Technology Transfer and Commercialization

Individual Assignment – Case Analysis
Preparation of a case analysis (2,000 words maximum) for classroom discussion of the case during Session 14 on Day 4 (18th October 20).
Case: X-IT and Kidde (A)
Authors: Constance E. Bagley and David20 Lane
Publisher: Harvard Business School Publishing, May 2003.
Case number: HBS 9-803-041.
Deadline: due before 12.00pm (midnight) on Thursday 15th October 2020 via the Blackboard assignment Submission System.
Instructions for the Individual Assignment:
Read the case and then write an analysis of the case addressing the following four questions:
(i) What are X-IT’s strongest legal claims against Kidde?
(ii) What are the pros and cons of suing Kidde?
(iii) If you were Aldo DiBelardino, what would you do?
(iv) If you were an outside investor of X-IT, would you fund a lawsuit? Why or why not?
The case analysis must be no longer than 2,000 words, it must be the original work of each individual student and it must be prepared specifically for this course.

ANSWER

Technology Transfer and Commercialization

Overview

The X-IT and Kiddle case highlights interference with property rights and consequential outcomes emerging from the action. X-IT assumed all right over its idea, and the decision by the Kiddle Company to use the confidential information provided to them for their advantage goes against intellectual property rights. X-IT experiences a loss of its clientele and competitive advantage because Kiddle commences the production of similar ladders under their name. The move tampers with consumer trust and loyalty. Overall, the case informs the audience about intellectual property rights and the need for market competitors to avoid poaching other firm’s ideas for their interests. If a business desires to form a partnership, it is imperative to adhere to confidentiality and ensure the involved parties agree to the idea. Otherwise, any attempt to produce other companies’ products without their consent might attract lawsuits. Prevention of such outcomes calls for adherence to agreements.

X-IT’s Strongest Legal Claims against Kiddle

X-IT has a potential legal claim against Kiddle. One of these legal aspects is the poaching of its business idea without its authorization and a pending application. X-IT’s have intellectual property rights over its ladders. The company enjoyed rights over the product for some time. As Savale and Savale (2016) state, these rights are exclusive for a certain period, and the owners have control of their business idea. The names, symbols, and designs incorporated in the product are not replicable. Within this time, no business is expected to develop a similar idea since it would tamper with X-IT’s ownership rights. However, Kiddle decides to use a similar design to produce ladders and deliver them in the market using its brand name. The firm sends copies of X-IT’s ladder to a Chinese manufacturer to replicate the products. This already indicates an interference with intellectual property rights since X-IT had not given any go-ahead for the firm to produce similar ladders. X-IT has the legal obligation to protect its property rights and thus has a legal claim at hand. Also, Kiddle goes against confidentiality and decides to produce similar products that threaten the existence of X-IT.

Kiddle fails to align with confidentiality requirements. Discussion about rights is meant to be confidential. Clients have a legitimate expectation of confidentiality in communications with patent agents or any other interested party (Harnisch, 1993). Confidentiality helps to safeguard patent rights. In this case, the two companies had agreed to discuss patent rights to develop a closer business relationship. X-IT had called out for Kiddle to assess if the intellectual property status was “weak” or “strong” so that the two could arrive at a viable conclusion on a potential partnership. The patent application document was confidential, and after Ive sent it to Kiddle’s attorney, a directive of non-disclosure to Kiddle’s management was issued. Oslakovic, Kiddle’s attorney, was to communicate with X-IT’s team after assessing the document. However, he provided the details of the patent claims to Kiddle, where this paved the way for replicating X-IT’s design. Kiddle has acquired the ladders’ design specifications and took advantage of this opportunity to produce similar products. This action interferes with confidentiality requirements, and X-IT has a potential legal claim against Kiddle.

Pros and Cons of Suing Kiddle

Pros

Patent Rights Retention

The decision to sue Kiddle attracts various advantages. One of these benefits is that X-IT has a viable chance of retaining its patent rights and undertake various business changes. Currently, the firm is not able to make any quality moves because it has no control over its product due to the stiff competition in the market. Retaining their rights might enable the management to innovate and expand its operations. According to Saha and Bhattacharya (2011), intellectual property rights help a business to reap commercial benefits from their creative ideas. It provides a key advantage in the market, and companies are capable of wooing consumers with quality products that meet and exceed their expectations. Therefore, there is a significant opportunity to retain property rights because X-IT can innovate and expand its organizational processes and operations. Also, the firm can win the trust of its clientele and maintain brand loyalty. The long-term support of the consumers act as the foundation of the business. There is a dire need for X-IT to win their clientele and attract other consumers willing to try their ladders.

Client Retention and Enhanced Brand Loyalty

X-IT can win the trust of its consumers and develop brand loyalty. Brand reputation and competence determine the consumers’ levels of trust (Afzal et al., 2010). Thus, it is integral for any business to advance its reputation and competency in the market. As for X-IT, its current status translates into reduced brand recognition among new consumers. Also, retaining clients are likely to develop low trust and loyalty to the business. However, suing Kiddle might change its conditions whereby it has a chance to win its clientele and attracts potential users. After Kiddle’s replication of its products, consumers felt that X-IT was taking advantage of them. This forces most of their clients to neglect any form of transaction with the company. The legal process has the potential to allow X-IT to retain its consumers and attract new potential users.

Cons

Altered Business Operations

X-IT’s operations may be altered due to the legal battle, especially when it takes a long time. Court proceedings often take a long time within which a business stands to change its operations. The delayed court process affects justice provision. As McGuinness (2016) notes, justice delayed is justice denied. Lengthy court proceedings may deny an individual or business the chance to acquire the desired justice. In this case, DiBelardino is running the business alone after his partner left the company but retained his equity share. This leaves him in control of the business. The legal battle may utilize most of his time, denying him the opportunity to attend to business affairs. At this point, the firm requires optimal attention to accelerate its growth amidst stiff competition existing in the market. However, deciding to sue Kiddle attracts massive time that would otherwise be invested in reviving the business. Besides altering operations, the court case can also deteriorate its financial status.

Deteriorating Financial Status

X-IT is in a wanting financial status. A legal battle in court may force the company into an adverse financial situation. The court battle might alter its quest for business growth and productivity. Financial status affects long-term growth (King & Levine, 1993). Any excessive use of resources could derail efforts to accelerate business processes. X-IT has an insufficient resource base at its disposal to fill orders and engage in other organizational functions. Suing Kiddle leaves it with a significant financial burden of paying attorney fees. Thus, the court battle might affect X-IT’s financial position when it is experiencing slower growth. As opposed to time rushing for court battles, the management can decide to invest this time and effort in advancing its business.

Possible actions that DiBelardino should take

Re-strategizing X-IT’s Operations

Re-strategize X-IT’s operations is an effective way of reviving the business. The leader should develop and implement innovative approaches and adopt viable business changes. The company is facing stiff competition in the market that attracts the introduction of innovative and sustainable solutions. As Goksoy, Ozsoy, and Vayvay (2012) state, the increased competition forces businesses to become innovative and integrate crucial change processes. These elements provide an opportunity to improve performance and elevate efficiency. One of the possible moves that the leader should make is cut organizational cost. This will enable the firm to operate at a bare minimum as it strives to gain its competitiveness. Also, halting the introduction of new products in the business is another imperative move that DiBelardino should preserve available finances for the already existing product. Notably, an assessment of corporate activities that require a change is essential to allow the company to progress over time. The business process reengineering is a crucial strategic approach that permits organizations to redesign or replace the older method with new and potential tactics (Bhaskar, 2018). This accelerates the attainment of quality organizational outcomes. These strategic approaches can enable the firm to re-invest itself. Also, DiBelardino can reach out to Kiddle’s management level for an in-depth discussion targeting a possible partnership.

Liaise with Kiddle’s management level for a partnership discussion

Kiddle has the upper hand compared to X-TI. As the leader, one should appreciate this and possibly liaise with Kiddle’s management for an in-depth discussion that might lead to a partnership. X-IT can take advantage of this to retain its brand image among its consumers. Its sustainability might depend on a partnership with Kiddle. According to Gray and Stites (2013), partnerships exist as crucial collaborative efforts capable of delivering exponential growth. Businesses combine resources, skills, and knowledge for sustainable development. Thus, a partnership exists as a critical strategy that the X-IT team should consider in the quest to make its company competitive again.

Possibility of an outside investor funding X-IT’s lawsuit

As a potential investor, funding the lawsuit is an ideal move. Litigation finance is one of the growing trends across the globe (Steinitz, 2019). Potential investors are aiding businesses to undertake a legal case against others in the expectation of massive gains. However, it is vital to assess the case and associated conditions before making such a move. In the issue at hand, an investor stands to benefit from the lawsuit. Kiddle failed to meet its end of barging as incorporated on the confidential agreement between the two. The agreement stated that X-IT should furnish Kiddle with information but needed to be confidential. Kiddle’s attorney, who was the representative, would evaluate the document to assess its benefits to the firm. However, he was not required to disclose the information to Kiddle’s management, which he did. This altered the confidential requirement and is as such answerable for the actions it undertook thereby. X-IT has a case at hand, and a potential investor willing to fund the lawsuit stands to benefit as well. The investor may benefit from a chance to become a part of the business later or even gain financially. Before the case, X-IT can discuss with the investor to agree on potential ways of offering rewards due to the support provided.

References

Afzal, H., Khan, M. A., ur Rehman, K., Ali, I., & Wajahat, S. (2010). Consumers’ trust in the brand: Can it be built through brand reputation, brand competence, and brand predictability. International Business Research, 3(1), 43.

Bhaskar, L. H. (2018). Business process reengineering: A process-based management tool. Serbian journal of management, 13(1), 63-87.DOI:10.5937/SJM13-13188

Goksoy, A., Ozsoy, B., & Vayvay, O. (2012). Business process reengineering: A strategic tool for managing organizational change an application in a multinational company. International Journal of Business and Management, 7(2), 89. http://dx.doi.org/10.5539/ijbm.v7n2p89

Gray, B., & Stites, J. P. (2013). Sustainability through partnerships. Capitalizing on collaboration. Network for business sustainability, case study, 24, 1-110.

Harnisch, V. J. (1993). Confidential Communications between Clients and Patent Agents: Are They Protected under the Attorney-Client Privilege. Hastings Comm. & Ent. LJ, 16, 433.

King, R. G., & Levine, R. (1993). Finance, entrepreneurship, and growth. Journal of Monetary Economics, 32(3), 513-542.

McGuinness, H. M. J. C. (2016). Alternative Dispute Resolution-Mediation and Conciliation.

Saha, C. N., & Bhattacharya, S. (2011). Intellectual property rights: An overview and implications in the pharmaceutical industry. Journal of advanced pharmaceutical technology & research, 2(2), 88.

Savale, S. K., & Savale, V. K. (2016). Intellectual Property Rights (IPR).

Steinitz, M. (2019). Follow the Money: A Proposed Approach for Disclosure of Litigation Finance Agreements. UCDL, Rev., 53, 1073.