As a start-up company, intellectual property is one of the most valuable assets, especially as a protective barrier to competing companies. The protection of intellectual property is essential for the livelihood of a young company that is working to get their product to market. As a result, when a start-up deems that a competitor has infringed upon their intellectual property, it is in their right to take legal action against said competitor for the infringement. This was the case with X-IT, who saw Kidde Safety’s production of a similar emergency escape ladder as a direct violation of their intellectual property.
In the court of law, X-IT can make numerous claims against Kidde Safety in regards to the emergency escape ladder. First and foremost, X-IT can claim that Kidde violated confidentiality agreements that the two companies agreed upon. In these confidentiality agreements, executed on June 8, 1999, it clearly states that X-IT would give information on its business, financial condition, operations, assets, and liabilities in exchange for the agreement that all information delved would remain confidential. This included only telling those employees within Kidde that needed the information for evaluation of whether or not Kidde should acquire X-IT.It also meant that any information given would only be used for the sole purpose of making this evaluation and nothing else. However, Kidde did not satisfy these terms.
First of all, Kidde began investigations of whether they could produce their own similar product without violating any of X-IT’s pending patent application. In court, this could be interpreted as using the information disclosed as part of the confidentiality agreement for purposes other than those designated by X-IT, namely for determining whether it was worthwhile for Kidde to purchase X-IT.Kidde was potentially using the information they had received from X-IT to see whether they could avoid acquiring X-IT and produce a competing ladder instead. In court, there would be no way to definitively prove that Kidde was not using any of the information, even if it was a simple idea, disclosed as part of the confidentiality agreement. Therefore, this could be seen as one violation of the agreement. Another claim X-IT had against Kidde was the violation of the agreement to only disclose the strength of the pending patent application to Kidde.Kidde’s patent attorney, Charles Oslakovic, was supposed to evaluate X-IT’s patent application and simply characterize to Kidde that that intellectual property was strong or not.
Oslakovic was supposed to withhold any information pertaining to the claims, specifications, or content of the application. Instead, Oslakovic specifically described the claims to Kidde and advised the company as to which product features to modify specifically so as to not violate the patent once it became approved.Specifically, he detailed the design of the storage strap of the X-IT ladder and gave advice on how to change the feature to avoid patent infringement. Since all of this information was protected by the nondisclosure agreement between the two companies, Oslakovic and Kidde were in direct violation of breaking the agreement. This violation allowed Kidde to produce a competitive product that was strikingly similar to that of the X-IT emergency ladder but would not be guilty of any patent infringements if the patent was granted to X-IT. Finally, X-IT could point to the use of similar packaging as proof of an intellectual property infringement.
Specifically, Kidde had the lapse of judgment of using the same photo of DiBelardino’s nephew and sister-in-law using the product on the packaging for their product. This photo was clearly the property of X-IT, as witnessed by the act of blotting out of the faces with magic marker by Kidde employees upon learning the origins of the photograph, as well as later statements made by Kidde executives. Kidde clearly seemed to have stolen and encroached on the intellectual property of X-IT in regards to the emergency escape ladder, and the claims that X-IT has against Kidde should be strong enough to win a court case.First of all, it should be noted that patent was pending and unless approved, any claims of the product being too similar in features and specifications would be worthless without an issued patent. Furthermore, as a result of the information obtained from Oslakovic in his review of the patent application, Kidde should theoretically have a product that is clear of any patent infringement, so X-IT should not have any strength in claims on this front. However, in regards to Oslakovic’s violation of the confidentiality agreement, the claims are strong.
Oslakovic claimed that Ive was present when he shared the information in question to Kidde employees. While Ive denies this, a major issue he may come across is that he elected to not have an attorney represent him when X-IT and Kidde agreed upon allowing Oslakovic to review the patent application. If Ive can prove that he never agreed upon disclosure of information protected by the confidentiality agreement, then he has a strong and viable claim against Kidde in this instance.The court would probably require Oslakovic to prove that Ive was present during the event in discussion, and thus Oslakovic would be unable to prove this and the confidentiality agreement would then take precedence. Furthermore, if Ive could prove that Kidde was attempting to determine if they could produce a competitive product soon after the entering of the confidentiality agreement, then X-IT could strongly claim that information they had disclosed was being used for purposes explicitly not allowed by the agreement.The confidentiality agreement in this case protected the intellectual property of X-IT, and as such any use of information provided in the agreement towards designing a competitive product should be deemed a violation under the court of law. Finally, while in and of itself, the packaging argument is not a strong claim as there were no copyrights or trademarks on the photo or packaging; the use of the photo by Kidde could be presented as strong supporting evidence that a violation of X-IT and Kidde’s confidentiality agreement had occurred.
Therefore, the claims that X-IT has against Kidde can be seen as both valid and strong.