Chancery Court issues unprecedented arrest warrant

WILMINGTON – The Delaware Court of Chancery this week did something that, as far as anyone can tell, it has never done before.

It issued an arrest warrant.

The unusual action by Vice Chancellor Donald Parsons Jr. came in a lawsuit filed by W. L. Gore and Associates against a former employee and research scientist – Huey Shen Wu of Newark – who the company claims is misappropriating Gore trade secrets and property.

Parsons issued the order calling for Wu's arrest after weeks of warning him that he was in contempt of court and faced possible imprisonment if he did not comply with an order to surrender his U.S. passport, Taiwanese passport, Chinese visas and other Chinese travel documents.

Widener Law School professor Lawrence A. Hamermesh, who specializes in Chancery Court matters, said he was surprised by the move and did not realize the court had that power. "It is news to me," he said.

Ken Lagowski, office manager for the Register in Chancery, said in his nearly 30 years with the court, it has never been done. As far as anyone can tell, it may never have been done in the 220-year history of the court, known primarily for resolving business disputes.

Lagowski said court staff had to reach out to Superior Court for assistance in properly issuing the warrant and entering it into the Delaware Justice Information System.

Lagowski said that a number of years ago, Chancellor William Allen threatened to issue a warrant, but the defendant fled the country, and the warrant was never issued.

In this case, Wu may no longer be in the country.

Charles Knapp, who is representing Gore, said Wu maintained homes in Delaware and Taiwan. Knapp said Wu had regularly been attending hearings until a few weeks ago, making him suspect that Wu fled the country.

Wu responded in late March in writing to a motion seeking sanctions against him, claiming that he was in bankruptcy and could no longer afford an attorney. In a lengthy brief he wrote himself, Wu denied the allegations by Gore and the need for sanctions.

A call to a Delaware phone number Wu submitted to the court was not answered on Wednesday.

Gore originally sued Wu shortly after he left the company in 2004, alleging that Wu had "engaged in an extensive and fraudulent campaign to misappropriate Gore trade secrets and steal Gore property, data and files."

Wu had worked on polymers related to Gore's signature product Gore-Tex, and in 2006, the company won an unusual court order barring Wu from working in the polymer field for 10 years.

In 2012, Gore filed a new suit claiming Wu was in violation of the order, was working under the name "Samuel Wu" and had established research and development companies in Taiwan and China in competition with Gore specializing in outdoor, medical and military clothing involving polymers.

Gore claimed Wu was marketing his products online and told Chinese television reporters he estimated $95 million in annual revenue from his products.

Wu sought bankruptcy protection in April 2013 and on March 7 wrote to the court that "after 10 years of separation from Plaintiff Gore, I have been essentially unemployable due to injunction orders. Ongoing litigation has exhausted all my funding sources."

Unlike other, similar theft-of-trade-secrets cases in recent years, there are no criminal charges pending against Wu.

Knapp said Gore's next step will be to have Taiwan recognize and enforce the arrest warrant if Wu has returned to that country. China, he said, "is a completely different animal."

Knapp said Wu, who has grown children and other family members living in the United States, "now has a tough decision in front of him." He can come forward and comply with the court's order or, if he has fled the country, face arrest if he ever returns to the U.S.

Hamermesh said the case illustrates a bigger problem related to China and companies based in China engaging in theft of trade secrets.

The unusual arrest warrant is clearly a sign of frustration by the court. Usually, Chancery Court judges expect an order or ruling to be followed.

"Chancery usually doesn't have to worry about stuff like arrest warrants," Hamermesh said, adding that is something generally left to other courts.

The fact that it has come to this is clearly a breakdown in civility "and a breakdown in the system," he said.

Contact Sean O'Sullivan at (302) 324-2777 or sosullivan@delawareonline.com or on Twitter @SeanGOSullivan