DuPont’s $920 Million Trade Secret Jury Verdict Vacated by Fourth Circuit and Remanded With Instruction to Try The Case Again Before a New Judge

In an unpublished opinion only 17 pages long, the United States Court of Appeals for the Fourth Circuit has vacated DuPont’s $920 million verdict against South Korea’s Kolon Industries. You’ll recall that DuPont convinced the jury that Kolon had misappropriated at least 42 trade secrets of DuPont’s Kevlar technology.

The appellate opinion noted that it was reversible error for Senior District Court Judge Robert E. Payne to exclude evidence Kolon wanted to introduce that DuPont had previously disclosed in litigation with DuPont’s former chief competitor – a company called AkzoNobel. Essentially Kolon wanted to show the evidence to the jury in order to convince the jury that some of the information DuPont was claiming as a trade secret was NOT a trade secret because they had made the information public in the previous litigation. But Judge Payne did not allow any of that evidence to come in, concluding it would confuse the jury and was of little value to the proceedings. This was, according to the Fourth Circuit, abuse of discretion that required a reversal of the trial verdict: “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.” In other words, the “blanket exclusion” of Kolon’s evidence in its entirety doomed the trial and verdict.

In the same unpublished opinion, the Fourth Circuit directed on remand to the United States District Court for the Eastern District of Virginia that Judge Payne be replaced by another federal judge from that district. Ironically it did so after holding that Kolon’s motion to disqualify Judge Payne was untimely. Kolon’s disqualification motion was premised on the fact that Judge Payne was formerly a partner in the firm that has traditionally represented DuPont in these types of matters – the firm now known as McGuire Woods. Despite the fact that the Court concluded the disqualification motion was untimely, the Court still directed a reassignment for a new trial between DuPont and Kolon. Other than saying “we think it prudent” the Fourth Circuit did not explain its reassignment order.