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Kolon Accused of Stealing DuPont Trade Secrets

(CN) - A grand jury charged Kolon Industries and five executives and employees of conspiring to steal trade secrets for high-strength fiber technology from DuPont and Teijin Ltd.

A grand-jury indictment, filed in August and unsealed Thursday, charges Kolon Industries and several executives and employees with obstruction of justice, theft of trade secrets and conspiracy to convert trade secrets.

In September 2011, E.I. du Pont de Nemours and Co. was awarded nearly $920 million for its stolen Kevlar trade secrets, plus $350,000 in punitive damages.

DuPont makes a para-aramid fiber called Kevlar that has competed for decades with the Twaron fiber made by Teijin Limited in Japan, according to the Justice Department.

Para-aramid fibers are used to make body armor, fiber optic cables, and automotive and industrial products. Kolon recently began making a para-aramid fiber called Heracron.

From July 2002 through February 2009, Kolon allegedly tried to improve its Heracron by targeting current and former employees at DuPont and Teijin and hiring them as consultants, then asking them to reveal confidential and proprietary information, according to the indictment.

When the consultants could not answer Kolon's specific questions, it allegedly asked the consultants to glean the information from current DuPont employees.

For example, the indictment claims a former DuPont employee gave Kolon a CD containing several confidential business documents, including a detailed breakdown of DuPont's capabilities and costs for the full line of its Kevlar products, customer pricing information, analyses of market trends and strategies for specific Kevlar submarkets.

In August 2008, a DuPont employee met with Kolon employees in a Richmond hotel room as part of an undercover operation with law enforcement, according to the indictment. The DuPont employee allegedly discussed how he could feed them trade secrets without leaving evidence.

The indictment says Kolon also tried to recruit a former employee of Teijin Twaron, who reported the requests for trade secret information to the Japanese subsidiary. Despite a cease-and-desist letter from Teijin Twaron's legal team, Kolon kept trying to glean trade secrets but took extra steps to avoid detection, the indictment states.

Kolon executives and employees Jong Hyun-Choi, In-Sik Han, Ju-Wan Kim, Kyeong-Hwan Rho and Young-Soo Seo are charged with one count of obstructing justice and one count of conspiring to convert trade secrets. Kolon faces the same two charges, plus four additional counts of stealing trade secrets.

The individual defendants face a maximum of 30 years in prison and up to $500,000 in fines if convicted. Kolon could be fined up to $25.5 million.

The indictment additionally demands that Kolon and its executives and employees forfeit $225 million - the estimated proceeds of Heracron sales from January 2006 through June 2012 - plus $341,000 in payments made to former DuPont employees in exchange for trade secret information.

The case is being prosecuted by assistant U.S. attorneys Timothy Belevetz and Kosta Stojilkovic, trial attorney John W. Borchert, and senior counsel Rudolfo Orjales, and is being investigated by the FBI's Richmond Field Office.

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