Kepner-Tregoe v. Vroom

Citation: Kepner-Tregoe, Inc. v. Vroom, 186 F.3d 283, 51 U.S.P.Q.2d (BNA) 1771 (2d Cir. 1999).

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.

Kepner-Tregoe successfully sued LSI and Dr. Jago in Texas for lost profits and attorneys’ fees, but were unable to get jurisdiction over Dr. Vroom.

Trial Court Proceedings
Then K-T went after Dr. Vroom in Connecticut. The federal district court ruled first that the portion of the license allowing him to use the Vroom/Yetton Model in “his own teaching and private consultation work” was ambiguous, and looked to contemporary documents for explanation. K-T had written Dr. Vroom in January 1972 that “it wanted to prevent ‘mass' teaching of the materials”; he produced no evidence to contradict this letter.

The trial court concluded that Dr. Vroom's right to use the Model was limited to teaching duly enrolled undergraduate and graduate students, and did not permit him to use it when teaching executives who were studying at universities in advanced management programs. The district court also found that Dr. Vroom had willfully violated the license when he continued to use MPO after the Fifth Circuit decisions and the injunction.

Appellate Court Decision
The Second Circuit affirmed, sustaining both a finding of $100,000 in statutory damages for copyright infringement and a finding of $120,000 in contractual damages, being the amount K-T expended in its successful Texas litigation.