Kolon Indus., Inc. v. E.I. Du Pont De Nemours & Co.
| Decision Date | 05 April 2012 |
| Docket Number | Civil Action No. 3:11cv622 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | KOLON INDUSTRIES, INC., Plaintiff, v. E.I. DU PONT DE NEMOURS AND COMPANY, Defendant |
This matter is before the Court on the MOTION FOR SUMMARY JUDGMENT (Docket No. 254) filed by E.I. du Pont Nemours and Company ("DuPont"). For the reasons set forth below, DuPont's motion will be granted and the counterclaim will be dismissed with prejudice.
On February 3, 2009, DuPont filed a Complaint against Kolon claiming, inter alia, that Kolon had "engaged in concerted and persistent actions to wrongfully obtain DuPont's trade secrets and confidential information about [DuPont's] KEVLAR [] aramid fiber." Compl. ¶ 1. DuPont also alleged claims for conspiracy, business torts, and conversion. All claims, but the trade secret misappropriation claim, were dismissed either voluntarily by DuPont before trial or upon motion by Kolon before the casewas submitted to the jury. Hereafter, the action by DuPont will be referred to as the "Trade Secrets Case."
On April 20, 2009, Kolon filed its ANSWER and a COUNTERCLAIM alleging that DuPont had violated Section 2 of the Sherman Act, 15 U.S.C. § 2, by engaging in anticompetitive activity, attempted monopolization (FIRST CAUSE OF ACTION) and monopolization (SECOND CAUSE OF ACTION). See Defs.' Answer at 35. DuPont filed a MOTION TO DISMISS the antitrust counterclaim which was granted, with leave to amend. On August 25, 2009, Kolon filed its AMENDED COUNTERCLAIM (Docket No. 50); and on August 31, 2009, Kolon filed its SECOND AMENDED COUNTERCLAIM ("SACC") (Docket No. 59) which was dismissed, again for failing to state a claim, but also with leave to amend (Docket No. 100).
Kolon declined to further amend the counterclaim and, after the Court entered an Order under Fed. R. Civ. P. 54(b), Kolon appealed the dismissal of the counterclaim. On March 11, 2011, the United States Court of Appeals for the Fourth Circuit decided that Kolon adequately had pled antitrust claims of monopolization and attempted monopolization and remanded the matter for further proceedings. E.I. du Pont de Nemours and Co. v. Kolon Industries, Inc., 637 F.3d 435 (4th Cir. 2011). The counterclaim will be referred to as the "Antitrust Case." Following remand, the parties engaged in several months ofdiscovery. Thereafter, DuPont filed this motion for summary judgment.
The following generally applicable facts are either undisputed or recited giving all favorable inferences to Kolon, the non-moving party. Other facts will be recited in the legal analysis to which they are pertinent and those facts also are either not in dispute or recited giving all favorable inferences to Kolon.
The product at issue in the Antitrust Case, as well as the Trade Secrets Case, is para-aramid fiber. Dupont's para-aramid product is Kevlar. Kolon's corresponding product is Heracron.
Para-aramid fiber is a high-strength, non-conductive, lightweight material with no melting point and high resistance to abrasion. Production of para-aramid is very time-intensive and expensive. Typically, a seller of para-aramid must "qualify" its product with a purchaser before the product can be sold. This involves laboratory testing, in-use testing in the customer's product, and in-use testing on a larger scale, and it takes anywhere from six months to three years. See Mem. Supp. Summ. J. SOF ¶ 11 (uncontested fact); Opp. Summ. J. at 4-5. The para-aramid product comes in three general forms: filament (yarn), staple (yarn cut into short pieces); and pulp (yarn cutup then manipulated, which comes in both wet and dry varieties) . Mem. Supp. Summ. J. SOF ¶ 1. In 1965, DuPont invented para-aramid fiber. DuPont began production of its para-aramid fiber in 1971 and trademarked its product Kevlar in 1973. Id. at 3.
Para-aramid fiber is used in, amongst other things, tires, fiber optic cables, body armor, cables, sporting goods, and automotive belts, hoses, and gaskets. DuPont was the only manufacturer of para-aramid in the United States from 1971 until the 1980s. Mem. Supp. Summ. J. SOF ¶ 2. At that time, Akzo N.V., a Dutch company, which was later purchased by Teijin Aramid, sought to introduce its para-aramid product, Twaron, into the United States market. Teijin started selling Twaron in the United States and worldwide in 1987. From 1990 to 2009, Teijin's share of the United States para-aramid market increased as DuPont's share decreased. By 2006, Teijin controlled 41 percent of the United States market, and by 2009, it controlled 44 percent of that market. See Mem. Supp. Summ. J. at Exhibit 21, Dr. Bamberger Rpt. at 17. Teijin surpassed DuPont in the worldwide para-aramid market in 2006. DuPont's global market share went from 91 percent in 1990 to 46 percent in 2006. Reply Mem. Supp. Summ. J. at 7 n. 3. DuPont's share in the United States went from 100 percent to 59 percent during that same time period. Mem. Supp. Summ. J. at 5 at Exhibit 21, Dr. BambergerRpt. at 16. By 2009, DuPont's market share in the United States had decreased further to 55 percent. Id.
In 2006, Kolon began producing its para-aramid product, Heracron, and thereafter started to market it in the United States. SACC SI 8 (Docket No. 2); Opp. Summ. J. at 6.1 To that end, Kolon engaged seven sales agents in the United States: Aramid Fiber Systems (Michael Mitchell), Gane, Inc. (H.K. Jung), K-Tex, LLC (Joe Kaminsky), KTL Trading Resource (Bruce Lindley), Scarponi Textiles (David Scarponi and David Murphy), Sekka-Tex (Brian Seekamp), and Techtrade (Steve S.K. Chung). In its SACC, Kolon alleged that:
In sum, the central allegation of Kolon's case is that DuPont's use of long-term, multi-year, supply contracts with high volume para-aramid purchasers from January 2006 to April 20, 2009 (the relevant time period)2 were evidence of attempted monopolization and monopolization of the para-aramid market (the relevant product market) in the United States (the relevant geographic market). See also E.I. du Pont de Nemours and Co. v. Kolon Industries, Inc., 637 F.3d 435 (4th Cir. 2011) ().
The foregoing facts form the basic context for the assessment of DuPont's motion for summary judgment. Other facts will be outlined in the discussion of the analytical component to which they relate.
In its First Cause of Action, Kolon alleges that, during the relevant period, DuPont monopolized the para-aramid market in the United States. DuPont raises five contentions in support of its motion for summary judgment on the monopolization claim: (1) Kolon has not proven that DuPont possessed monopoly power during the time period in question; (2) Kolon has not proven harm to competition; (3) there is no evidence of substantial market foreclosure; (4) Kolon does not have standing to pursue its claims because it cannot prove antitrust injury and because it was not a lawful competitor of DuPont during the relevant time period; and (5) Kolon cannot prove damages.
First, DuPont points out that Kolon's own expert, Dr. Bamberger, estimated that DuPont's relevant share of the market was no more than 59 percent during the relevant time period. Mem. Supp. Summ. J. at 28. According to DuPont, decisional law in the Fourth Circuit establishes that at least 70-75 percent market share is required to support a finding of monopolization. Id. (citing R.J. Reynolds Tobacco Co. v. Philip Morris Inc., 199F. Supp. 2d 362 (M.D.N.C. 2002), aff'd sub nom. 67 F. App' x 810 (4th Cir. 2003); E.I. DuPont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 450 (4th Cir. 2011) (quotations omitted)). DuPont also emphasizes that Teijin, its major competitor, obtained a majority share of the global para-aramid market in 2006, and that Teijin's market share continued to increase as DuPont's market share decreased during the relevant time period. Id. at 29.
Second, DuPont argues that Kolon has not satisfied its burden of showing harm to competition. DuPont points out that Kolon's own expert testified that any harm occurred after the relevant time period; and, according to DuPont, the fact that no harm took place during the relevant time period eliminates the basis for Kolon's Counterclaim. Id. at 30.
Third, DuPont claims that none of its agreements with customers excluded Kolon from a "substantial share" of the market. Id. at 31 (citing Chuck's Feed & Seed Co. v. Ralston Purina Co., 810 F.2d 1289, 1293 (4th Cir. 1987) (citing Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 328 (1961))). According to DuPont, Kolon has not quantified any portion of the relevant market that DuPont allegedly foreclosed. Id. at 32. Kolon's expert, Dr. Bamberger, testified that the only United States customers that could have been foreclosed by DuPont are those with whom Kolon...
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