Full opinion text
ORDER DOUMAR, District Judge. After a four week trial, a verdict was rendered by a jury in this matter on August 17, 2001 in favor of the Plaintiff, X-It Products, L.L.C., Inc. (“X-It”) for in excess of $116 million dollars. X-It and Defendant, Walter Kidde Portable Equipment, Inc., (“Kidde”) have filed numerous post trial motions regarding the propriety of this verdict including: X-It’s Motion for Order Granting Permanent Injunction, Kidde’s Motion for Transcript Portions to Remain Under Seal, Kidde’s Motion for Post Verdict Relief, X-It’s Motion for Finding of Unfair Competition and Trade Practices and for Prejudgment Interest, and X-It’s Motion to Strike Kidde’s Post Trial Offer of Evidence. The Parties have fully briefed the issues, and have inundated the Court with extraneous 'briefs, cases, and documents. The Court held a hearing on December 17, 2001, the main focus of which was the issue of damages, both compensatory and punitive. The Court heard oral argument on the issues. Although the suit contains ten different counts, this case is composed of just two major issues. First, it is a copyright case and a trade dress case in that one company, Kidde, replicated the copyrighted picture and trade dress of X-It and used it. Second, it is a case where a company, Kidde, unfairly and fraudulently appropriated the trade secret patent application of X-It, to market a competing product, while breaching its contract which prohibited its disclosure and use. A confusing factor in the case requires the Court to state what this case is not. THIS CASE IS NOT A PATENT INFRINGEMENT CASE, but it necessarily involves and centers around patents. The damages are related first to the copyright and trade dress violation, and second to the sum of money the Plaintiff would reasonable have received for the Defendant to be able to utilize the trade secret information which it fraudulently appropriated at the time and place of obtaining it. Also, this fraudulent appropriation of the trade secret was a clear breach of contract. On this second aspect of damages, relating to the fraudulent appropriation of the trade secret patent application, and breach of contract, the jury clearly awarded multiplicatus compensatory damage awards for several causes of action on the same facts. The jury was fully instructed on each of the counts with sixty-eight interrogatory questions, including subparts, concerning the matter. Indeed, the jury instructions clearly stated without objection that, “[t]he total amount of compensatory damages may not exceed the value- found for any one violation, except for the copyright violation, if any.” (Tr. pg. 4300). There were no objections to this instruction, and this instruction is the law of the case. For this reason, as well as the common law, the Court now Orders the Plaintiff, XHt Products, L.L.C. (“X-It”), to elect the remedy for which it desires judgment, and the corresponding verdict, under which it wishes to recover compensatory damages for the Defendant’s fraudulent actions in fraudulently appropriating the trade secret patent application or the breach of contract. This amount will be awarded in addition to any damages for the copyright violation if appropriate plus any punitive damages, and/or attorney’s fees, if appropriate to the elected remedy. In addition pre-judgment interest on, the amount of compensatory damages will be awarded from August 15, 1999 at the rate of 8% per annum on any and all awards except contract judgment, if any, until date of judgment, and from August 15, 1999, at 9% per annum until date of judgment on the contract action. The federal judgment rate of interest will begin on date of judgment. The Plaintiff cannot recover for both contract and tort. Depending on the remedy elected, the copyright damages may be subsumed in the damages for the breach of contract and/or the damages for fraud. A new trial is DENIED, I. Introduction It is always helpful to understand the posture of a suit at the time of trial. This suit centers around X-It’s product, packaging, and patent application and the supposed proposed purchase of X-It by Kid-de. In the nearly fifty years that the undersigned has been a member of the bar, working almost always in litigation, of which twenty years have been on the bench, the undersigned has never seen a case which entailed more rancor between attorneys handling a case or involved in the case. Never have so many objections, obstructions, and motions been put forward by both sides than in any prior case seen by the undersigned during those almost fifty years. X-It claims that actions taken by Kidde and its agents entitle X-It to recovery on several counts. Specifically, X-It seeks recovery under the following theories: 1) copyright infringement, 2) false designations in violation of Section 43(a) of the Lanham Act, 3) false advertising in violation of Section 43(a) of the Lanham Act, 4) breach of contract, 5) misappropriation of trade secrets in violation of the Illinois Trade Secrets Act, 6) misappropriation of trade secrets in violation of the North Carolina Trade Secrets Act, 7) breach of the North Carolina Unfair Trade Practices Act, 8) breach of the Illinois Consumer Fraus and Deceptive Business Practices Act, 9) breach of Illinois Common Law through unfair competition, and 10) breach of Virginia Common Law though unfair competition. The Court’s concern is that, but for the theory of recovery based on copyright infringement, the same theory of damages was presented by the Plaintiff on all counts except for the copyright violation. II. The Jury Awards and Damages To award damages in this case, the jury needed to determine what would have taken place, monetarily speaking, but for the wrongful acts of the Defendant. The jury necessarily determined that Kidde would have had to buy X-It, as it had set out to do, because it was clearly going to put out a web-type ladder in August 1999. Kidde realized that X-It’s ladder was a revolutionary and exceedingly practical product. Indeed, Kidde sold 100,000 of the copy web ladder in a very short time — much better sales than for the old style chain ladders they had previously sold. In July and August, 1999, Kidde was faced with X-It being in a position to capture the prime market for such products, especially with retailers such as Home Depot. It chose to prevent this by presenting essentially the same product and packaging to its vast distribution system. In order to determine the damages to X-It, one must look at what would have happened had Kidde not stolen its patent information, copyright, and trade dress. In this case, Kidde would have had to purchase X-It entirely, which its officers had planned to do some time prior to their introduction of the copies of X-It’s ladder and packaging at the 1999 Hardware Show. In fact, Kidde had done little or no research on packaging or ladder design; it had merely copied and slightly modified X-It’s product by causing a new hook to be devised in a contest some 20 days before their first presentation of their prototype ladder. This presentation was done at a pre show meeting in Chicago on August 14, 1999, the day before the National Hardware Show, which began on August 15, 1999. The only substantial difference between the ladder that Kidde displayed as its own at the Show and X-It’s ladder was the hook. The packaging was substantially the same except Kidde used its name instead of X-IT’s. Since Kidde would not market a product which infringed another’s patent, Kidde could not introduce a copy ladder without having knowledge of what was in the pending patent application or buying or licensing the product or company. It chose through deceit to obtain the secret patent application and modify a ladder based thereon to avoid patent infringement. It also appropriated X-It’s copyrighted packaging. In essence, Kidde pulled the rug out from under X-IT, a promising young company with an innovative product, package, and an aggressive marketing plan. In the aftermath of Kidde’s having stolen both XIT’s product, package, and its marketing, as well as having willfully deceived X-IT’s management, X-IT lost all its forward momentum and began to fall apart. Absent the intervention of the courts, Kidde had succeeded in its scheme to practically destroy an up and coming rival through deceit. As far as sales were concerned, Ive, X-It’s former president, testified that while in 1999 X-IT had sold 13,000 ladders, a 350% increase on its sales for the prior year, in 2000, following Kidde’s actions, sales dropped to 8,800 ladders. (Tr. 403). Additionally, prior to the 1999 Hardware Show X-IT had fifteen different companies handling sales covering the entire country. (Tr. 404). After the show, “it was somewhat like we had a disease. People were not calling us any more. And we were not getting our phone calls returned.” (Tr. 404). Sales representatives who managed X-IT’s accounts with Target and Wal-Mart, two giant retailers, actually saw the Kidde display at the 1999 Hardware Show and accused X-IT of trying to undercut them. (Tr. 404). At the time of the trial, those fifteen marketing firms handling XIT sales had been reduced to two. (Tr. 463). Moreover, given that X-IT was the first company to produce a web ladder, prior to the 1999 Hardware Show it commanded nearly 100% of that market for web ladders. (Tr. 463). As a result of Kidde’s wrongdoing, at the time of trial XIT had been reduced to 10% of the market. (Tr. 464). One example of this trend is Home Depot. Prior to the Show, Home Depot had expressed an interest in expanding its distribution of X-IT’s ladder nationally following its successful test marketing of the ladder in one region. (Tr. 433-34). As has become clear in subsequent hearings on the Injunction issued against Kidde in this case, X-IT’s relationship with Home Depot has failed to mature while Kidde has flooded Home Depot and dozens of other retailers with knock-off ladders and infringing packaging. As DiBelardino testified, “the playing field X-IT must operate on has been irrevocably tilted.” (Tr. 1795). As X-IT’s sales receded, so did its ability to raise additional capital from its investors. According to Ive, calls for additional capital to keep the already lean start-up in business went unheeded after it became clear what Kidde had done and the danger that posed to X-IT’s survival. (Tr. 464). The fallout from Kidde’s wrongdoing also had severe repercussions for X-IT’s previously close-knit management team. Ive and DiBelardino, the two Harvard MBA students who had come up with the idea of the web ladder and founded the company saw their relationship deteriorate to the point where Ive eventually left the company altogether. (Tr.- 465). As a result of his seeing the handwriting on the wall after the August 16, 1999, confrontational meeting with Apperson and Oslako-vic, X-IT’s Chief Financial Officer, Kevin Dodge, left the company in September, 1999. (Tr. 1607-08). In short, DiBelárdi-no described the scene at X-IT subsequent to the 1999 Hardware Show as “chaos.” (Tr. 1662). As of the date of trial, X-IT consisted of only DiBelardino and one part time assistant. (Tr. 1691). The question, therefore, is what would Kidde have paid had it not -wrongfully acquired the information. This is where the jury completely accepted the testimony of X-It’s expert, Richard Troxel, that damages for X-It would amount to a present value of $3,151,654. (Tr. 1204). This calculation was based on a $1 million lump sum payment, plus a $3.50 running royalty on all units sold over a projected five year period, discounted to present value. (Tr. 1211-12). On the other hand, Marc Sherman, the Defendant’s expert, testified that $300,000 was the total damages suffered by X-It based on no dollar value down and a royalty of $2.30 on each ladder (calling for only 130,434 ladders to be sold). (Tr. 3724). However, this was substantially less than the $600,000 offered by Kidde to X-It as a lump sum payment plus the $2.00 royalty offered to X-It prior to the fraud, as an “opening offer.” The jury reached a verdict on sixty-five interrogatory questions on August 17, 2001.' It was greatly less than the $6,000,000 figure that Kevin Dodge felt was the value of X-It at the time of the Hardware Show. (Tr. 1601). On Count One, the Copyright Infringement Claim, the jury found that the total dollar amount of damages to X-It as a result of Kidde’s copyright infringement was $842,556.00; representing $200,000.00 for copyright infringement at the 1999 Show and $642,556.00 after the 1999 Show for a total of $842,556. On Count Two, the Lanham Act Count, the jury found the same damages of $842,556.00; representing $100,000.00 for trade dress violation, $500,000.00 for false advertising at the 1999 Show, and $242,556.00 for false advertising after the 1999 Show. The $842,556 was the net profit Kidde made from sale of the copy ladder in the copy packaging. On Count Four, the Breach of Contract Claim, the jury awarded $3,151,654.00. On Count Five, the Misappropriation of Trade Secrets Claim, the jury awarded the following: $3,994,210.00 under the Illinois Trade Secrets Act (representing $842,556.00, the net profit of Kidde, plus $3,151,654.00, the value of X-It), $3,151,654.00 under the North Carolina Trade Secrets Protection Act, and punitive damages of $25,000,000.00 under the North Carolina Trade Secrets Protection Act. On Count Six, the Unfair Competition Claim, the jury awarded the following: $3,151,654.00 for unfair competition under the North Carolina Unfair Trade Practices Act, $25,000,000.00 in punitive damages under North Carolina Common Law, $3,151,654.00 for unfair competition under the Illinois Consumer Fraud and Deceptive Business Practices Act, $45,000,000.00 in punitive damages under the Illinois Consumer Fraud and Deceptive Business Practices Act and Illinois Common Law, and $3,151,654.00 for unfair competition under Virginia Law. The $3,151,654.00 was the testified expert value of X-It. These damages awards are based on the same actions by the Defendant, which will be discussed below, and are clearly duplica-tive in several respects. Finally, as a total verdict, the jury awarded $116,437,592.00 composed of compensatory damages of $21,437,592.00 and punitive damages of $95,000,000.00. This is the total sum of all the separate damage awards and cannot stand as such. III. Facts Aldo DiBelardino (“DiBelardino”) and Andrew Ive (“Ive”) were students together at Harvard Business School in the 1990s. Ive was from England, where his undergraduate education took place, while DiBe-lardino was from Virginia Beach, Virginia, and had been educated in the United States before attending Harvard Business School. While at Harvard, they came up with the idea for an escape ladder which utilized webbing, was lightweight, could be easily deployed in an emergency situation, and occupied a minimum of space. While still in school, they desired to begin a company to produce and distribute these ladders. The company they formed was X-It Products, L.L.C., the Plaintiff herein. DiBelardino did not finish at Harvard, but Ive did graduate and upon doing so became president of X-It. X-It was initially financed by small investments from Ive and DiBelardino themselves, their friends and families, totaling between $200,000 and $250,000. (Tr. 268). Later, some investors, including professors at Harvard and Harvard Business School graduates, helped to finance X-It. With that money they designed their packaging and ladder and developed a manufacturing process in a factory in China, taking several trips to China and making many changes in design of the ladder and in the box containing the ladder in the process. They also focused their attention on a marketing strategy, one which would concentrate on the physical presentation of their product rather than on advertising. As a start-up company, they lacked sufficient capital to launch an effective advertising campaign. This meant that the design of the box was all important and they spent a great deal of time and money developing it. X-It received national attention on television as well as other media, and extensive recognition for what was perceived to be a new, practical, and efficient emergency escape ladder. The box design included bullet points of the attributes of the ladder and a photograph of the ladder purportedly in use. As models on the ladder for the photograph on the box, DiBelardino recruited his nephew and sister-in-law. (Tr. 1640); X-It spent $7,000 to $8,000 on a focus group to evaluate the packaging. (Tr. 1641). They spent $750 to build the wall in the photograph. (Tr. 1698). They spent about $4,000 working with the photographer, Mr. Becker. Id. They spent $10,000 combining the photo with their packaging, working with Mr. Maffini. Id. X-It then spent between $100,000 and $150,000 on its total marketing plan, revolving around the packaging. Id. This was in addition to the salaries Ive and other paid employees received. There were several trips to China and several prototypes produced before finalizing the product. Ive indicated that they had expended $525,000 in start up costs. In August 1999, X-It had a total of three employees. (Tr. 324). Its sales were handled through independent sales representatives and on the internet. Its shipping was handled through independent contractors. X-It began manufacturing their final design of the ladder in China and began distributing it on the Internet and with independent sales representatives subsequent to the National Hardware Show of 1998. That was the year before the incidents made the basis for this suit occurred. Various publicity was accorded to the production of this ladder, including nationally televised programs, since it was so revolutionary as far as the public was concerned. X-It began delivering these ladders, called an “Emergency Escape Ladder” in the latter part of 1998, or early 1999, after introducing the ladder at the August 1998 National Hardware Show. The National Hardware Show is an annual show which is well known as the largest hardware show for representatives in the industry to see new products as well as existing products and takes place in Chicago. X-It had a small booth in a secondary location at the show in comparison to the large booth in a prominent location that Kidde had. Kidde, the largest producer, distributor, and manufacturer of fire protection equipment, became aware of the existence of this ladder and realized its proficiency over Kidde’s “Fire Escape Ladder” which was a steel chain type ladder of considerable weight and bulk. In October 1998, Carl Torneo (“Torneo”), Vice President of Kidde, having learned about X-It’s “Emergency Escape Ladder” as a result of the 1998 Hardware Show, contacted Ive about the X-It “Emergency Escape Ladder” and requested one. In response, Ive sent Torneo a confidentiality agreement on October 30, 1998, which Torneo filed and ignored. Sometime thereafter, Torneo ordered an X-It “Emergency Escape Ladder” off the Internet. In late 1998 or early 1999, Torneo sent an X-It ladder to Jane Chen at Fenwick Development in China (“Fenwick”), asking her, in China, to have Fenwick copy the ladder “to the best of their ability” in order to test Fen-wick’s ability to make such a strap ladder. (Tr. 1161). In April of 1999, Torneo, Vice President of Kidde, contacted Ive, president of X-It. Kidde’s facility for production and its offices in the United States were located in' Mebane, North Carolina. Torneo asked whether X-It would consider either selling its new “Emergency Escape Ladder” to Kidde, or entering into a business alliance allowing Kidde to market the ladder in a joint manufacturing or distribution arrangement. Meanwhile, on May 21, 1999, Fenwick shipped, from China, the first two copies of the X-It ladder to Torneo. (Tr. 1158). They also discovered that Kidde could produce the ladder cheaper than X-It. (D.Ex. 713). Ive, president of X-It, was invited to, and attended, a meeting on June 1, 1999, in Mebane, North Carolina, which was Kidde’s headquarters. Michael Apperson (“Apperson”), president of Kid-de, stated that Kidde would prefer to buy X-It rather than enter into a business alliance in order to manufacture and sell the ladder. This possible purchase of X-It is the focal point of the damages in this case. The initial meeting between the parties was held in Mebane, North Carolina, on June 1, 1999. The preferred course of conduct was to buy X-It. On June 4, 1999, four more copies of the X-It ladder were shipped from China by Fenwick to Torneo for Kidde in North Carolina. (Tr. 1158). Thus, after June 4, 1999, Kidde had six copies of the X-It ladder made by their Chinese manufacturer. There was no evidence that Kidde had any other web ladder of any type or description being manufactured except the copied X-It ladder and the original X-It ladders it had obtained. Since Kidde had determined that it could manufacture and deliver the ladder to the United States for one dollar per ladder cheaper than X-It, Kidde was in a good position to offer a continuing royalty. (T. Ex. 713). On June 8, 1999, Mark Schiefer, Vice President of Marketing for the parent company, who worked under Apperson, the President of the Defendant, at Apper-son’s request prepared a memo for Apper-son. Apperson in turn sent this memo to John Michael Harper, Chef Executive Officer of the parent company. (Ex. 368, pg. 735). The document set forth that the ladder market was 300,000 in 1998 with a steady growth of 3-4% annually. Speaking of X-It it said, “[t]his start-up company does not have good distribution, but is generating significant interest in the market place.” It then provided as follows: Acquisition Rational: KIDDE safety recommends continuing the discussions towards acquisition of the X-IT Fire Escape Ladder. The XIT ladder is the strongest, safest, and smallest emergency escape ladder available, The design is clearly superior to any other design currently distributed through retail channels, with expectations to be priced at the same levels as current, inferior ladder. Combining the superior X-IT ladder design with KIDDE branded instore merchandising and local market advertising focusing on NFPA’s, Fire Drills: “The Great Escape”, will provide the best opportunity for KIDDE Safety to dominate market share in the escape ladder category. Share potential is estimated to be 65%. Further, working to obtain dominant share in the ladder category will fortify the growth KIDDE safety is experiencing in the entire home safety product segment. Thus on June 8,1999, the Defendant clearly believed that X-It had a fabulous product. If their predictions were true and they acquired Kidde and 65% of the market, they would sell upward of 195,000 ladders in the first year with a steady growth of 3-4% annually. On June 8,1999, X-It and Kidde executed a Confidentiality Agreement written in the form of a letter, drawn in North Carolina by Sam Solomon (“Solomon”), chief financial officer of Kidde, acknowledging that X-It and Kidde were in the process of “discussions concerning a potential transaction.” (Tr. 319). The parties agreed that X-It would furnish Kidde with “Confidential Information” including information concerning the business, financial condition, operations, assets and liabilities of X-It that may be “confidential” or “proprietary.” The Confidentiality Agreement also set-forth certain restrictions that Kidde agreed to accept as conditions to X-It’s disclosure of confidential information. Namely Kidde, who drew the document, agreed to four specific articles designated by roman numerals from one to four as follows: (i) it and its representatives ... will use the Confidential Information only for the purposes of evaluating the potential transaction with [X-It]; (ii) it will provide the Confidential Information only to its employees involved in the potential transaction with [X-It] or outside advis-ors retained by [Kidde] in connection with such potential transaction and who agree to keep such information confidential, (iii) it will not disclose, in whole or in part, any Confidential Information (except to the extent [X-It] gives its prior written consent or other than as specifically provided for herein); and (iv) it will promptly return to [X-It], upon [X-It’s] request, all copies of any Confidential Information provided to [Kidde]. $ ‡ ‡ ‡ $ For purposes of this agreement “Confidential Information” shall not, in any event, include any information that (i) is in the public domain (other than through a breach of this agreement by Buyer or any of its representatives) at the time of its disclosure to or use by Buyer, (ii) is in Buyer’s possession prior to its disclosure by Seller or is independently developed by Buyer (provided that the source of such Confidential Information was no bound by a confidentiality agreement with Seller or otherwise subject to any applicable restriction on the use of such information), (iii) is obtained by Buyer from a third party without any applicable restriction on use, including, without limitation, a confidentiality agreement with Seller or (iv) is disclosed pursuant to the order or requirement of a court, administrative agency or other governmental body. (Ex. 117) (Tr. 1809). ■ The June 8, 1999, Agreement in conclusion provided that the Agreement would be construed under North Carolina state law. The Confidentiality Agreement was prepared by Sam Solomon, Kidde’s Chief Financial Officer, on behalf of Kidde, and executed by Ive on behalf of X-It. Solomon testified that on or about June 19, 1999, he made an offer on behalf of Kidde to X-It for $600,000 plus a $2.00 royalty per ladder. In a deposition prior to trial Solomon indicated that the $600,000 figure was the “starting point.” At trial Solomon indicated that the “starting point” was actually $400,000. Then, after being confronted with his deposition statement, he stated at trial that the deposition statement that $600,000 was the “starting point” was correct. (Tr. 2019). Sometime between June 8, 1999, and June 23, 1999, Ive complained to Apperson that someone from Kidde had informed a Home Depot buyer, Andy Slanina (“Slani-na”), that X-It and Kidde were in negotiations. Apperson denied that Kidde was leaking any such information. It is clear that, at that time, X-It knew — as reflected in the 1998 X-It Case Study — that Kidde possessed established distribution outlets, including many of the same national retailers. Moreover, X-It knew in 1998 that Kidde, along with First Alert, “dominated” the market in the area of fire protection. X-It was trying to get Home Depot to buy the X-It Emergency Escape Ladder. Simultaneous to Kidde’s discussions with X-It regarding the possible acquisition of X-It, Kidde was to explore the possibility of developing an escape ladder. On June 28, in a memo from Mark Schiefer (“Schiefer”), Vice President of Kidde Portable, to Henry Arnette (“Arnette”), Kid-de’s project engineer, Schiefer directed Arnette to compare the ladders received from Fenwick with the X-It ladders, and to “develop new attributes.” Kidde at that time had only the chain ladder, called the “Fire Escape Ladder,” which was heavy and bulky. At the meeting held on June 29, 1999, at which X-It gave to Kidde information on X-It’s accounts and customers and 2 or 3 days later a call came from Texas asking why X-It was selling the company to Kid-de. (Tr. 336). At this meeting, according to Ive, Apperson made X-It an offer to buy X-It of $600,000 plus $2.00 as a royalty for every ladder sold. Apperson confirmed that an offer was made by Kidde but states the offer was not made by him. Torneo could not answer whether Apper-son made such an offer. (Tr. 1174). Ap-person stated at trial that the offer was for $500,000 to $600,000 plus a $2.00 royalty per ladder. (Tr. 1883). As previously set forth, Solomon, Defendant’s CFO, indicated his starting offer was $600,000 plus $2.00 royalty per ladder. Ive felt X-It was more valuable and informed Apperson that X-It had already expended $535,000 in producing and marketing the ladder. (Tr. 341 et seq.). On June 29, 1999, Arnette, Kidde’s project engineer, indicated concern about claims on X-It’s box indicating that X-It’s ladder design was protected by international patents and trademarks. (Tr. 2311— 15). Schiefer stated that Arnette should continue with development. Id. There are no dated documents to verify Arnette’s work. However, Arnette claims he was working on the project in the early part of June. There are no dated computer printouts, no dated notes, no dated diagrams to support this claim other than the direction from Schiefer to Arnette directing him to start, which memo was dated June 28, 1999. Arnette testified clearly that the ladder displayed by Kidde at the National Hardware Show on August 15, 1999 was substantially similar in all regards to the X-It ladder except the hinged window hook. (Tr. 2309). Indeed Arnette’s “Fire Ladder Diary” indicates that plant wide competition was stared July 19, 1999 and that the “hinged window hook prototype” was started July 29, 1999. (Ex. 314). Indeed, Ortiz, the Director of Engineering for Kidde, who was in charge through June 30, 1999 (Tr. 1329), stated clearly and unequivocally, speaking of web ladders, that “Kidde never had one under design during my tenure.” (Tr. 1334). This, it would appear that the first attempt at any design changes occurred on or after July 19,1999. It is important in this case to set forth the facts in the period from June 29 or June 30, 1999 through July, 1999, and pri- or to August 14, 1999, or some 45 days. The shipping of material from North Carolina to the National Hardware Show in Illinois must have been done before August 14, 1999, since on that date it was presented by Kidde to a pre show group in Chicago. It was slated to arrive at the show on August 13, 1999, for that was the setup day. (Ex. 314). Apperson discussed the matter of Kidde developing its own version of the ladder with J. Michael Harper (“Harper”), president of Kidde’s parent company, Kidde Safety, Inc. (“Kidde Safety”). Harper testified that he had previously indicated to those in North Carolina that approximately $500,000 plus a royalty was the range for a possible buy from X-It. On Friday July 16, 1999, Harper, president of Kidde Safety (the parent company) and Apperson, president of Kidde (the subsidiary) had a conversation. As a result of that conversation, Harper made a note in his own handwriting noting that Apperson was “to explore whether Kidde was able to produce its own version [of the ladder] as of July 16, 1999.” (Tr. 2254). The National Hardware Show was only weeks away. July 16, 1999 was a Friday. The next business day, Monday July 19, 1999, a plant wide window attachment contest was begun at Kidde’s North Carolina facility. (Tr. 2303). Thus, as of July 19, 1999, development of what appeared to be a type of hooking arrangement for a ladder was begun. This was the first evidence of any design by Kidde of anything concerning the ladders except for conversation. This hooking device was for attachment of the ladder to a window. Thus on Monday morning, July 19, 1999, Apperson, president of Kidde, was faced with developing Kidde’s own ladder after the Friday conversation with Harper, his boss. Although Schiefer, Vice President of Marketing of Kidde Safety (the parent company), who was working for Apperson in North Carolina, and Arnette, Kidde’s project engineer, knew that there were potential patent problems in producing a copy of X-It’s ladder. (Tr. 2311). The patent application of X-It was secret and unknown to Kidde on July 19,1999. Apperson testified unequivocally as follows: “we as a company will not sell a product that is directly infringing somebody else’s product.” (Tr. 1835). Moreover, Apperson testified concerning his conversations with Harper, that Harper indicated that if “we could just make our own ladder without violating any protection, meaning patent or intellectual property protection, which he (Harper) knew we had going as a product development, why would we acquire X-It.” (Tr. 1809) (emphasis added). Thus, the problem that Apperson faced was how to sell a non-infringing product without knowing what the potential patent was on the product Kidde was copying. Since Kidde would not sell a product that infringed another’s patent and since Kidde was going to market its own copy, it logically and necessarily followed that it have to determine what was contained in the secret patent application of the product to be copied in order to avoid a patent infringement suit since it would not market an infringing product. As Apperson testified you either design around the patent or buy the rights on the company with the patent. (Tr. 833). On the same business day, Monday, July 19, 1999, the first business day after Harper, the CEO of the parent, noted that Apperson was “to explore whether Kidde was able to produce its own version,” and the day the window attachment contest was started, Ive, of X-It, was contacted by Apperson, of Kidde, to see if Kidde could see the secret patent application of X-It. Accordingly, on or about July 19, 1999, Kidde indicated to Ive, president of X-It, that it may be willing to raise its offer ($600,000 plus $2.00 royalty on every ladder sold) to acquire X-It if Kidde found X-It’s intellectual property rights in the X-It ladder to be strong. (Tr. 344). This was done when Apperson knew that the maximum offer indicated by Harper, president of the parent corporation of Kidde, had already been exceeded by $100,000, and rejected. Harper had to approve any buyout, and had never indicated that the $500,000 approval would be raised. Harper’s notes clearly indicated his desire: for Kidde to make the ladder without infringing. Nonetheless, Apperson indicated that Kidde desired to examine X-It’s patent application with regard to the ladder for purposes of raising the offer. Patent applications are secret, are not public records, and may be amended. Apperson indicated to Ive that, in accordance with the June 8, 1999 Confidentiality Agreement, X-It should submit its patent application to an “outside” patent attorney for review and evaluation of its value, then the prior offer of $600,000 plus $2.00 really might be raised. (Tr. 344). This was said even though there was no evidence that Harper would ever give approval for more than $500,000 plus $2.00 royalty. During this time Fenwick, in China, was continuing to make copies or of the “same design” as the X-It ladder. In fact, on July 30, 1999, twelve more copy ladders were shipped from Fenwick in China to Carl Torneo in North Carolina purporting to be of the “same design as [the] competitor.” (Tr. 2307) (Ex. 314). Thus, in August 1999, Kidde had on hand at most eighteen web ladders, all of which were copies of the X-It ladder from China. There was no showing of any other ladder of any nature being produced by, or on behalf of, Kidde. The only thing being done was development of a window hooking arrangement for the ladder copied in China from X-It. There was no design for the hooking arrangement as of July 19, 1999, when the contest was started for such a design by Kidde. This hooking arrangement was being done in North Carolina and not started to be attached until July 29,1999. (Ex. 314). No specifications for any Kidde ladder were in evidence or shown by the evidence until well after the hardware show on August 15, 16, and 17, 1999. The first drawing of a ladder by Kidde was dated September 1999. Regardless, or because of its efforts to put a ladder on the market, Kidde needed access to X-It’s patent application. (Tr. 344). There was no evidence indicating that any progress on developing any ladder was actually done by Kidde between June 28 and July 16, 1999. In fact, the evidence was clear that the Kidde employees believed that right up until a confrontation at the National Hardware Show, on August 16, 1999, between Kidde and X-It, that Kidde would acquire X-It. (Tr. 851-53). As Hoover, creative designer for Kidde testified: Question: How did you become aware of X-It prior to the National Hardware Show? Answer: We were told that we are introducing this X-It ladder. We were to acquire the company and this would be a product that we would be selling. Question: So up until that time (time of lawsuit) it was your understanding that Kidde Safety was going to acquire X-It products? Answer: It was not certain that they would acquire X-It products based on the incidents at the hardware show. (Tr. 853). “Indeed Apperson in the period between June 29, 1999 and July told Dodge, of X-It, that he, Apperson, wanted to see if we could wrap up our discussions in time for the Hardware Show so we could display our products jointly at the show.” (Tr. 1599). Moreover, he told Ive that the goal was to sell X-It before the Hardware Show. (Tr. 324). Regarding Kidde’s desire to examine X-It’s patent application, on or about August 5, 1999, Apperson stated that, “John An-grez our V.P. in Colorado Springs is contacting [Charles Oslakovic] to let him know that you will be sending something and how we will work it to keep the information separate and reasonably protected.” Ive, of X-It, had the clear understanding that disclosing the trade secret material in the patent application was to “value” the patent and increase the offer that Kidde would make. (Tr. 344). X-It then made arrangements to share its U.S. patent application with Kidde’s “outside” patent attorney, Charles S. Oslakovic, Esq. (“Osla-kovic”). Ive told Apperson that he would give it to an “outside attorney” and that all that- the attorney would ultimately be able to share was whether the patent was “weak or strong.” (Tr. 352) Specifically Ive stated that he and Apperson: agreed together that we would send it to somebody else outside the company, and that that person wouldn’t be able to share claims with Mr. Apperson. He [the outside attorney] wouldn’t be able to share specifications. By specifications I meant ... drawings. All he [the outside attorney] would be able to tell Mr. Apperson is weak or strong. And we" [X-It’s executives] were hoping obviously that he [the outside attorney] would come back and say strong. And Apperson agreed to that. (Tr. 353). This statement was never rebutted or denied by Apperson. Thus it is clear that the agreement was that “all he would be able to tell Mr. Apperson is weak or strong.” In fact, Apperson testified that the agreement between himself and Ive, prior .to the 1999 Hardware show, was that Osla-kovic was not allowed to discuss claims in the X-IT patent application with anyone at Kidde. Specifically, Apperson characterized his agreement with Ive as follows: Question: You understood that the information that was sent to your patent attorney, Charles Oslakovic, was information that was to be treated as confidential pursuant to the June 8, 1999 confidentiality agreement? Answer: I understand, yes, that that was to be treated as confidential. Question: Now, the additional terms and conditions. What were the additional terms and conditions that would apply to the treatment of the patent information that was shared with Mr. Oslakovic? Answer: Mr. Oslakovic was not to share the claims with Kidde Safety. Question: And that was the agreement you reached with who? Answer: Andrew [Ive]. ^ H< ❖ H* ‡ Question: I mean he [Oslakovic] couldn’t read the document and then orally share information with Kidde regarding the claims, could he? Answer: Could not share information with us, no. (Tr. 837-39). Apperson’s testimony is clearly at odds with the conduct in this case since it is clear that the claims could not be shared yet they were. X-It asserts that it shared its patent application with Oslakovic pursuant to the June 8, 1999 Confidentiality Agreement as well as “additional oral commitments” between the two parties and Oslakovic. Ive was dealing with Oslakovic without the benefit of an attorney for himself or X-It. Additionally, X-It contends that, the “oral commitments” also concern Kidde and Os-lakovic’s alleged promise to X-It that Osla-kovic would not share the details of X-It’s patent application with Kidde. Ive testified that he spoke with Oslakovic and stated, “I’m going to send you this. As per Mr. Apperson, you can’t share claims. You can’t share specifications. All you cm do is to let him knoiv strong or weak to the strength or not of the patent. And he agreed to that.” (Tr. 354) (emphasis added). Oslakovic never denied this. Ive believed and understood that Oslakovic was “neutral.” (Tr. 353). Oslakovic did not remember the conversation with Ive, or even that a call was made to him by Ive. (Tr. 1090, 3193). However, the letter sending the patent application and the affidavit of Oslakovic, both of which are sent forth on the following pages, clearly refer to the conversation and the understanding prior to the receipt of the patent. Schiefer, vice president of Kidde, testified that as late as August 16, 1999, at the confrontation, Oslakovic had indicated that, “Osla-kovic would act as some sort of intermediary or neutral type person.” (Tr. 2728). Thus Oslakovic was trying to indicate his disinterest to Ive, even as late as August 16, 1999, at the confrontational meeting of the parties at the National Hardware Show. Id. Pursuant to the various agreements and understandings clearly shown and unre-butted, on August 9, 1999, Ive forwarded the patent application to Oslakovic, which he received on August 10, 1999. Concerned with protecting the trade secret information contained in the patent application, Ive enclosed the following letter to Oslakovic: Dear Charles: Please find enclosed a copy of our patent relating to the X-It emergency escape ladder in which we are discussion with Kidde safety. As per out telephone conversation we are attempting to ensure that the specific of the patent and the info contained within it are kept separate and not shared with Kidde Safety. Kidde and X-It Products have agreed to have you and your organization give feedback on the patent without giving specific wording or diagrams from the patent if possible. We would like to get your thoughts on its strength and the potential it has to protect the product from infringement when awarded. ■ It is quite possible we may share the patent with Kidde Safety at a later date when we have permission to do so from our board. Many thanks, and please do not hesitate to contact me if you have any questions or concerns. Sincerely, Andrew Ive On August 9, 1999, Ive sent an e-mail to Oslakovic telling him the product would arrive by 10:30 a.m. Tuesday, August 10, 1999, adding “looking forward to your thoughts and feedback.” Again on August 10, Ive asked sent another e-mail which asked for feedback. Oslakovic, in his affidavit which testimony he adopted at trial, stated as follows: After I agreed to maintain the patent application in confidence, and not to disclose its content to Kidde Safety, X-It sent me a copy of its patent application as it was filed with the U.S. Patent and Trademark Office. It was my understanding that X-It gave me access to the application so that I could advice Kidde Safety on the Scope of protection being sought, but without revealing the patent application details. The CIT ladder itself was already in the market and was known to Kidde Safety. I was also provided, a sample of the X-It product. (Tr. 1088) (Emphasis added). After hearing the witness testify about the circumstances at the time, a reading of the letter of August 9, 1999, from- Ive to Oslakovic, is clear and unambiguous. Although Oslakovic maintained a bizarre and clearly unwarranted interpretation. The only patent application pending and contemplated by anyone to be “awarded” was the X-It patent application. Kidde had no patent application even remotely contemplated on August 9 or 10, 1999. The “thoughts” Oslakovic had on “its” strength and the potential “it” had to protect the “product from infringement when awarded.” It was to protect the product “from” infringement when awarded. The only product referred to in the letter or that anyone, including Oslakovic, had was an X-It Product or a copy of it. The only patent application was the X-It patent. Oslakovic’s affidavit which he adopted as true states that he had an X-It ladder. Reading this in connection with the testimony is clear and unambiguous and is susceptible of only one interpretation. The only “product” to be “protected” was the X-It product by the X-It patent. The patent wasn’t to protect the Kidde product which wasn’t even in existence on August 9, 1999. It was to protect the X-It product. Oslakovic, a suave, sophisticated witness, spun a tale. He claimed that the “product” referred to in X-It’s letter was the “Kidde” product which was unknown to X-It and non-existent- at that time. He said he couldn’t remember his conversations with Ive before the letter. However, his affidavit states, “after I agreed to maintain the patent application in confidence and not to disclose its content to Kidde Safety, X-It sent me a copy....” Clearly it was only after he “agreed” to maintain the patent application in confidence by his own statement that the patent was sent to him by Ive who believed that Oslakovic was neutral. Oslakovic was entrusted with the secret property of X-It for X-It’s benefit not for Kidde’s benefit. He was to advice “both” X-It and Kidde by giving “feedback” to X-It and to advise' Kidde if the patent was weak or strong. He was to determine if the X-It product he had would be protected from infringement by the X-It patent which he had. He gave Kidde feedback on August 13 but gave no feedback to X-It. Indeed Oslakovic was a “trustee” having been entrusted with the secret property of X-It in trust under specific instructions from X-It before accepting the trust res. He chose to ignore the duties and instructions on either the 12th or the 13th of August. Oslakovic discussed the “over-wrap” claim with Apperson of Kidde according to his own testimony. This was admittedly a claim in X-It’s patént application. Moreover, at the same time, he sent the “Luckey” patent to Apperson at X-It to discuss. This was a “specific” from the secret patent application. On August 13, 1999, the Kidde display arrived in Chicago. Oslakovic did not see any of it until August 16, 1999. On August 14, 1999, Kidde presented its X-It copy ladder with copy packaging and sell sheets with Kidde’s name instead of X-It with a slide presentation to some 50 to 70 sales representatives. (Tr. 1802). On Sunday, August 15, 1999, at the hardware show, the X-It copy ladder and the X-It copied packages were displayed. Apperson speaking of photographing the X-It box, “again this was just to Kidde’s eyes an X-It box, assuming X-It would be owned by Kidde.” (Tr. 1823). Later Apperson further testified: “Mark Schiefer made the decision to use the scanned and altered images from the X-It product and the prototype Kidde box at the show and on the power point slide that was at the show.” As Henry Arnette, project engineer of Kidde, admitted that the ladder Kidde had displayed at the show was “substantially similar in all regards except the window hook” to the X-It ladder. (Tr. 2309). When Ive saw the display he was very angry. Apperson agreed to meet with Kidde the next day, Monday August 16, at the show. Oslakovic met with Apperson for one an a half hours before the show. Oslakovic testified that he explained to Ive at the confrontation that he was “representing” Kidde. He never indicated to Ive that he was anything but independent pri- or to the confrontation. Indeed, contrary to Oslakovic, Schiefer, of Kidde, testified that at the confrontation that Oslakovic held himself out as a “neutral.” Ive had no attorney. The jury clearly believed Schiefer, vice president of Kidde, and not Oslakovic. Oslakovic says that he began describing what was in the patent application and comparing those matters with Kidde’s “proposed” ladder not the X-It ladder. Oslakovic’s duty of loyalty was to X-It whether as a client, a beneficiary of a trust, or pursuant to a specific and unambiguous contract. He violated all of these duties. Oslakovic testified that he started the conversation at the confrontation by stating that he was Kidde s attorney. He further claims that he was given “permission” to disclose the claims in the application by Ive not stopping him as Kidde’s lawyer from disclosing details of the X-It patent application and claims. No oral or written permission was given to Oslakovic. Since “they didn’t tell me to stop,” Oslako-vic claims that this gave him permission to disclose the details and claims of the patent application. (Tr. 3318, 3339, 3403). Ive strongly denies this. Oslakovic asserts he discussed in detail the claims in the patent application with Kidde on August 16,1999, at the confrontation. Schiefer, Vice President of Marketing of Kidde, was the person who decided to use the photography of the X-It box in the slide show presentation with the Kidde name substituted, and to use the copy box at the hardware show. (Tr. 1836). It was this same Schiefer who testified contrary to Oslakovic concerning the confrontational meeting on August 16. He stated that Oslakovic offered his services as a “neutral” to compare the “proposed” Kidde product to the X-It patent application. (Tr. 2728). Thus Oslakovic was persuading not only X-It but his own people that he was a “neutral” mediator. Oslakovic admitted that the original letter he received clearly stated that Ive could reveal the information from the patent only when “we have got permission from our board” and Oslakovic knew that Ive did not have permission from the board. (Tr. 3462). After the confrontation on August 18, 1999, Oslakovic received two copies of a communication from Ive to Apperson both of which came early in the morning. One of these came directly from Ive, and subsequently a copy was sent by Apperson to Oslakovic at 7:40 a.m. the same day. The communication was as follows: to reiterate a prior agreement, X-It does not give Charles S. Oslakovic, Ley-dig, Voit & Mayer, Ltd., or any other party, permission to share X-It’s pending patent application with anyone without our prior written permission. (Emphasis added). Apperson sent a copy of this same e-mail to Oslakovic on the early morning of August 18, 1999, at 7:40 a.m. and included additional language as follows: Chuck, I know you were copied on this reply, but I thought I would send one as well. Clearly, X-It wants to dig in and fight. Can you please summarize for our files an opinion that documents that the Kid-de ladder is covered by prior art so that we have things buttoned up if this thing gets ugly which I suspect it will.... By this time, under any and all circumstances, Oslakovic knew he had to have “written permission” to disclose any information. Unfortunately Apperson wanted chapter and verse. Oslakovic proceeded to answer Apperson without either written permission or oral permission. He sent a fax purporting to be a memorandum of what occurred at the Hardware Show. On August 18, 1999, only three and a half hours after receiving the second copy of the admonition not to share the patent without prior “written permission.” He totally disregarded the requirement of written permission. The relevant portion of this memorandum of conference is as follows: Also by way of background I had advised Kidde Safety that there was a group of claims which attempted to cover a ladder structure, but which did not appear to cover what was intending to be the commercial version of the Kidde Safety product. An expired U.S. patent (Luckey, #4,098,372) disclosed a slat-type ladder with a cross-section which was the same from step-to-step, and the Kidde Safety product was the same in this respect as the expired patent. There was a second group of claims which covered the wrap and the method of deployment, and the wrap which Kid-de Safety used and the method by which the ladder was deployed were different than what appeared to be claimed in the patent application. Prior to the meeting, it was conveyed to Mr. Ive that Kidde did not see the patent application as a valuable asset, and it appeared that it was not useful to go forward with acquisition negotiations. AT THE MEETING This will simply attempt to recount the points that were made by the various attendees, without trying to give a sense to the give and take of the discussion. Mr. Apperson expressed the view that the product Kidde safety had developed was outside the patent (based on my advice) and therefore the primary asset of X-It was not valuable to Kidde. He asked Mr. Ive to correct him if he had missed any points. Mr Ive said that he believed that the patent covered the product, and when into explanations about the nylon webbing, the manner at which it was looped over the treads, and the general nature of the carrier. I mention that there appear to be two sets of claims in the patent. The basic ladder claims required a structure which was not in the Kidde product. The Kid-de product insofar as the treads were concerned, was like the prior art. The second group of claims dealt with the overwrap in which Kidde had no expressed interest. There appeared to be no claims directed to the nylon webbing, manner of looping, and the like. Mr. Ive brought up the Kidde Safety packaging which used a photograph which he contended was copied, in part, from the X-It packaging, creating a copyright infringement, and also accused Kidde Safety of copying the trade dress of the X-It product. Mr. Schiefer explained that the packaging was only temporary, intended to show the size of the box, and that tho overall style of the packaging was in keeping with the other style elements in the Kidde Safety packaging program. The artwork on the packaging was a temporary expedient and did not represent what Kidde Safety intended to bring to market. At the conclusion of the meeting steps were taken to mask the photographs on the packaging. Mr. Ive made much of the fact that X-It had been dealing in good faith with Kidde Safety and was very upset at the trade dress issue and copyright issue. He also stated he firmly believed that the Kidde Safety product was encompassed in his patent. Mr. Apperson stated that he was trying to apportion a value to X-It so that he could make a recommendation to his managers on the price to be paid, and he saw the main value as being in the possible patent property. He asked the open question of whether there was anything more which should be valued, and the issues seemed to come back to the patent property. In the end, Mr. Apperson proposed that the X-It lawyers and the Kidde Safety lawyers independently or jointly evaluate that patent application against the Kidde Safety product to determine whether the patent application would cover the product. As a condition for providing a sample of the product to be evaluated, he asked that X-It agree not to amend their patent application based on information obtained from study of the sample or consultation between the lawyers or the lawyers and the parties during the course of the evaluation exercise. If the evaluation proved that the patent had value, that could serve as a basis for a recommendation for the purchase of X-It. If the evaluation determined that the patent did not apply to the product, there appeared to be no basis for a deal. Mr. Dodge seemed to agree that the evaluation proposal put forth by Mr. Ap-person was the best way to move matters forward. Mr. Ive also seemed in the end to agree that we would proceed in that fashion. Later in the day I visited Mr. Ive at his booth. H again went into the trade dress and copyright issues. I told him that as I heard Kidde Safety that morning, they were interested in the value of the company and if the patent application had value, things might move forward in a positive direction. But I told him that the value of the patent was strongly affected by how difficult or how easy it was to design around it. If the independent Kidde Safety design, without even knowledge of the patent application managed to avoid scope of the patent claims, that suggests that even inadvertent design around is straightforward, suggesting a rather low value to the patent. Mr. Ive said, however, that he was inclined to go forward with the evaluation and asked that I call his lawyer Mr. Wolf of the Wolf, Greenfield firm in Boston. I undertook to do that and did indeed complete the call on Wednesday at the time of dictating this memorandum. This clearly disclosed claims, which was forbidden. It is interesting to note that the memorandum also refers to there being: “no claims directed to the nylon, webbing, manner of looping, and the like.” There was a diagram in the X-It patent application showing the “manner of looping.” This is significant in the fact that a patent application may be amended before granted adding claims for that which is shown in the drawings. There was no contention by anyone that written permission to discuss claims was given or obtained by Oslakovic or Kidde. Oslakovic says that he discussed claims. (Tr. 3407). The creative designer for Kidde, Kurt Hoover, believed up until the August 1999 Hardware show that Kidde would acquire X-It as he had been told this at a meeting. (Tr. 853). That is why he and others at the National Hardware Show felt no qualms about exhibiting the little changed X-It product and packaging as Kidde’s own. Hoover was the person responsible for shipping the exhibit and its products to and from Mebane, North Carolina. In returning the products, he destroyed all of the boxes at the show because it would be too costly to ship back empty boxes. The ladder Kidde had at the Hardware Show on August 15,1999, had an overwrap. The strap had not been developed yet. (Tr. 870). The change from an overwrap to a strap occurred after the Hardware Show at “the end of August, [or in] September” according to Hoover. (Tr. 870). Clearly done after learning of the overwrap claims from Oslakovic. As Jackson, the patent and expert consultant withe extensive business background, testified about Oslakovic’s disclosure, “he shared sufficient information that a businessman could operate on it an coming out with a complete product.” (Tr. 1961). It is clear that beyond any doubt that changes were made to the X-It copy ladder received from China pursuant to the information furnished by Oslakovic concerning the X-It patent application after the Hardware Show. Thus the overwrap, which was one of the prevalent claims in the X-It patent, was eliminated from the Kidde ladder after disclosure by Oslakovic. Other changes were made but there were no drawings by Kidde done until September 1999. On September 19 or 20, 1999, a Kidde sample was sent to Oslakovic without the over-wrap. Hoover personally packed the ladder shown at the 1999 National Hardware Show and personally returned it to Me-bane, North Carolina. He gave the Show ladder, in Mebane, North Carolina, to Pamela Calderwood, the engineering supervisor. (Tr. 865). Indeed, Hoover saw one or two copy ladders after the show which he turned over to Arnette. (Tr. 869-70, 2344). The ladder at the Kidde booth at the 1999 Hardware show was a sample copy of X-It’s ladder from China, only the hook was different. (Tr. 1166). Apperson claimed in his deposition testimony that the ladder at the show never came back. Hoover testified unequivocally to the contrary. Someone destroyed all of the X-It copy ladders — some 18 of them. This had to be done after August 16, 1999 and well after the return of the show ladder to North Carolina. Moreover, it was done when the suit by X-It was contemplated by Kidde as a possibility. The conversatio