Espionage. Double agents. Betrayal. Theft. While I could be describing the latest James Bond film, these elements were all part of a trade secret lawsuit in the United States involving Dupont’s product Kevlar. As any polymer chemist knows, Kevlar is a para-aramid synthetic fibre having a tensile strength five times that of steel. It has numerous applications, the most notable being its use in body armour. The polymer was invented by a scientist at Dupont in the 1960s and as such, any patent protecting the base product would have expired long ago. The famous case of Dupont v. Kolon Industries highlights the value of trade secrets and technological know-how, even for a product that is more than 50 years old. Furthermore, the case highlights the need for companies to be aware of and protect these valuable assets.
In 2006, Dupont fired Michael Mitchell, a long-time employee who was involved in the sales and marketing of Kevlar. Upon his termination, Dupont reminded Mitchell of his obligations to the company including the non-disclosure provisions of his employment contract. Mitchell was also required to sign an Employee Termination Statement affirming that he had returned all documents to the company and that he would not divulge any secret or confidential information.
Shortly after his termination, Mitchell was approached by Kolon Industries, a Korean company that also marketed and sold para-aramid fibre products. Mitchell entered into a formal consulting agreement with Kolon to provide assistance relating to the production and marketing of Kolon’s product Heracron, which competes with Kevlar in several applications. After learning of Mitchell’s relationship with Kolon, Dupont began an internal review of Mitchell’s pre-termination activities while he was with their company. Following their review, Dupont contacted the Federal Bureau of Investigations (FBI) to inform them about the possible theft of trade secrets and confidential information. After a review of the case and an investigation, the FBI executed a search warrant of Mitchell’s residence, seizing documents and several computers. An analysis of his computers showed that Mitchell was in possession of highly confidential information concerning the processes used by Dupont to produce different types of Kevlar. It was further determined that Mitchell had passed to Kolon sensitive information concerning the processes for the preparation of Kevlar.
In addition to criminal trials against Mitchell and other executives of Kolon, Dupont brought a suit against the Korean company for theft of its trade secrets. At the conclusion of the trial, a Virginia jury awarded almost $1 billion to Dupont as damages for the theft of its intellectual property. As well, Mitchell was sentenced to 18 months in federal prison for stealing Dupont’s trade secrets. While Kolon successfully appealed the jury’s award of $1 billion, the two companies recently settled the matter for $275 million.
If anything, the Dupont case illustrates the value of intellectual property and technological know-how a company can develop internally and the need to take steps to adequately protect such information. Obviously not all companies are behemoths like Dupont, which can easily afford to enforce its rights through the courts. However, there are numerous steps any company can take to help protect its proprietary information. Every company involved in research and development should have an employment contract and require each new employee to sign it when they are hired. Such employment contracts should assign the ownership of any intellectual property to the company developed during the course of their employment. In addition, the contract should state that the employee will not disclose the company’s confidential information, even upon termination. One can easily envisage a problem that frequently arises for companies of all sizes: a key scientist working on an important technological project leaves before it has been patented. It’s obviously impossible to remove that knowledge from the inventor’s head before they leave. However, the employee should be reminded of their obligations to the company even after resigning. In addition, assuming the research material is patentable, the company should file a patent application as soon as possible to protect their rights through the patent system.
Mike Fenwick is a patent lawyer with Bereskin and Parr LLP in Toronto and holds a master’s degree in organic chemistry.