By Jonathan Stempel
Feb 26 (Reuters) - In an unusual rebuke to the U.S. Justice
Department, a federal judge said prosecutors may not yet pursue
their high-profile criminal case accusing Kolon Industries Inc
of stealing trade secrets from Kevlar maker DuPont Co.
While refusing to dismiss the indictment, U.S. District
Judge Robert Payne in Richmond, Virginia, in a Feb. 22 decision
decided to put the case on hold because prosecutors had failed
to properly notify the South Korean company of the charges.
The same judge had presided over a civil trial in which a
jury in September 2011 ordered Kolon to pay DuPont $919.9
million for stealing 149 trade secrets related to Kevlar, a
high-strength para-aramid fiber used in body armor, military
helmets, tires and fiber-optic cables. Kolon is appealing.
In delaying the criminal case, which was unveiled in
October, Payne said prosecutors failed to comply with laws
designed to ensure that defendants are "served" with papers
describing the charges and giving them a chance to answer.
The judge rejected what he called at least eight U.S.
government efforts to serve Kolon, including under a bilateral
treaty on legal proceedings.
For example, he said that in one instance the government
waited too long to serve, while in another it did not suffice to
serve a New Jersey-based unit rather than the parent.
Payne canceled a March 6 arraignment but said a new
proceeding could take place as soon as June 7 if Kolon is
"The court cannot conclude to any degree of certainty that
the United States will not be able to serve Kolon in this case,"
the judge wrote in a 59-page decision.
He said Congress could not have intended the "absurd" result
that foreign companies be able to escape U.S. prosecution by
keeping their principal places of business outside the country.
Peter Carr, a spokesman for U.S. Attorney Neil MacBride in
Alexandria, Virginia, said: "The court clearly ruled that Kolon
is amenable to service in this case, and we intend to serve
Kolon pursuant to the court's order."
Jeff Randall, a partner at Paul Hastings representing Kolon,
said in a statement that his client plans to defend against the
charges at the appropriate time.
He also said it may be difficult to serve Kolon in light of
a recent letter from a Justice Department lawyer questioning the
ability to serve "a foreign organization that has no agent or
principal place of business within the United States."
Kolon and five executives were charged with stealing trade
secrets from DuPont, which had begun selling Kevlar in 1965, and
from Japan's Teijin Ltd, which makes a rival fabric, Twaron.
Prosecutors said they want to take at least $226 million of
assets from Kolon, representing gross proceeds from the
company's sale of its own fabric, Heracron.
The indictment was dated Aug. 21 but kept secret for two
months. Also in August, Kolon was barred from making its fabric
for 20 years, but a federal appeals court later set aside this
order while Kolon pursues appeals.
The case is U.S. v. Kolon Industries Inc, U.S. District
Court, Eastern District of Virginia, No. 12-cr-00137.
For Kolon: Jeff Randall, at Paul Hastings.
For the United States: Michael Dry, U.S. Attorney's office,
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