Kepner-Tregoe, Inc. v. Vroom

Victor Vroom (defendant), a professor at Yale University’s School of Organization and Management, developed a management training program and licensed it to Kepner-Tregoe, Inc. (Kepner) (plaintiff). The license agreement granted Kepner exclusive rights to certain materials known as the Vroom-Yetton model. Vroom retained the right to use the licensed materials for his own teaching and private consulting work. Vroom later developed a second program called Managing Participation in Organizations (MPO) that partially overlapped with the Vroom-Yetton model. Kepner sued Vroom for copyright infringement in Connecticut in 1989 after learning that Vroom was using the licensed materials in connection with MPO seminars he was leading for large groups of executives at Yale and other colleges. Kepner also alleged that Vroom breached the license agreement by assigning rights to the MPO program to Leadership Software Inc. (Leadership), a Texas company that Vroom and his colleague, Arthur Jago, founded to market the MPO program. In 1990, Kepner sued Leadership and Jago in Texas, but Vroom was not named as a defendant because personal jurisdiction was unavailable. In the Texas case, Kepner alleged that Leadership’s sales of the MPO program infringed Kepner’s exclusive rights under the original license agreement with Vroom. The Texas court ruled in favor of Kepner. In the Connecticut matter, the district court found that Vroom breached the licensing agreement’s teaching clause, which the court construed as allowing Vroom to use the licensed materials to teach only enrolled graduate and undergraduate students. The court also ruled that Vroom breached the agreement by assigning rights to the MPO program to Leadership. In addition, due to Vroom’s knowledge of the infringement finding in the Texas case, the court found that his continued use of the copyrighted material in his executive workshops constituted willful infringement. Kepner was awarded the maximum statutory damages for willful infringement, as well as damages for the breach of contract. The breach-of-contract damages reflected the costs Kepner incurred in litigating the Texas matter, which the district judge found to be a direct consequence of Vroom’s breach of the license agreement. Vroom appealed, arguing, in part, that the statutory damages and breach-of-contract damages represented a double recovery for Kepner.