In a criminal case involving the alleged theft of trade secrets by individuals linked to companies funded by the Chinese government, an expert witness has testified that DuPont’s process for making titanium dioxide by chlorination was a closely guarded trade secret.
Two men are on trial in federal court in California for trade secret theft. Robert Maegerle is a former DuPont engineer, and Walter Liew is the founder of a company called USA Performance Technology Inc.
Prosecutors claim that Maegerle shared DuPont’s trade secrets with Liew, and that Liew then used that information to help companies funded by the Chinese government open new titanium dioxide plants.
According to the government, Liew and Magerle earned $28 million from the trade secret theft.
In a pending civil action that is related to the criminal matter, DuPont is suing Liew for theft of trade secrets, but this lawsuit is on hold pending a ruling in the criminal trial.
The defendants claim that the DuPont process has been public knowledge for decades, and that they designed the Chinese plants using information from textbooks and other legal sources.
But expert witness Robert Gibney denied that was possible. Gibney is a former senior vice president for Tronox Ltd., which is also in the titanium business.
Gibney testified that DuPont was able to command premium prices for its titanium dioxide pigment, and that competitors knew that the DuPont process was more efficient than the alternatives — but not how it worked.
Gibney said that DuPont made special efforts to protect its process, requiring employees to sign codes of conduct and swearing them to secrecy each year. It also prohibited cellphones and cameras in its plants, and used on-site guards in its titanium dioxide factories.
The Uniform Trade Secrets Act (“UTSA”) defines a trade secret as:
- information, including a formula, pattern, compilation, program, device, method, technique, or process,
- that derives independent economic value, actual or potential, from not being generally known to or readily ascertainable through appropriate means by other persons who might obtain economic value from its disclosure or use; and
- is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
UPDATE in DuPont Trade Secret case: Ex-DuPont Engineer Convicted Of Trade Secret Conspiracy.