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Dismissal, Plea in DuPont Secrets Cases

Tuesday, March 6, 2012

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DuPont Chemical Co. has dropped a civil lawsuit against one former employee accused of sharing trade secrets, while another ex-employee has pleaded guilty in a similar criminal case.

 DuPont Powder Coatings

 DuPont Powder Coatings

DuPont sought to prevent a senior research scientist who had overseen a pipeline coating reformulation project from going to work for a competitor.

The civil suit, filed in February 2011 in Houston, accused Dr. Wenjing Zhou of taking his extensive knowledge about a DuPont pipeline coating developed exclusively for TransCanada Pipelines Ltd. to South Korea’s KCC Corp., which then tried to compete for the coating contract.

Confidentiality Agreement

Zhou, a research chemist, had worked for DuPont Powder Coatings USA Inc. since September 2001. When hired, he signed a confidentiality agreement that was later underscored by a daily culture of extreme confidentiality, the suit said.

For example, all work product was restricted to DuPont’s premises, coatings formulations were encrypted, work information was banned from personal computers and portable drives, and all research materials were secured and password protected.

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 that product line.

His duties included meeting with customers, including TransCanada, which used an exclusive DuPont coating on its pipeline. He also oversaw a three-year project to reformulate that product.

On Nov. 30, 2010, Zhou abruptly resigned from DuPont to work for KCC Corp., a Seoul-based protective coatings maker that was competing for TransCanada’s business.

Work Ban Sought

DuPont sued to permanently bar Zhou from working for “any person or entity” in the functional powder coatings business, saying the knowledge he had acquired at DuPont would unfairly benefit its competitors.

In November, however, DuPont abruptly filed court papers to drop the litigation, saying the company and Zhou had “reached an understanding which renders pursuit of this suit unnecessary.”

The motion was granted Nov. 30. Terms of the settlement were confidential, and both sides declined to comment.

Ex-Worker Guilty in Spy Ring

Meanwhile, another former DuPont scientist has pleaded guilty to participating in a spy ring accused of peddling proprietary titanium dioxide information to companies controlled by the Chinese government.

 Titanium dioxide
One of four defendants accused of selling titanium dioxide information to Chinese-controlled companies has pleaded guilty and is now cooperating with prosecutors.
Federal prosecutors say Tze Chao, 77, of Wilmington, DE, is now cooperating with their investigation into companies suspected of paying millions of dollars for the information.

Chao admitted Thursday (March 1) in a San Francisco federal court that he kept confidential documents after retiring in 2002 from DuPont, where he had worked for 36 years.

In 2003, he began consulting for Pangang Group Co., a Chinese steel manufacturer.

Pangang, Chao and several others were indicted in February on charges that they conspired to steal DuPont’s formulas for manufacturing titanium dioxide, in an attempt to get a piece of that $12 billion global market.

Chao admitted passing proprietary information to Pangang. He is free on bond pending sentencing and faces up to 15 years in prison.


Tagged categories: Coatings manufacturers; DuPont; Formulating; Pipelines; Powder coatings; Research; Titanium dioxide

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