft of its trade secrets. Kolon counterclaimed for antitrust violations, alleging that DuPont had attempted to monopolize the market for para-aramid fibers by illegally using multi-year supply agreements which required high-volume customers to purchase between 80% and 100% of their requirements from DuPont. Judge Payne dismissed the counterclaim for failure to plead a relevant geographic market. Kolon filed an interlocutory appeal.  In March, the Fourth Circuit reversed the dismissal (opinion here) and remanded the counterclaim back to the District Court. 

DuPont continued to actively communicate and cooperate with federal criminal investigators, and the government served two grand jury subpoenaes on DuPont for the documents produced by Kolon in the civil litigation. Kolon moved to quash the subpoenaes, alleging that the government was unfairly "piggy-backing" on the DuPont's civil suit. Judge Payne denied the motion to quash, ruling that DuPont's cooperation with the government was not improper. As Legal Times reported here, on June 15, the Fourth Circuit unanimously affirmed, allowing the federal government to obtain all of the documents produced by Kolon in discovery for its grand jury investigation.

The DuPont/Kolon fight has been massive and hotly disputed, generating more than 1200 pleadings and orders, including a recent Order instructing Kolon's lead counsel to study the provisions of 28 U.S.C. 1927 regarding taxable costs because of Kolon's persistent filing of repetitive motions (sometimes after the Court had decided a like motion) and for filing 6,000 trial exhibits and refusing to materially reduce the number of those exhibits.

As we've blogged before here, property rights in trade secrets can override the public's First Amendment right of access to judicial proceedings and documents. In his Notice and Order issued yesterday, Judge Payne ruled that there was no alternative to the protection of DuPont's alleged trade secrets than to permit the use of documents under seal and to close the Court upon notice that such evidence is to be presented. Since the public's right of access extends to all evidence and trial proceedings that do not include trade secrets, however, Judge Payne may face practical difficulties in determining when and how often to limit public participation in the trial.

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