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Kolon to Pay $360M to Settle Trade Secrets Case

(CN) - Kolon Industries Inc. pleaded guilty Thursday to stealing Dupont Company's trade secrets regarding a fiber used to make Kevlar bulletproof vests, the U.S. Department of Justice announced.

Under the terms of the plea agreement, the South Korea-based company will pay $360 million, of which $275 million is restitution to involving E.I. DuPont de Nemours & Co.'s. The remaining $85 million represents criminal fines to be paid to the federal government.

DuPont accused Kolon Industries of stealing 149 of the its trade secrets over a two-and-a-half year period related to the chemical giant's Kevlar para-aramid fiber, a material used in everything from the aforementioned bulletproof vests to tires.

In February 2009, DuPont filed a civil lawsuit against Kolon in the Richmond, Va. Federal Court, alleging theft of trade secrets.

Thereafter, certain Kolon personnel attempted to delete files and emails related to Mitchell, Schulz and outside consultants hired to improve Kolon's para-aramid fiber, and urged other Kolon personnel to search for such materials and mark them for deletion, prosecutors said.

DuPont won a $919.9 million jury verdict against Kolon Industries, but that verdict was later reversed and a new trial ordered.

In the end, Kolon Industries pleaded guilty to one count of conspiracy to convert trade secrets. It entered its plea before U.S. District Judge Anthony Trenga of the Alexandria, Va. Federal Court.

In a statement, DuPont Senior Vice President and General Counsel Stacy Fox said her company is pleased with the outcome of the case.

"The resolution of this litigation helps ensure the protection of our proprietary technology," Fox said.

Kolon Industries did not immediately respond to a request for comment.

Kolon personnel met repeatedly with former DuPont employees, including Edward Schulz, of Brownstown, Pennsylvania, and Michael Mitchell, of Chesterfield, Virginia, to obtain confidential and proprietary DuPont information about Kevlar.

Schulz pleaded guilty to conspiracy to steal trade secrets in September 2014 and is scheduled to be sentenced on June 26, 2015. Mitchell pleaded guilty to theft of trade secrets and obstruction of justice in December 2009, and was sentenced to 18 months in prison.

Still unresolved is an ongoing case that the Justice Department is pursuing against five former Kolon Industries executives and employees. To date, none of the executives has come to the United States to face the charges, the agency said.

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