# DuPont v. Kolon: A $919.9 Million Kevlar Verdict and the Fragile Foundations of Trade-Secret Damages

> The largest trade-secret award of its era measured the benefit Kolon gained from stolen Kevlar know-how, then collapsed because the jury never heard the evidence that might have shown the secrets were not secret at all.

Topic: Trade Secrets  |  Author: Lidiia Levitska  |  Source: Intellectual Property Law (outsideipcounsel.com)
Canonical: https://outsideipcounsel.com/blog/dupont-v-kolon-kevlar-trade-secret-damages/


*E.I. du Pont de Nemours & Co. v. Kolon Industries, Inc.*, Civil Action No. 3:09cv58 (E.D. Va.), produced one of the defining trade-secret damages verdicts of its generation, and then a reminder that even a nine-figure award rests entirely on the liability findings beneath it. On September 14, 2011, a federal jury in Richmond found that Kolon Industries, a Korean manufacturer, had willfully and maliciously misappropriated 149 of DuPont's trade secrets for producing para-aramid fiber (the technology behind Kevlar). The jury found that Kolon's misconduct had produced a benefit to Kolon worth $919.9 million and awarded that amount to DuPont. The court added punitive damages capped at $350,000 under the Virginia Uniform Trade Secrets Act and enjoined Kolon from para-aramid production for twenty years. On April 3, 2014, the Fourth Circuit vacated the judgment (Nos. 12-1260, 12-2070) and remanded for a new trial before a different district judge. In 2015 Kolon pleaded guilty and was ordered to pay an $85 million criminal fine and $275 million in restitution to DuPont; the parallel civil settlement was announced on confidential terms.

## At a glance

- **Case:** *E.I. du Pont de Nemours & Co. v. Kolon Industries, Inc.*, Civil Action No. 3:09cv58 (U.S. District Court for the Eastern District of Virginia, Payne, J.); appeal Nos. 12-1260 and 12-2070 (4th Cir.), unpublished per curiam
- **Key dates:** Jury verdict September 14, 2011; Fourth Circuit vacatur April 3, 2014; civil settlement and criminal guilty plea announced April 30, 2015
- **Damages:** $919.9 million compensatory under the Virginia Uniform Trade Secrets Act, measured as Kolon's unjust enrichment; $350,000 punitive (the VUTSA cap); jury found willful and malicious misappropriation of 149 trade secrets
- **Outcome:** Verdict vacated for an evidentiary error going to whether the information qualified as a trade secret; case resolved by Kolon's guilty plea ($85M fine plus $275M restitution to DuPont) and a confidential civil settlement

## How DuPont built a nine-figure damages case

DuPont's claim arose under the Virginia Uniform Trade Secrets Act (VUTSA), the Commonwealth's enactment of the model statute. VUTSA, like the Uniform Trade Secrets Act generally and the later federal Defend Trade Secrets Act, authorizes recovery for the plaintiff's **actual loss** caused by misappropriation and for any **unjust enrichment** the defendant gained that the actual-loss figure does not already capture. A plaintiff may also recover exemplary damages where the misappropriation is willful and malicious.

DuPont alleged that Kolon, seeking to accelerate its own para-aramid business, recruited former DuPont employees as consultants and paid them to disclose closely held manufacturing know-how. That know-how was not a single formula but a portfolio of process secrets: the accumulated, hard-won detail of how to spin a high-performance aramid fiber at commercial scale. The damages theory tracked the value of what Kolon obtained: the development costs and competitive advantage that decades of DuPont investment represented, recast as the benefit Kolon captured by short-circuiting that investment rather than as a lost-profits figure.

The jury accepted the model and found that Kolon's misdeeds had produced a benefit to itself worth $919.9 million, awarding that sum to DuPont. It was at the time among the largest trade-secret awards ever rendered. The willful-and-malicious finding triggered exemplary damages, but here Virginia's law mattered: VUTSA permits punitive damages of no more than twice the compensatory award or $350,000, whichever is less, and the district court held that the ceiling applies once per award rather than per misappropriated secret. DuPont had asked for $350,000 for each of the 149 secrets, roughly $52 million. It recovered $350,000, an amount that was, next to a near-billion-dollar compensatory figure, trivial. That contrast is itself instructive. Under the federal DTSA, exemplary damages can reach **twice** the compensatory award with no dollar ceiling; under VUTSA, the practical ceiling in any substantial case is fixed and low. A plaintiff choosing a forum and a statute is, in part, choosing how much its punishment theory is worth.

## Why the award did not survive

The Fourth Circuit's reversal had nothing to do with the damages methodology and everything to do with the liability foundation. Before trial, the district court granted DuPont's motion *in limine* excluding evidence that Kolon wanted to use to show that some of the claimed secrets had been disclosed in earlier litigation (the *Akzo* proceedings) or were otherwise in the public domain. The appellate court held that exclusion was an abuse of discretion: it deprived Kolon of the chance to argue that one or more of the asserted items failed the threshold requirement of every trade-secret claim, namely that the information actually be secret.

That ruling is the quiet lesson of the case for anyone focused on damages. **Damages are derivative.** A $919.9 million figure is only as durable as the finding that each piece of information underlying it qualifies as a protectable trade secret. If a defendant is wrongly prevented from contesting secrecy, the entire award, however carefully modeled, is built on sand. The size of the number does not insulate it; if anything, the larger the award, the more a reviewing court will scrutinize the liability record that generated it.

## The criminal coda and the real price

When the case returned for retrial, it did not get there. On April 30, 2015, Kolon resolved both the civil and criminal exposure at once. It pleaded guilty to conspiracy to convert trade secrets and, under the plea agreement and restitution order, was ordered to pay an $85 million criminal fine and $275 million in restitution to DuPont. DuPont and Kolon separately announced a settlement of the civil litigation whose financial terms, described only as up-front and ongoing payments, remain confidential. The $360 million Kolon was ordered to pay is a fraction of the vacated verdict. It is a reminder that the *headline* number a jury returns and the *recovered* number a defendant ultimately pays often diverge sharply, and that the gap is usually a function of appellate risk on liability rather than disagreement about the damages math.

## Open questions

The case leaves unresolved how a properly instructed jury would have valued the misappropriation had Kolon been allowed to attack secrecy item by item. If some of the asserted secrets fell out as publicly known, the actual-loss and unjust-enrichment figures would have required apportionment, a problem that has since become central to trade-secret damages (as in the disgorgement context of *TAOS v. Renesas*). The settlement foreclosed that exercise, leaving the relationship between the breadth of an asserted secrets portfolio and the defensibility of an aggregate damages number an open question that recurs in every multi-secret case.

## Implications

- **Damages live or die with secrecy.** A large award is only as sound as the proof that each asserted item is genuinely secret; protect the liability record before celebrating the number.
- **Watch the *in limine* fights.** Excluding a defendant's public-domain or prior-disclosure evidence is high-risk error; both sides should treat secrecy-evidence rulings as outcome-determinative.
- **Statute selection shapes punishment.** VUTSA caps punitive damages at the lesser of twice the compensatory award or $350,000, and the cap runs per award, not per secret; the federal DTSA permits up to 2x exemplary damages with no dollar ceiling. The choice of statute and forum can dwarf or shrink the deterrent component.
- **The verdict is not the recovery.** Appellate exposure on liability routinely compresses a headline award into a far smaller settlement.

## Frequently asked questions

**Did DuPont ultimately keep the $919.9 million?** No. The Fourth Circuit vacated that judgment in 2014. In 2015 Kolon pleaded guilty and was ordered to pay an $85 million criminal fine and $275 million in restitution to DuPont, and the parties separately settled the civil case on confidential terms.

**Why was such a large verdict reversed?** Not because of the damages calculation, but because the trial court had excluded evidence Kolon wanted to use to show some of the claimed information was already public. That evidence went to whether the material qualified as a trade secret at all.

**How do exemplary damages here compare to federal law?** Under the Virginia Uniform Trade Secrets Act, punitive damages cannot exceed twice the compensatory award or $350,000, whichever is less, so the $350,000 ceiling controls in any large case. The federal Defend Trade Secrets Act, by contrast, allows exemplary damages up to twice the compensatory award with no dollar cap.

## Authorities and sources

- *E.I. DuPont de Nemours & Co. v. Kolon Industries, Inc.*, Nos. 12-1260 and 12-2070 (4th Cir. Apr. 3, 2014) (unpublished per curiam), vacated and remanded with instructions: [full opinion (Fourth Circuit)](https://www.ca4.uscourts.gov/Opinions/Unpublished/121260.U.pdf).
- Exemplary-damages cap: [Va. Code § 59.1-338, Damages (Virginia Law Portal)](https://law.lis.virginia.gov/vacode/title59.1/chapter26/section59.1-338/).
- Criminal resolution: [U.S. Department of Justice, "Kolon Industries Inc. Pleads Guilty for Conspiring to Steal DuPont Trade Secrets Involving Kevlar Technology"](https://www.justice.gov/usao-edva/pr/kolon-industries-inc-pleads-guilty-conspiring-steal-dupont-trade-secrets-involving).
- Settlement announcement: [DuPont, "DuPont and Kolon Settle Trade Secret Litigation" (Apr. 30, 2015)](https://www.prnewswire.com/news-releases/dupont-and-kolon-settle-trade-secret-litigation-300075313.html).