Kolon plans to appeal record damages

A Korean textiles manufacturer has been ordered to pay the largest amount of damages in the country’s history for stealing trade secrets.

But Kolon Industries said on Wednesday it plans to appeal the U.S. court ruling that it must pay more than 1 trillion won ($863 million) to chemicals giant DuPont.

The two companies have been embroiled in a two-year-long legal battle regarding the alleged theft of confidential information used to make DuPont’s trademarked synthetic fiber.

A U.S. district court in the state of Virginia accepted a jury’s verdict that Kolon must pay $919.9 million in compensation to DuPont. However, the court overthrew the U.S. company’s demand of $50 million in punitive damages, lowering this to $350,000.

According to Reuters, the jury said in September that Kolon was found to have willfully and maliciously stolen trade secrets and confidential information regarding DuPont’s Kevlar para-aramid fiber.

The compensation amounts to about 71 percent of Kolon’s total assets, according to the financial industry. The company’s stock plunged by 12.37 percent as of yesterday afternoon after the news was released.

“DuPont has insufficient evidence showing that Kolon stole its trade secrets, and the compensation has been calculated based on an improper method,” the company said. “Kolon has solid legal and factual grounds on which to base an appeal, including lack of proof to support the core elements of DuPont’s trade secret claims, and the admission of an erroneous damages theory.”

Kolon, a familiar textiles brand in Korea, said the company has been developing high-tech fiber technology and patents for the past 60 years. It started conducting research in cooperation with the Korea Institute of Science and Technology in 1979 and “has independently secured its technological capabilities through consistent research and innovation for the last 30 years,” the company said.

The legal dispute began in 2009 when DuPont filed a complaint claiming that Kolon, a newcomer to the aramid fiber market, had violated one of its technology patents.

According to foreign media, DuPont alleged that Kolon hired some of its former employees in 2008 and they provided it with confidential information about the material.

Kolon countered that the allegations were groundless and that DuPont was merely trying to force Kolon out of the aramid fiber market. It filed a separate antitrust suit against DuPont the following year that will go to trial in March.

Four key players currently control the global market for aramid, a high-strength material used in bulletproof vests and helmets, but DuPont owns the largest share. It produces an estimated 28,000 tons of Kevlar a year, followed by Japanese company Teijin, which calls its product Twaron. Kolon is the third player in the market with its Heracron fiber.

Kolon succeeded in developing the material in 2005 and started selling it in 2006.

By Song Su-hyun [ssh@joongang.co.kr]