By Park Jin-hai
Kolon Industries, Korea’s leading textile maker, has settled a lawsuit with DuPont involving fiber used to make bulletproof vests, after pleading guilty to conspiring to steal the U.S. company’s trade secrets.
It entered into a settlement agreement with the U.S. chemical giant in the United States District Court for the Eastern District of Virginia to pay $275 million to resolve its civil trade secrets dispute over DuPont’s para-aramid fiber, the high-tech fiber five times stronger than steel.
Kolon has also entered a plea agreement with the U.S. Department of Justice, resolving all criminal charges against the company.
It pleaded guilty to a count of conspiracy to convert trade secrets related to its para-aramid products and will pay an $85 million penalty, while the U.S. government has agreed to dismiss all other criminal charges filed against Kolon, including theft of trade secrets and obstruction of justice.
The restitution and fine will be paid over the next five years.
“Kolon is pleased to put these matters behind it and resolve its dispute with DuPont and the criminal charges filed by the U.S. government,” said Kolon CEO Park Dong-moon, Friday. “This settlement has brought the dispute with DuPont to a peaceful and satisfactory end for both sides, while freeing Kolon to expand its global presence in the aramid market.”
The company, under the agreement, can make the para-aramid product Heracron.
The long-running case was triggered in 2009 when DuPont filed a lawsuit against Kolon for “theft of trade secrets and confidential information” relating to the Heracron brand by hiring one of the U.S. company's retired engineers.
Kolon had claimed that DuPont’s aramid fiber technology was the subject of hundreds of expired patents that had been in the public domain for dozens of years for competitors to use legitimately.
The restitution Kolon agreed to pay DuPont is far smaller than the $920 million in damages that a U.S. District Court in Richmond, Virginia, awarded DuPont in 2011. A federal appeals court overturned that ruling in 2014.
The global aramid market amounts to 2 trillion won. DuPont and Japanese chemical giant Teijin together take nearly 80 percent of the market, while Kolon has about 8 percent of it.
The U.S. litigation hit the Korean textile maker’s overseas expansion hard.
But industry sources say Kolon will profit from the agreement because it can pursue its business freely in the U.S. market, and in other overseas markets that were indirectly affected by the legal action.
“Ending the Kolon-DuPont legal battle will have a substantial effect on elevating Kolon’s corporate value,” said Son Yong-ju, a Kyobo Securities analyst. “Once its advance into the aramid market goes into full swing, we expect its operating profit and share price to skyrocket.”