X IT And Kidde A Case Solution

1. What should X-IT do now? Should X-IT sue Kidde? What are its chances of success?

DiBelardino should file a lawsuit that Kidde had stolen the design for a fire escape ladder from his company and subsequently brought it to market. The chances of success are very high since X-IT has a very strong case and can defend it with legal help.

I believe the first step is to talk to an attorney to get an initial analysis of the facts and current data to determine whether they believe there is precedence for this type of matter and a possibility of winning the case. In addition, a meeting would need to be held with the investors and board of directors at X-IT to gain support and reach an agreement on the course of action to be taken. If a business case was made that, although risky, a chance at winning a case of intellectual property infringement against Kidde is feasible; the investors might be willing to support it for long-term gains in the future.

Especially with the copyright infringement and use of packaging, it is clear that Kidde attempted to take advantage of X-IT and bully them out of the marketplace. I would pursue the option of suing Kidde.

2. Assuming that X-IT pursues formal legal action against Kidde, what would the legal claims be? What are the strengths and weaknesses of each claim? What would be the likelihood of success of each claim?

I believe that X-IT should sue kidde and make sure they pay the fine for going against the business ethics. The chances of X-IT winning depends if they are able to prove their case by focusing on the strong points.

X-IT's strongest claims are the breach of confidentiality agreements (and then misappropriation of X-IT's trade secrets) and copyright infringement. As shown in Exhibit 4 in the case study, Walter Kidde agreed to use the pending patent information provided by X-IT only to: evaluate the potential transaction, limit it to personnel involved in the transaction (this includes outside advisors), all personnel involved will keep it a secret, and they must return the information upon X-IT's request.

Kidde's copyright infringement would carry significant weight. In fact, when Kidde released its version of the ladder, they neglected to even change the packaging that featured DiBelardino's children. In essence, Kidde was attempting to use the same packaging to fool customers into thinking that it was the same product provided by X-IT, which was not the case.

In addition, Kidde had agreed to use the information only for evaluation purposes. Instead, they utilized the information to determine if there was a small design change to the system that they could make that might provide enough justification that they would not be infringing the claims of the pending patent. While Kidde's use of an outside advisor was not prohibited, his actions and analysis were, resulting in misappropriation of X-IT's trade secrets.  The infringement of the agreement would have to be handled through the courts. 

The pros of suing Kidde would be that X-IT has sufficient documentation and testimony to argue in court that Kidde committed multiple intellectual property infringements against them. The confidentiality agreement, coupled with the copyright infringements and false advertising, have enough credence to win the court case. At the time, X-IT was in a unhealthy financial situation, and the influx of funds for the damages caused by Kidde to X-IT should they won could save the company from bankruptcy.

However, the major deterrent to suing Kidde would be the extraordinary legal fees that would need to be paid to compete against Kidde. Kidde had over $2 billion in revenues, and could easily divert funds to cover all legal and attorney fees, while the cash-strapped X-IT might not have the necessary funding to do so. However, X-IT would have to rely on investors and stopping product development to do so.

3. What are other options for X-IT besides pursuing legal action? You should address various business options (i.e. closing the company, strategic alliance) and ensure that you examine these options from the legal perspective and well as from the non-legal view. What are the benefits and drawbacks of each decision? Which decision would you ultimately choose and why? You may use any available law and strategy research available to you in order to frame your discussion.

Taking a legal action was one solution for X-IT. On the other hand the other solutions can be that X-IT can either close down there business, sell it of to the Kiddle at a very low price or form a strategic alliance with its competitors. 

Apart from this they can settlement outside the court without legal action taking place. They can make use of the meditation service or the opinion service. Mediation allows parties to reach a solution, which they are happy with. This allows flexibility for parties to agree a compromise they are both content with rather than accepting a decision imposed by the courts. The benefit of meditation is that it can provide a far quicker and less expensive route to resolution than litigation.