The battle continues in the trade secret misappropriation dispute between DuPont Co. and competitor Kolon Industries over para-aramid fibers, often used to strengthen military or police gear. Eastern District of Virginia Judge Payne issued a staggering 20-year worldwide injunction prohibiting Kolon from producing its Heracron fibers, which is significant not only for the duration and scope of the injunction, but for the 70-page opinion analyzing the standard and basis for issuing the permanent, post-verdict injunction. There may be more to come on appeal, but, as it stands, the opinion provides significant ammunition for trade secret owners seeking an injunction in cases of misappropriation.
After lengthy analysis, the court held that the eBay standard, which requires irreparable harm and unavailability of an adequate remedy of law for an injunction in patent cases, does not apply for a violation of the Virginia Uniform Trade Secrets Act (VUTSA). The court instead applied Virginia state law, holding that because DuPont had proved a violation of the VUTSA, it need not prove irreparable harm or the lack of an adequate remedy at law. Since nearly all states have adopted some version of the Uniform Trade Secrets Act, DuPont will be useful to trade secret owners outside of Virginia and across most of the United States.
Not all trade secret owners, however, should bank on such a strong injunction. Aside from issues to be raised during appeal, the court took particular issue with Kolon's conduct, which it described as "surreptitious," "deliberate," and "stealing." With facts that included the secret passing of proprietary information from a former DuPont employee's personal computer to Kolon at a meeting in South Korea, and a guilty plea regarding that conduct, in September 2011, a jury found that Kolon had willfully and maliciously misappropriated 149 Kevlar trade secrets and awarded DuPont $919.9 million in compensatory damages and $350,000 in punitive damages.
Based on these facts, the court weighed the equities to determine whether and to what scope an injunction was appropriate. Among its considerations, the court analyzed the impact of whether Kolon had any assets in the United States and the harm to DuPont by the very revealing of its trade secrets, particularly with regard to processes for use in the next generation of para-aramid technology ("new fiber technology"). In line with the court's discussion of Kolon's "stealing," the court also reasoned that Kolon brought upon itself any harm from the injunction by misappropriating DuPont's trade secrets and that the public interest is not served by unfair competition, despite Kolon's argument that the safety of South Korean and American military personnel would be compromised if it was not permitted to produce Heracron fibers.
Regarding the injunction's scope, the court reasoned that an injunction against producing Heracron, as opposed to use or disclosure of DuPont's trade secrets, was appropriate because Kolon could not independently manufacture a para-aramid product without using DuPont's trade secrets. The court also analyzed the injunction's worldwide scope, finding, among other reasons, that it was appropriate because Kolon itself had not demonstrated any conflict between South Korean and American trade secret laws that would create sovereignty issues regarding the injunction. Finally, the court justified the 20-year duration by finding that there was significant lead time for the independent development of para-aramid technology, shown by Kolon's 20-year effort to develop Heracron and DuPont's 30-year development for its Kevlar trade secrets.
As it stands, although the staggering scope of the DuPont injunction may be inappropriate for most trade secrets, the decision's detailed analysis provides significant support to trade secret owners seeking to obtain an injunction.
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