Stealing White

Stealing the formula for white paint may not seem like a big deal.

http://www.bloomberg.com/features/2016-stealing-dupont-white/

Turns out that it’s a very big deal indeed. TiO2 is the foundation color for every other paint.  It’s what you get in a base.  It also set your pigment size and having a finer pigment means a paint that’s easier to apply with more binders.

All this whiteness is the product of a compound known as titanium dioxide, or TiO2. A naturally occurring oxide, TiO2 is generally extracted from ilmenite ore and was first used as a pigment in the 19th century. In the 1940s chemists at DuPont refined the process until they hit on what’s widely considered a superior form of “titanium white,” which has been used in cosmetics and plastics and to whiten the chalked lines on tennis courts. DuPont has built its titanium dioxide into a $2.6 billion business, which it spun off as part of chemicals company Chemours, in Wilmington, Del., last fall.

A handful of other companies produce TiO2, including Kronos Worldwide in Dallas and Tronox of Stamford, Conn. Chemours and these others will churn out more than 5 million tons of TiO2 powder in 2016. China also produces large amounts of the pigment, and its industries consume about a quarter of the world’s supply. Most of China’s TiO2 plants, however, use a less efficient and more hazardous process than the one developed at DuPont. Starting in the 1990s, if not earlier, China’s government and Chinese state-run businesses began seeking ways to adopt DuPont’s methods. Only they didn’t approach the company to make a formal deal. According to U.S. law enforcement officials, they set out to rip off DuPont.

“It’s about stealing something you can make a buck off of. It’s part of a strategy to profit off what American ingenuity creates”

“At first, you’re like: Why are they stealing the color white? I had to Google it to figure out what titanium dioxide even was,” says Dean Chappell, acting section chief of counterespionage for the FBI. “Then you realize there is a strategy to it.” You can’t even call it spying, adds John Carlin, the assistant attorney general in charge of the U.S. Department of Justice’s national security division. “This is theft. And this—stealing the color white—is a very good example of the problem. It’s not a national security secret. It’s about stealing something you can make a buck off of. It’s part of a strategy to profit off what American ingenuity creates.”

Most trade-secret theft goes unreported. Companies worry that disclosing such incidents will hurt their stock prices, harm relationships with customers, or prompt federal agents to put them under a microscope. Theft of trade secrets also rarely results in criminal charges because the cases are time-consuming and complicated, and it’s often difficult to win a conviction for conspiracy to commit espionage. A 2013 study estimated that China accounted for as much as 80 percent of the $300 billion in losses sustained by U.S. companies from the theft of intellectual property. Often, China won’t even release the records or serve the subpoenas that might contribute to a prosecution. To win in court, companies must prove they properly safeguarded their trade secrets, something many fail to do.

DuPont/Chemours does shield its titanium dioxide process. Guards patrol its plants, which are surrounded by tall fences. Visitors have to be escorted and are forbidden from taking photographs. Documents and blueprints must be signed out, bags inspected. Employees sign confidentiality agreements and are relentlessly drilled on protecting proprietary information. Work is compartmentalized so that few employees have access to everything in a plant. The company vets all its contractors.

Frankly I think that just stealing the process doesn’t help you very much.  It may seem that you can leap past DuPont’s decades of experience, but that means that you never develop your own experience.  which means, that unlike DuPont, you don’t have the experience to build on.

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One comment

  1. alldaycoffeebreak · February 12, 2016

    This is interesting. I wonder if this has anything to do with, or might affect, the Dow DuPont merger that is planned in the coming years.

    Like

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