Dow Gets Green Light to Press On With Trade Secret Theft Claims

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By Jacob Rund

Dow Chemical Co. got the nod from a Delaware court to continue with claims against a Turkish chemical producer it has accused of stealing trade secrets for making paint ingredients.

Delaware Chancery Court judge Sam Glasscock III on May 25 denied Istanbul-based Organik Kimya San. ve Tic. A.S.'s motion to dismiss the theft claims for lack of jurisdiction, saying it’s too early in the litigation to decide if there’s enough cause to throw out the case.

Dow, now a part of DowDuPont Inc., sued the Turkish company’s U.S. subsidiary in 2016 for allegedly hiring ex-employees of a Dow subsidiary to re-create the proprietary technology. According to the lawsuit, the employees had data that included recipes and manufacturing instructions for polymers used to increase the opacity of paint.

“All of these trade secrets have given Dow a leg up on the competition, and the information they embody is not generally known to others,” Glasscock wrote in his opinion. He also said Dow has taken “several steps” to protect that technology from outside use.

Organik, in its motion to dismiss, said Delaware’s trade secrets law doesn’t apply in other jurisdictions, and that none of the alleged conduct happened in the state. It argued that the “presumption against extraterritorial application” of legal statutes requires that the claims be tossed. Glasscock refuted this, saying Delaware’s “liberal” rules for pleading cases allows such a lawsuit to be brought.

However, the judge declined to rule on whether the state’s uniform trade secrets law preempts Dow’s common law claims. Other states that have adopted the law have taken different approaches to the preemption question, Glasscock said, raising “uncertainty” about which state’s law applies in this case.

Glasscock said Organik can raise this question again as the lawsuit progresses.

The case is The Dow Chemical Company v. Organik Kimya Holding A.S. , 2018 BL 185821, Del. Ch., C.A. No. 12090-VCG, memorandum opinion issued 5/25/18 .

To contact the reporter on this story: Jacob Rund in Washington at jrund@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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