A Chinese automotive glass maker is on the hook for $26 million after the Third Circuit upheld a default judgment concerning the company, Jiangsu Tie Mao Glass Co. Ltd., and accusations that it stole trade secrets from PPG Industries, a global manufacturer of paints, coatings and specialty materials.
PPG brought the lawsuit in 2015 after “investing heavily” in the development of a new kind of plastic for airplane windows dubbed “Opticor.” According to the case’s factual background detailed in the court’s written opinion, the Chinese company asked a former PPG employee to provide it with those secrets despite the employee having signed non-disclosure agreements.
According to the court’s opinion, the former PPG employee, now an employee of Jiangsu Tie Mao Glass, provided a propriety report from PPG that detailed the Opticor technology. PPG filed suit after being contacted by one of its subcontractors who had been asked to send the “same molds” used by PPG to Jiangsu Tie Mao Glass. Furthermore, a plan for a production facility was in place.
The court would eventually award PPG more than $26 million concerning Pennsylvania’s Uniform Trade Secrets Act. That decision came through summary judgment, as the Chinese company failed to appear in the case for months, not doing so until it neared its conclusion.
Jiangsu Tie Mao Glass appealed the ruling, though only disputing the $26 million figure at which the court arrived. In the court’s opinion, U.S. Circuit Judge Kent A. Jordan wrote that “80% of success is showing up.”
“One can quibble about the percentage, but it’s a good bet that refusing to show up, especially when you’re being sued, is a recipe for failure,” the judge wrote. “That’s a lesson that Jiangsu Tie Mao Glass Co. Ltd. (TMG) should have taken to heart. By its failure to appear in this lawsuit until practically the end, TMG effectively conceded the allegations of the complaint that PPG Industries, Inc. (PPG) had served on it.”
The judge called those allegations, which he wrote are now accepted as fact, “damning.”
“When the misappropriation came to light and PPG sued TMG, the latter watched from overseas rather than litigate. As a consequence, PPG asked the District Court to enter default judgment and award damages in the amount that TMG was unjustly enriched,” the judge continues. “Only then did TMG decide it was worth coming to court, but its protestations were and are too little and much too late.”
In its appeal, Jiangsu Tie Mao Glass argued that it received no commercial benefit from the use of PPG trade secrets as production was not underway. PPG, on the other hand, argued that the Chinese company received unjust enrichment by not having to spend money developing the technology on its own. Instead, it utilized the proprietary report from PPG.
“Under the Uniform Trade Secrets Act, including Pennsylvania’s version of that statute, it can be appropriate to measure unjust enrichment from a misappropriated trade secret by looking at development costs that were avoided but would have been incurred if not for the misappropriation,” the court wrote. “The District Court considered and carefully analyzed such evidence here, and its methodology and conclusion are sound.”