September 23, 2011

Stealing Trade Secret With Zeal: May Make You Reel

A federal jury in the State of Virginia gave, which is undoubtedly the biggest verdict till date in a case of 'misappropriation of trade secret' till date. The Jury awarded a whopping $919.9 million verdict in favor of DuPont in the case of E.I. du Pont de Nemours v. Kolon Industries. The verdict marks the end of the two-and-a-half year battle that DuPont waged against Kolon Industries (a relatively new comer to the industry of rubber/tyre manufacturing) claiming that Kolon had willfully misappropriated key aspects of its formula for Kevlar®, a high strength synthetic fiber used in applications as diverse as bicycle tires and body armor.
(Image from here)

Such huge verdict was a result of twofold wrongs:
a. of 'stealing' of the trade secrets through a former DuPont employee (who had supposedly stored the data in his home computer, who later confessed the theft and hence was separately sentenced to 18 months of imprisonment)

b. of willful destruction of evidence by deletion of several emails and related documents by Kolon which was caught by the forensic experts employed by DuPont.

Though some of those evidences were recovered on backup tapes after extensive computer forensic analyses, much of it remained missing. This led Judge Robert Payne to provide a so-called adverse inference instruction to the jury, meaning that the jury was free to assume that the missing evidence would have weighed against Kolon.

Hence, due to such serious 'bad faith' conduct by the employees of Kolon, the award included if not punitive damages, but atleast sanctions. Further, the Judge refused to give a default award in favor of DuPont, so this position of law may still be open to reviews, though prima facae it is a open and shut case, hence the Jury was allowed to infer adversely (against Kolon).

What is learnt from this case is that, it is not only the duty of any organisation to protect its trade secret, but also be aware of any potential theft of other's trade secrets by its own employees. Moreover, in case any such theft is brought into notice of the employer, proper measures should be taken, not to effect any damage to the evidences so that such theft is undetectable, but to ensure that all the employees, including the IT team and the IP teams are set at high alert thereby tracing all the subsequent steps so as to preserve all the evidences in favor of such employer being sued.

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