X-It Products v. Walter Kidde Portable Equipment
| Citation | 155 F.Supp.2d 577 |
| Decision Date | 09 July 2001 |
| Docket Number | No. CIV. A. 2:00CV513.,CIV. A. 2:00CV513. |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | X-IT PRODUCTS, L.L.C., Plaintiff, v. WALTER KIDDE PORTABLE EQUIPMENT, INC., Defendant. |
Robert M. Tata, Benjamin V. Madison, III, Brent L. Vannorman, Hunton & Williams, Norfolk, VA, for Plaintiff.
William F. Devine, Hofheimer Nusbaum, P.C., Norfolk, VA, Laura B. Luger, Moore & Van Allen, PLLC, Durham, NC, for Defendant.
This matter is before the Court on Plaintiff's Motion for Partial Summary Judgment and Defendant's motion entitled "Motion to Dismiss, for Judgment on the Pleadings, and for Summary Judgment." Plaintiff, X-IT Products L.L.C. ("X-IT") moves for partial summary judgment against Defendant Walter Kidde Portable Equipment ("Kidde") on Counts I (Copyright Infringement), IV (Breach of Contract), and V (Misappropriation of Trade Secrets) of its eight-count Amended Complaint. Kidde, meanwhile, moves for summary judgment on all eight counts of X-IT's Amended Complaint, including Counts II (False Designations Under Section 43(a) of the Lanham Act), III (False Advertisement Under Section 43(a) of the Lanham Act), VI (Unfair Competition), VII (Tortious Interference), and VIII (Unjust Enrichment and Constructive Trust).
Kidde's Brief in Opposition to X-IT's Motion for Partial Summary Judgment raises an additional matter for the Court to consider as well. Specifically, Kidde argues that X-IT's unclean hands bar the entry of summary judgment in its favor and warrant the entry of summary judgment in Kidde's favor on all claims. On May 17, 2001, however, X-IT filed a Motion to Strike Kidde's Unclean Hands Evidence and Argument. Additionally, X-IT has filed a Rule 56(f) Motion to Refuse the Application for Judgment on Kidde's Motion for Summary Judgment, asserting that additional discovery is necessary to further rebut Kidde's Motion for Summary Judgment, and that entry of summary judgment in favor of Kidde is therefore inappropriate at this time.
This Court heard argument on all of these motions on May 23, 2001 and took the matter under advisement at that time. For the reasons set forth below, this Court GRANTS X-IT's Motion for Partial Summary Judgment on Count I on the issue of liability with respect to Kidde's infringement of X-IT's copyright for use in Kidde's packaging, sell-sheets, and Power-Point presentation at the 1999 National Hardware Show. In addition, for the reasons set forth below, the Court GRANTS (1) Kidde's Motion for Summary Judgment on Count IV with regard to X-IT's claim that Kidde misused X-IT's actual and potential customer account list; (2) Kidde's Motion for Summary Judgment on Count V with regard to X-IT's claim that its customer account list constitutes a trade secret; and (3) Kidde's Motion for Summary Judgment on Count VII as to X-IT's tortious interference claim. X-IT's Motion to Strike Kidde's Unclean Hands Evidence and Argument is GRANTED IN PART and DENIED IN PART. The Court STRIKES Kidde's allegations of litigation misconduct on the part of X-IT, but will hear evidence regarding X-IT's alleged pre-litigation misconduct. In all other respects, X-IT's Motion for Partial Summary Judgment and Kidde's "Motion to Dismiss, for Judgment on the Pleadings, and for Summary Judgment" are hereby DENIED.
Andrew Ive ("Ive") and Aldo DiBelardino ("DiBelardino") co-founded X-IT in July of 1997 while Ive and DiBelardino were classmates at Harvard Business School.1 Ive and DiBelardino formed X-IT to produce and market a "web-style" emergency escape ladder that the two first conceived, designed, and created in 1996 and 1997 as a project for their Product Development course at Harvard. See Am. Compl. ¶¶ 5, 6, & 9. X-IT launched a production version of its Emergency Escape Ladder (hereinafter the "X-IT Ladder") in August of 1998. See Pl.'s Opp. Ex. 2, DiBelardino Dep. at 429. In June of 1998, Kevin Dodge ("Dodge"), a former classmate of Ive's and DiBelardino's at Harvard, joined X-IT as its Chief Financial Officer.2
The X-IT ladder weighs approximately seven (7) pounds and is packaged for sale in a box measuring approximately 15 inches by 7-1/2 inches. See Am. Comp. ¶ 9. The ladder, which has a weight rating of over 1,000 pounds, is constructed of mesh-webbed railings and stackable or "nested" aluminum rungs. See id. ¶¶ 9, 11. The X-IT ladder's "nesting" design allows the rungs to easily fit together during storage. See id. ¶ 11. X-IT maintains that this feature also allows for compact storage and "quick tangle-free deployment in the event of an emergency." Id. According to X-IT, the smaller size of its ladder, the "unique nesting design," and the innovative graphics on the box made the X-IT ladder inherently distinctive from any other emergency fire escape ladder on the market at the time it was introduced. See id.
Some discussion of the unique graphics on X-IT's packaging is appropriate at this time, since many of X-IT's claims in the instant case center around the artwork contained therein. The undisputed evidence clearly indicates that the creativity behind X-IT's packaging artwork came from X-IT's founders, Ive and DiBelardino. X-IT (1) designed the house logo; (2) conceived the house diagram; (3) chose the fireman's picture; (4) chose the features to be listed in the bullet lists; (5) conceived the "1,2,3" deployment instructions; (6) built the set for the photograph that Becker eventually took; (7) selected the models (DiBelardino's nephew and sister-in-law) that appeared in the photograph; and (8) employed a photographer, Joel Becker ("Becker") of Becker-Cline Digital Photography to take a picture of the models and set that X-IT constructed. See Pl.'s Mot. Ex. 17, Ive Aff. ¶¶ 5-9, 11; Pl.'s Mot. Ex. 2, DiBelardino Aff. ¶¶ 5-6; Pl.'s Mot. Ex. 3, Becker Aff. ¶¶ 3-4. Becker took the photograph in early June 1998, with X-IT paying the invoice for Becker's services on June 10, 1998. See Pl.'s Mot. Ex. 3, Becker Aff., ¶¶ 5-8. At the time of payment on June 10, 1998, Becker orally transferred all copyright rights to the photographs to X-IT. See id. ¶ 5; Pl.'s Mot. Ex. 17, Ive Aff. ¶ 10; Pl.'s Mot. Ex. 2, DiBelardino Aff. ¶ 7 & Exs. B, C. This oral assignment was subsequently memorialized in two written assignment agreements in April 2000 and April 2001. See Pl.'s Mot. Ex. 2, DiBelardino Aff. Exs. B & C. Finally, it is undisputed that on June 9, 2000 the U.S. Copyright Office issued two certificates of registration to X-IT covering both the photograph on X-IT's box and the cover art on X-IT's packaging. See Pl.'s Opp. Ex. 44, Kidde's Response to X-IT's First Request for Admission 48; Pl.'s Opp. Ex. 49, XIT 001266—XIT 001268 ().
In April of 1998, Harvard Business School Publishing published a Case Study about X-IT and the X-IT ladder (hereinafter the "X-IT Case Study"). See Def.'s Mot. Ex. 13, X-IT Case Study. Professors Myra Hart ("Hart") and Marco Iansiti ("Iansiti"), both of whom invested in X-IT, prepared the X-IT Case Study.3 Although the X-IT Case Study was premised on X-IT and the X-IT ladder, certain information included within the Case Study was not based on actual information from X-IT or its founders, but was deliberately conceived and used just for the Case Study. See Pl.'s Opp. Ex. 9, Hart Dep. at 21, 106-10; Pl.'s Opp. Ex. 10, Iansiti Dep. at 194-95. The X-IT Case Study contained an "X-IT Business Plan," which included a detailed business description, market analysis, cost-benefit and risk analysis, marketing strategies and goals, long-term development plans, projected income statement, projected balance sheet, projected revenue and expense statements with lists of projected accounts, and resumes of X-IT's principals.4
The X-IT Case Study was taught and distributed to Harvard Business School students in April of 1998 and April of 1999. See Def.'s Mot. Ex. 14, Hart Dep. at 103-04. Students were under no obligation to maintain the confidentiality of the information presented in the X-IT Case Study and, once the X-IT Case Study was distributed, it became a matter of public record. See id. at 103-04. In April of 1999, the X-IT Case Study also became available for purchase and use by the general public. See id. at 18-19.
In both the X-IT Case Study and X-IT's initial offering memorandum to investors, X-IT identified Kidde as one of the two large competitors that X-IT would face in the marketplace. See Def.'s Mot. Ex. 13, X-IT Case Study; Def.'s Mot. Ex. 16, IVE 75-92. X-IT's offering memorandum also identified a number of risk factors associated with investing in X-IT, including the risk associated with the possibility of a competitor replicating the unpatented X-IT ladder. See id. at IVE 82. X-IT hoped to mitigate the risk of replication by obtaining "intellectual property protection," such as patenting the X-IT ladder. See id.
X-IT introduced its ladder at the August 1998 National Hardware Show (hereinafter referred to as the "1998 Show") in Chicago, Illinois. See Am. Compl. ¶ 17. The National Hardware Show, conducted in Chicago in August of each year, is one of the largest and most important trade shows throughout the world. See Pl.'s Opp. Ex. 46, Expert Report of Ken Cort, at 1. The show plays a major role in the sales process for hardware, building materials, and other related products. See id. X-IT's principals visited Kidde's booth at the 1998 Show and showed the X-IT ladder to representatives of Kidde. See Def.'s Ex. 3, Ive Dep. at 242-43; Def.'s Ex. 4, DiBelardino Dep. at 196-97. Prior to the 1998 Show, Kidde had not contemplated designing a web-type ladder. See Pl.'s Opp. Ex. 14,...
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