Employee Stole Lubrizol Secrets, DOJ Says


The U.S. Department of Justice last week filed charges against Lubrizol Corp. ex-employee Kyung J. Kim of Broadview Heights, Ohio, accusing him of conspiring from late 2001 through January 2008 with three executives of Seoul-based SK Chemicals to steal and receive Lubrizol trade secrets involving thermoplastic polyurethane and other technologies.

The Justice Department filed the criminal information papers against Kim last week in the U.S. District Court for the Northern District of Ohio. According to the papers, Kim was formerly a senior research and development associate who worked at the companys Noveon subsidiary in Brecksville, Ohio. The department said that if a trial results in his conviction, the court will determine the sentence after reviewing factors unique to the case. The FBIs investigation continues.

SK Chemicals is a subsidiary of SK Holdings Co.A competitor of Lubrizols Noveon business segment, SK Chemicals manufactures and sells specialty chemicals, including polyurethane resins. Lubrizol, headquartered in Wickliffe, Ohio,acquired Noveon in June 2004.

In a March 26 statement Lubrizol issued in concert with the Justice Departments filing, the company said it discovered Kims actions through an internal investigation in mid 2007 and immediately notified the Federal Bureau of Investigation.

Mr. Kim was suspended at that time and was subsequently terminated, Lubrizol said. We continue to cooperate fully with the FBI and the U.S. Department of Justice in their ongoing legal actions. Accordingly, it is not appropriate for anyone at Lubrizol to comment further at this time. Lubrizol is confident of its ability to secure restitution in this matter.

The Justice Department said, Kim would gather Lubrizol trade secrets regarding thermoplastic polyurethane and other technology and provide them to the coconspirators; this included non-halogen flame retardant technology sold under the Estane trade name and static control technology sold under the Stat-Rite trade name. Specifically, the departments filing charges that in March and June 2007, Kim downloaded Lubrizol trade secrets and confidential technology onto an external computer storage device in preparation for meetings with the coconspirators.

The department alleged that Kim would meet with the coconspirators at hotels and condominiums at various sites including Tucson, Ariz.; Niagara Falls, Canada; and Suwon, South Korea. The meetings occurred onat least 17 occasions, and would last for several days. At these meetings, Kim would explain the trade secrets and other confidential Lubrizol technology to the coconspirators, the department said.

The papers allege that the coconspirators provided Kim with envelopes of $10,000 in cash at each meeting in exchange for the trade secrets and other confidential Lubrizol technology. The coconspirators would also reimburse all of Kims travel expenses, usually $1,100, according to the Justice Department.

Lubrizol said it has strict internal policies and takes numerous protective measures to maintain secrecy of company confidential information.

Unfortunately, it is clear that these policies and protective measures are not totally failsafe, given human behavior, the company said. While we continually look for ways to enhance our ethical and legal conduct guidelines, we also reaffirm our tremendous pride in and deep commitment to the honesty and integrity of our employees.

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