Kepner-Tregoe v. Leadership Software

Citation: Kepner-Tregoe, Inc. v. Leadership Software, Inc., 12 F.3d 527, (5th Cir. 1994), ''cert. denied, 513 U.S. 820 (1994), aff’g and mod’g'' 1992 WL 281444 (S.D. Tex. July 9, 1992).

Factual Background
Dr. Victor H. Vroom, a Yale professor, and a colleague, Dr. Philip Yetton, developed a teaching tool know as the “Vroom/Yetton Model.” Its full name was “Leadership and Decision Making Cases and Manuals for Use in Leadership Training.”

The authors registered the work with the Copyright Office in 1971. In 1972, they signed a worldwide, exclusive license permitting Kepner-Tregoe, Inc. (K-T), an international management training company, to use the work on payment of royalties. The agreement also granted K-T a license to use all modifications and improvements to the original work, and a clause allowing Dr. Vroom “to retain non-assignable rights to use the licensed materials for ‘his own teaching and private consultation work.’”

In the mid-1980s, Dr. Vroom developed a more sophisticated technique, based heavily on the Vroom/Yetton Model and embodied it in software. Named “Managing Participation in Programs” (MPO), it was licensed to Leadership Software, Inc. (LSI), a company owned by Dr. Vroom and another colleague, Dr. Arthur Jago.

Trial Court Proceedings
When K-T learned of this license in 1989, it sued LSI and Dr. Jago in the Southern District of Texas, but lacked jurisdiction over Dr. Vroom. In two opinions, Judge Harmon held that LSI and Dr. Jago were liable for defendants' profits of $46,000 and for nearly $40,000 in attorneys’ fees and $2,400 in costs.

Appellate Court Decision
Defendants appealed. After a detailed examination, the Fifth Circuit Court of Appeals affirmed the district court's findings on copyright infringement, but modified its injunction against licensing modifications of the MPO program to those that were substantially similar to MPO.