Fourth Circuit Blows Away Nearly $1 Billion Kevlar Trade Secrets Award

The Fourth Circuit has thrown out the second-largest trade secret jury verdict on record, an award of nearly $1 billion, on the grounds that the district court improperly excluded evidence relevant to the defense.

We have covered this case extensively, tracing its history of allegations of double agents, bribery, top-secret industrial facilities, and its (apparent) culmination with an enormous jury award.  Now, it seems, this epic legal saga will start anew.  On April 3,  the Fourth Circuit unanimously vacated the jury award and ordered a new trial.

DuPont alleged Kolon stole trade secrets concerning Kevlar, the fiber used in bulletproof armor.  When the legal shootout ended in September 2011, it was a sweeping win for DuPont: 18 months in prison for David Michael Mitchell, a Kolon consultant and former DuPont employee who pled guilty to stealing DuPont’s trade secret secrets and funneling them to Kolon; indictments against Kolon executives for solicitation and misappropriation of DuPont’s trade secrets; and the mammoth $920 million judgment against Kolon for violating Virginia’s Uniform Trade Secrets Act.

On appeal of the civil verdict, Kolon argued the district court improperly excluded evidence showing that many of DuPont’s alleged trade secrets weren’t “secret” at all, but that DuPont disclosed them in open court during a prior patent suit against another competitor (Kolon said that many of them were even available in the National Archives).

The appeals court agreed, finding U.S. District Judge Robert E. Payne of the Eastern District of Virginia improperly excluded relevant evidence that might have helped Kolon, including evidence disclosing some of the trade secrets during prior litigation in the 1980s against competitor Akzo Nobel NV.

“With reluctance, we hold that the district court abused its discretion and acted arbitrarily in excluding, on the wholesale basis that it did, as irrelevant or insufficiently probative, evidence derived from the Akzo litigation,” the opinion said.  “Kolon has demonstrated on appeal that evidence from the prior litigation over DuPont’s Kevlar program was not irrelevant as a matter of law and that the probative value of that potential evidence exceeded the bare minimum the district court seemed to ascribe to it.”