Formosa Plastics Corp (台塑), the world's largest producer of polyvinyl chloride (PVC), said yesterday that it has reached a settlement with a US company that filed a lawsuit against the Taiwanese company in August 2004 for infringing on trade secrets.
Under the agreement, Formosa Plastics will pay Hexion Specialty Chemicals Inc US$50 million, according to a filing to the Taiwan Stock Exchange yesterday.
Headquartered in Columbus, Ohio, Hexion is now the world's largest thermosetting resins maker, ahead of the likes of Georgia-Pacific Corp.
Formosa Plastics was actually sued by Resolution Performance Products LLC (RPP), a manufacturer and developer of epoxy resins that was merged into Hexion in April last year, for "unlawful conduct including unfair competition, misappropriation of trade secrets, fraud and conspiracy" in August 2004 in the District Court of Harris County, Texas.
At the time, RPP was seeking at least US$100 million in damages, claiming that Formosa Plastics tried to bribe an employee in Virtual Ideality, a RPP contractor, into unveiling proprietary business process information for making epoxy resins and epichlorohydrin (ECH).
Formosa Plastics said in the statement that it commissioned Virtual Ideality to review the manufacturing process of ECH and recycle the waste in February 2004. Formosa Plastics said it was Virtual Ideality's "inappropriate handling of business" that led to misunderstanding from Hexion, the statement read.
Formosa Plastics' output of ECH and manufacturing efficiency have improved since February 2004, which Hexion believes resulted from utilizing its technology through Virtual Ideality, the statement said.
During the trial process, the judge instructed the two parties to settle,
the statement said. As an appeal could take five to seven years and cost
Formosa Plastics considerable resources, the company decided to consent and
settle with Hexion before the verdict was delivered, according to the
statement.
Hexion agreed to accept US$50 million from Formosa Plastics, and also agreed
not to take any action against Formosa Plastics over the same issue, the
statement said.
Jerry Lin (林勝冠), an executive administrator at Formosa Plastics, said at
a press conference yesterday that the settlement fee will not influence the
company's finances. Instead, the settlement will have a positive effect on
the company's business and product expansion, he said.
Shares of Formosa Plastics dropped NT$1.05 to close at NT$47.8 on the Taiwan
Stock Exchange.
RSS