X-IT and Kidde Case Study

Topics: Intellectual property law, Infringement, Patent Pages: 5 (1335 words) Published: August 3, 2014
Karishma Patel
Professor Ellen Thomas
MGMT 480 450
29 June 2014
X-IT and Kidde Case
1. X-IT had a dominant ladder design which gave them a first-mover advantage. While they were not the first to invest in the fire safety/escape industry their focus and design outshined the rest at first. They fairly quickly grew a reputation for themselves and caught the attention of large retailers. X-IT also managed to fall into Kidde’s scope. Kidde was an already successful company that carried various other fire safety products. They depicted an interest in purchasing X-IT; more particularly just intellectual property of their ladder design and X-IT was not closed to the idea.

A fear that most companies hold when collaborating with another is of protecting their proprietary technologies. X-IT had this fear as well and applied for a patent. Unfortunately, due to a lack of money and in turn a lack of knowledge power, they were unable to protect their innovation from Kidde. Kidde, with the help of an unethical attorney, worked around X-IT’s still processing patent to “legally” create a similar ladder. Nonetheless, X-IT does hold a fair amount of ammunition against Kidde.

Copyright infringement and the breach of confidentiality agreements are the strongest legal claims that X-IT has. Within the confidentiality agreement between these two companies, it clearly states that Kidde would only use the pending patent information to analyze the potential transaction (purchasing X-IT). Additionally, it was agreed upon that the patent information would be kept limited to individuals involved in the transaction and that if X-IT requested the information back, it would have to be returned.

Although Kidde had agreed to use X-IT’s patent information only to evaluate, they used it for another purpose altogether. With the aid of an outside attorney, they utilized the information to make a change in the ladder’s design that could possibly provide just enough justification to prove that they were not infringing. In fact, if X-IT had the funds they most likely would have won a case against Kidde. The copyright infringement by Kidde was impossible to miss and, if taken to court, would weigh heavily. At the Hardware Show, Kidde not only displayed but also presented their version of X-IT’s ladder to numerous retail representatives (eye-witnesses). The convicting evidence here is that Kidde failed to change the retail box design which depicted DiBelardino’s nephew and sister-in-law. Possibly, this was a way to trick consumers into thinking that it was the same product X-IT was selling. 2. Even though suing Kidde seems like the ethical step to take, there are pros and cons to such action. A pro of suing Kidde is that X-IT has a sufficient amount of documentation and strong testimonies which would likely lead to a win. They could request for eyewitnesses from the Hardware Show to appear in court and testify. This would set a strong basis for and argument that Kidde committed multiple intellectual property infringements against them. In addition, presenting the confidentiality agreement with signatures would lock Kiddie into involvement. Coupling all documentation, witnesses, and claims together would provide enough credence for X-IT to walk away as winners in this case. When their intellectual property was stolen, X-IT was in an unhealthy financial situation. If they had went forth with a case, the influx of funds for the damages caused by Kidde to X-IT could have kept the company better afloat and further away from bankruptcy. Ultimately, if the case opened, X-IT may have the opportunity to win and grow their business further. A win would mean that they do not have to sacrifice the innovation they created.

However, the major con is what kept X-IT from suing Kidde originally. Opening a case is very costly and would require for X-IT to pay ridiculous legal fees. According to the article, Kidde had over $2 billion in revenues. They could very easily...
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