Arbitration Panel Rewards Norit for ADA's Misappropriation of Its Trade Secrets

Norit is the world's largest manufacturer of activated carbon for purification purposes. The overall market for carbon activated product is increasing, largely due to demand growth in the U.S.

In a 2008 lawsuit, Norit accused two former employees and their new employer ADA of theft of trade secrets used to construct a new activated carbon manufacturing facility in Louisiana (operated by ADA Carbon Solutions, LLC).

The parties agreed to binding arbitration, and now a 3-person independent panel has found ADA-ES, Inc. (and some affiliates) and former Norit employees John Rectenwald and Steve Young liable for misappropriation of trade secrets and breach of a non-solicitation provision of a contract.

The panel ordered ADA to pay Norit damages of $37.9 million and a royalty on all activated carbon sales (10.5% for three years, and 7.0% for a further five years on sales of activated carbon produced at the Louisiana plant). The panel also denied all of ADA’s counterclaims against Norit, and dismissed Norit’s request for injunctive relief, assignment of an ADA patent, and multiple other claims. A look at relevant licenses in ktMine shows the royalty percentages to be on the high side, indicating the reward had a punitive component.