Climbing Back Up

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During the trial, X-It's lawyers established that Kidde had become interested in X-It's new ladder after seeing it at the 1998 trade show. Kidde's Carl Tomeo, then director of materials, ordered several X-It ladders over the Internet and had one shipped to his Chinese manufacturer with instructions to replicate it. When Harper was shown photos of the two companies' products during his deposition, he was unable to tell which ladder and packaging came from which company.

From the trial's opening bell, Kidde's position was that even if the two products were very similar, there was no evidence that it had resulted in any harm to X-It. And indeed, X-It was unable to get any major retailer to testify that it had decided against ordering X-It ladders because of Kidde's product. "The competition was tough on both sides, and there were mistakes made on both sides," said Kidde attorney Luger in her opening statement. "But the evidence will also show that Kidde never, never set out with an improper intent to harm or injure X-It. Nor is there any evidence of ill will. The deal didn't happen. There was disappointment, and there was anger. The evidence will show that rather than battle it out in the retail business world the hard way -- through marketing, selling, product supply and fulfillment, and customer service -- X-It in this lawsuit is attempting to claim the profits it never could have earned itself."

During the four-week trial, an interesting development emerged in X-It's arguments. The company's lawyers introduced a deposition given by Apperson, who by then was no longer president of Kidde Safety, acknowledging that more than 16,000 of Kidde's ladders had straps and webbing made from polypropylene, a flammable material. Additionally, X-It's lawyers established that some Kidde ladder hooks had been coated with lead-based paint. Kidde vigorously denied that its use of either material resulted in any safety problems, saying that X-It was trying to hold it to standards that weren't relevant. But because Kidde had been selling its products in packaging that was modeled on X-It's and therefore carried the words "flame-resistant" and the "safest," the charges supported X-It's claim of false advertising. By the time the trial began, however, Kidde had removed any polypropylene from its ladders and had reduced the lead content of its paint, citing a constant effort to improve its products.

Apperson did not return repeated messages left for him at American Fibers & Yarns, where he is now CEO. Harper, who also did not appear at the trial, refused to comment on any matter related to the X-It trial. Apperson's replacement, Ed LeBlanc, also did not appear at the trial and told Inc he was not able to answer any questions, pending resolution of the lawsuit. But twice last year he contacted Dutton in London, according to Dutton. On both occasions -- the first a phone conversation and the second in person at dinner -- Dutton says, LeBlanc told him that X-It "didn't have a case." The two talked settlement, but the negotiations always hit a snag. "We dodged around the issue because we were miles apart in terms of what we could agree on," says Dutton.

The jury clearly felt that X-It did have a case. On August 17, 2001, it awarded X-It more than $21 million in compensatory damages and $95 million in punitive damages, finding Kidde liable on all six remaining counts. DiBelardino was not only happy with the verdict but relieved that the trial had ended. "By the time the fourth week had begun, I just wanted to get out," he says. He adds that he was "humbled and overwhelmed" by how, to his eyes, the jury's attention span never seemed to flag.

The $116-million award is subject to judicial review. Both sides expect a reduction, given that the punitive damages exceed Virginia state limits. On December 17, the judge heard arguments from both sides about whether X-It's award should be reduced and, if so, by how much. Kidde asked the judge to reduce the compensatory damages to $842,556 (X-It's expert's calculation of Kidde's profit from selling the ladders) and slice punitive damages to $350,000, the Virginia limit. As of press time, in late January, the judge had yet to announce a decision. He did, however, issue a permanent injunction giving Kidde 40 days to recall all packaging, photographs, or artwork that was "substantially similar to or derivative of X-It's copyrighted material."

Kidde, of course, may decide to appeal. And when the case finally ends, X-It may still find itself competing against a Kidde product that, while legal, amounts to a knockoff. Still, the verdict gave DiBelardino some pleasure. The outcome -- tentative though it might be -- has given him more confidence that he'll be able to pay his legal fees. The verdict also gave him a reason to call all 30 of his accounts to thank them for their ongoing support. Thanks to those relationships, X-It's sales rose 23% last year, to $320,000.

And to some extent, the award has restored some calm to DiBelardino's personal life. The trial had caused him to, as he put it, "fall off the wagon" in terms of family obligations. He'd lost many a weekend driving down to North Carolina or working on X-It matters. On many occasions, he got the "you need to get home earlier" speech from his wife.

But those days, he believes, fingers crossed, have passed. At the very least, he can see the day they will end. "I think we've gone over the highest crest, gone past the lowest low, and hopefully we're toward the conclusion of the ride," he says.

Ilan Mochari is a staff writer at Inc.

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