Trade Secrets Verdict Big Win for Business

October 4, 2011 - 5 minute read

John K. Etter, Member and Patent Attorney, and Roy Rodney, Managing Member

DuPont & Company was recently awarded $919,000 by a federal jury against a competitor that misappropriated the company’s proprietary formulas, manufacturing processes and customer information for DuPont’s Kevlar® fiber, which is used in bullet-resistant vests, tires and other products.  In its press release on the case, Thomas G. Powell, president DuPont Protection Technologies stated that “Companies around the world are facing a significant challenge to protect trade secrets and intellectual property.”   Thomas L. Sager, senior vice president and general counsel of DuPont went on to say, “Today’s jury decision is an enormous victory for global intellectual property protection.”  See E.I DuPont de Nemours & Company v. Kolon Industries, Inc., No. 09-0058 (E.D. Va. 9/14/11).

DuPont’s efforts to protect its trade secrets were extensive.  The Company required its technical and management employees to sign confidentiality agreements prohibiting disclosure of DuPont’s “commercially valuable technical and non-technical information,” while they were employed by DuPont and afterwards.  DuPont had “formidable physical security at its facilities,” only permitted certain employees access to trade secret documents, and required additional passwords and “digital e-passes” to access confidential information electronically.  DuPont regularly trained employees on trade secrets and required technical staff and managers to sign an Employee Termination Statement when they quit or were fired, agreeing to “not use or divulge at any time any secret or confidential information,” without DuPont’s consent.

Despite those protective measures, which are more than most companies implement, one of DuPont’s competitors contacted a long-time DuPont technical and marketing manager within a few weeks of when he left DuPont.  The former DuPont employee divulged highly technical, confidential details of DuPont’s Kevlar® fiber manufacturing process that he had copied onto his home computer, which permitted the competitor to significantly improve its fiber and triple production capacity.  The former employee disclosed customer pricing and contract information, and helped the competitor contact other DuPont employees.  DuPont sued the competitor and its former employee under the Uniform Trade Secrets Act, which has been enacted in Louisiana, Texas and almost all other states, for misappropriation of trade secrets, breach of contract and other causes of action.  After two years of discovery and pretrial motions and a several week trial, the jury found the competitor liable for misappropriating 154 trade secrets and awarded damages to DuPont.

The Uniform Trade Secrets Act protects information that “derives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use,” and that is subject to reasonable efforts under the circumstances to maintain secrecy.  Protected trade secrets include business information, such as customer lists, pricing, costs and vendor information, as well as engineering, chemical and technical specifications and formulas.

All businesses can be at risk for having their business “secrets” exploited by their competition.  Information as diverse as recipes, manufacturing and operational processes, customer lists, costing and pricing data and analytic tools can be protected as trade secrets under the Uniform Trade Secrets Act, contract law and other laws.  Software is somewhat tricky and often is protected through copyright rather than as a trade secret.  As with many aspects of business, taking steps to protect trade secrets proactively through legal measures is much more effective than trying to recover a secret that got out.

Roy J. Rodney, Jr., Managing Member, and John K. Etter, Member and Patent Attorney, of Rodney & Etter, LLC have assisted clients with protecting intellectual property as trade secrets, and as part of a comprehensive program to assess, protect and enhance their information, innovations, brand and inventions.  We can provide employee agreements, confidentiality and non-disclosure contracts, and trade secret policies, as well as invoking protections available under the unfair competition, copyright, trademark and patent laws.

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