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A tiny business whose founders invented an emergency escape ladder has settled its copyright violation case against a billion-dollar fire safety company for $17.4 million — the amount the small company was to receive after a judge reduced a $116 million federal jury verdict. The settlement, reached last week between the X-IT Products of Chesapeake, Va., and Walter Kidde Portable Equipment, a subsidiary of giant Kidde PLC, resolves X-IT’s allegations of copyright infringement, trade dress infringement, false advertising, misappropriation of trade secrets and breach of contract. X-IT was founded by two Harvard Business School students who invented a lightweight folding emergency escape ladder for an assignment. They patented the device in 1998 and formed X-IT to sell it. The plaintiffs alleged that after X-IT entered negotiations with Kidde of Mebane, N.C., to sell the rights to the ladder, Kidde stole the design and the packaging and sold the product as its own. Kidde is the world’s largest seller of safety equipment. A federal jury in Virginia in 2001 awarded X-IT’s inventors $21 million in compensatory damages and $95 million in punitive damages. It was one of the largest civil awards in the state’s history. U.S. District Judge Robert Doumar of the Eastern District of Virginia last summer reduced the verdict to $3.1 million in compensatory damages and $9.4 million in punitives. With interest and attorney fees, the total would have come to $17.4 million. X-IT’s attorney appealed the reduction. X-IT Products v. Walter Kidde Portable Equipment Inc., No. 2:00CV513 (E.D. Va.). Aldo DiBelardino, X-IT Products’ director and one of the ladder’s inventors, said the settlement allows him to dedicate his energy to helping the business — which sells about 10,000 ladders a year at $60 each — grow. He and a part-time worker are its sole employees. The other inventor, Andrew Ive, is no longer affiliated with X-IT. The $17.4 million settlement will cover X-IT’s $6.5 million of legal fees. The balance will be distributed among eight major investors. DiBelardino said he’ll pay off his mortgage with his after-tax share of $1.5 million. X-IT was represented by Robert M. Tata of Hunton & Williams’ Norfolk, Va., office. Kidde spokesman Steve Crews said the company was confident that it would have prevailed on appeal but settled the case so it could focus on business. Kidde’s attorney was J. Patrick Herald Jr. of Baker & McKenzie’s Chicago office.

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