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Intellectual Property Disputes Mounted

by Marc S. Reisch
December 24, 2012 | A version of this story appeared in Volume 90, Issue 52

Throughout the year, intellectual property disputes surged among competitors. Many firms also encountered problems with employee theft of proprietary information, and some employees were charged with stealing on behalf of their employers’ competitors.

In February, federal prosecutors revealed that a San Francisco grand jury indicted five people and a Chinese company—all acting at the behest of the Chinese government—with stealing DuPont’s technology to manufacture the white pigment titanium dioxide. Two of the people charged were longtime DuPont employees.

Then in March, the Justice Department secured a guilty plea on economic espionage from former DuPont researcher Tze Chao for providing a Chinese-government-controlled company with proprietary information on DuPont’s TiO2 production process.

In another case involving DuPont, a grand jury in Richmond, Va., indicted South Korea’s Kolon Industries and five of its employees in October. They were charged with stealing p-aramid fiber trade secrets from DuPont and Japan’s Teijin. Department of Justice prosecutors are seeking a $225 million fine from Kolon. In 2011, DuPont won a $920 million judgment against Kolon on the same charge.

Biofuels makers Gevo and Butamax Advanced Biofuels, the latter a joint venture between DuPont and BP, took shots at one another over patents covering their respective isobutyl alcohol processes. In one instance in March, Gevo said the U.S. Patent & Trademark Office rejected a “foundational patent” held by Butamax. However, Butamax said that that patent and others remain in effect.

In July, Ethox Chemicals, a small specialty chemical developer, sued Coca-Cola over a new additive for polyethylene terephthalate bottles. After it worked with Coca-Cola to develop plastics with improved gas permeability, Ethox claims, the beverage giant filed for patents without naming it or the inventor.

Among former employees caught stealing proprietary information, Cheng Yi Liang, a one-time Food & Drug Administration chemist, drew a five-year prison sentence for profiting from knowledge of upcoming drug approval announcements. Also, former Sanofi scientist Yuan Li was sentenced to 18 months in prison and ordered to pay $131,000 for stealing information about Sanofi compounds and then offering them for sale on a website in which she had a financial interest.



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