DuPont Powder Coatings has filed suit to stop a longtime senior research chemist from sharing pipe coating trade secrets with competitors—including a South Korean firm he joined after abruptly leaving DuPont.
DuPont Powder Coatings
DuPont worked three years to hone
its exclusive coating for use by
TransCanada PipeLines Ltd.
In a civil suit filed Feb. 25 in Texas, DuPont accuses Dr. Wenjing Zhou, of Houston, TX, of taking his extensive knowledge about a DuPont coating developed exclusively for TransCanada to KCC Corp., which then tried to compete for the coating contract.
Culture of Confidentiality
Zhou, a Ph.D. chemist, went to work for DuPont Powder Coatings USA Inc. in September 2001 as a research chemist, according to court papers.
When he was hired, Zhou signed a confidentiality agreement not to disclose “proprietary commercial information”—including product formulas, specifications and processes—“either during his employment by the company or thereafter.” He also agreed to surrender “all proprietary business information” if and when he left DuPont.
The agreement was reinforced by a daily culture of extreme confidentiality, court papers say. For example:
• Zhou underwent yearly training that reaffirmed the confidentiality of company information.
• No work product was allowed off DuPont’s premises without express permission from a supervisor.
• No work information was allowed to be kept in a personal computer or portable drive.
• Lab books were secured at the end of the day, and all formulas and product specs were password protected.
• Coatings were manufactured with encrypted formulations.
On June 1, 2006, Zhou was named Group Leader for DuPont’s Functional Coatings line, making him the lead scientist responsible for developing and upgrading the entire product line. For four years, he was responsible for monitoring key aspects of all Functional Coatings product formulations and variants.
TransCanada transports more than 20% of
the natural gas used in North America.
His duties also included meeting with customers, including TransCanada PipeLines Ltd., which used an exclusive DuPont coating on its pipeline. TransCanada’s 37,000+ miles of pipeline transport about 20% of the natural gas used in North America.
Zhou also met with representatives from Bredero Shaw, the industrial painting contractor that applied the coatings to TransCanada’s pipelines, court papers say.
During those years, TransCanada “set heightened coating specifications” that required DuPont to reformulate its pipeline product—an R&D effort that took three years, DuPont contends.
Resigned, Hired, Fired
On Nov. 30, 2010, Zhou resigned from DuPont without explanation and without notice, saying he “planned to spend more time with his family and take time to decide upon a new direction for his life,” according to court papers.
Weeks later, the papers say, DuPont learned that Bredero Shaw was “seeking to qualify other powder coatings suppliers to the meet the TransCanada specification for its pipe.”
One of those potential suppliers, DuPont learned, would be KCC Corp. of Seoul, South Korea, which was sending a delegation Jan. 13 to meet with TransCanada. The delegation would include Zhou.
DuPont says it confirmed that Zhou was then working for KCC and sought to head off the meeting with TransCanada. DuPont also warned Zhou and KCC in a letter that his participation in the project would violate his confidentiality agreement.
On Jan. 19, KCC allegedly told DuPont that KCC had fired Zhou, who it said had been recommended for employment by Bredero Shaw.
Neither Bredero Shaw nor KCC is a party to the Zhou litigation.
Work Ban Sought
The lawsuit seeks to permanently bar Zhou from working for “any person or entity” in the functional powder coatings business, saying his DuPont knowledge would give competitors advantage over DuPont.
“Any dissemination by Zhou of DuPont's proprietary information and trade secrets to KCC or another competitor has already created, and will continue to create, an unfair and ill-gotten competitive advantage” that will “result in a sustained loss of revenue to DuPont,” the suit says.
It adds: “Zhou simply cannot eject from his memory all of the specialized proprietary information he developed while working in DuPont's employ—information specific to industrial-use functional coatings.”
Zhou’s DuPont experience makes him “a unique repository” of proprietary information that “unavoidably” would become the basis for his work at any other coatings company and unjustly enrich him, DuPont contends.
The suit also seeks immediate injunctions to specifically bar Zhou from disclosing any DuPont information to KCC, Bredero Shaw, TransCanada or their affiliates and partners.
The company is also asking that Zhou be ordered to surrender “all records and data of any kind” related to DuPont and that he be ordered not to destroy, hide or alter any computer information, including email.
Zhou could not be reached for comment.