After almost ten months of a polarizing legal battle, the National Wooden Pallet & Container Association (NWPCA) and the developers of the Best Load program have reached a settlement in federal court. Both sides made concessions and got at least some of what they wanted. The dispute involved alleged copyright violations, misuse of business secrets, violation of lease agreements, and other charges connected with the development of a new unit load analysis tool called Best Load and similarities with the NWPCA's Pallet Design System (PDS).
The settlement allows the Best Load developers to go-ahead with product development although the software cannot be marketed for one year. Assuming that Best Load develops a pallet module, these programs will have to learn how to co-exist in the marketplace.
Although both programs have different strengths and focuses, there is some overlap, especially if the NWPCA wants to develop its own unit load analysis module for PDS. There is little doubt that PDS remains the preferred program from a mere pallet analysis standpoint due to its longevity, reputation in the industry, and the extensive variety of calculations it can do compared to the initial pallet design module in Best Load.
History of the Legal Dispute
Best Load is the brainchild of Dr. Mark White, a professor emeritus from Virginia Tech and the former director of the Center for Unit Load Design. He developed Best Load as a vehicle to help drive supply chain savings by reducing packaging and transport costs related to unit loads (a pallet of unitized product). Best Load was developed by White and Company, which was founded in 2005 as subsidiary of PalletOne, the largest pallet manufacturer in the country.
In a series of lawsuits, the association sued Mark White and White & Co. alleging copyright infringement, violation of Virginia's trade secrets statute, unfair and deceptive trade practices, breach of fiduciary duty, and breach of contract. The NWPCA later filed additional charges claiming that White, Howe Wallace of PalletOne, and PalletOne had violated the lease terms of PalletOne's PDS agreement, violated fiduciary duty to the association as members and committee participants, and other concerns.
Counter suits were filed by Mark White, Howe Wallace and PalletOne challenging NWPCA's ownership to PDS and the validity of certain copyright filings.
As this summer rolled on, it appeared that both sides had a lot riding on the outcome of these lawsuits. Legal bills were mounting, and the conditions seemed right for a settlement to be reached.
Both sides attended a court ordered settlement conference in August as part of the first lawsuit. This is standard part of many federal cases to see if all sides can reach common ground without having to go to trial. They reached an agreement in principle that was finalized over the next few weeks.
Details of the Settlement
The settlement requires the developers of Best Load to delete the current pallet design component of Best Load and to “start from scratch†in developing a pallet design component. This was going to happen any way since White and Company could not reach a financial agreement with the original programmer who developed the program.
Additionally, the settlement prohibits White and his colleagues from using certain NWPCA proprietary information (including any version of PDS) in developing a new pallet design component. White and his colleagues further agreed to destroy all copies of certain PDS data and never again challenge the NWPCA's ownership of PDS.
The agreement further stipulates that the NWPCA can have an independent expert review the final Best Load source code to ensure that there is no misappropriation of NWPCA source code or trade secrets. White and his colleagues also issued a press release recognizing PDS as the industry standard while agreeing not to lobby the American National Standards Institute, directly or indirectly, to remove PDS as the industry standard.
In return, the NWPCA agreed to drop all of its legal challenges. After PalletOne paid a fine for violating its PDS license, the NWPCA further agreed to issue new licenses to PalletOne. This license even allows Mark White, as a PalletOne employee, to use a PalletOne license for authorized activities. No damages were awarded and both sides agreed to cover their own legal bills.Â
The judge presiding over the case retained jurisdiction for enforcement of the court order. This does allow the NWPCA to go directly to the presiding judge to seek remedy if any breach occurs without having to file a new lawsuit.
Legal Wrongdoing or Not?
The NWPCA claimed that the settlement reached its primary goal to "protect its 30 year investment in PDS and to ensure that Dr. White, PalletOne, and their colleagues competed fairly with NWPCA in the marketing and sale of Best Load."
The original aim of the NWPCA's first lawsuit appears to be stopping any infringement of NWPCA intellectual property as well as limiting White as a potential competitor to PDS. The NWPCA succeeded on the first key goal and secured its ownership of PDS-related intellectual property. However, on the second goal, the settlement explicitly allows the continued development of Best Load, including a pallet design module.
As is fairly standard in many settlement agreements, neither party made any admission of guilt. The NWPCA insinuated in its post-settlement press release that White used the legal process to conceal information by trying to have most records sealed for attorney's eyes only.
Howe Wallace, president and CEO of PalletOne, refused to comment about the future of Best Load or the development of a pallet module. But he did deny any wrongdoing on the part of White, himself or PalletOne.
Wallace said, "There are no admissions of guilt in the settlement because, as we maintained from the beginning, we didn't do anything wrong. The original suit alleged copyright infringement, violation of trade secrets and damages. At the end of the day, there was no copyright infringement, and there were no damages. We definitely differed on what were trade secrets, and, from our perspective, there was none of those either."
Moving Forward
The sad part of the entire ordeal is that longstanding relationships involving the association, its members, Pallet One, and Mark White were put in jeopardy. Now it remains to be seen if these various players will work together toward common interests.
PalletOne released the following statement regarding PDS and White's feelings on the matter. PalletOne explained, "Dr. White is proud of his years of service to the pallet industry, the NWPCA, and its members and looks forward to continuing that service in the years ahead. Dr. White is especially proud of the contributions he made to the development and overwhelming success of PDS. He, with his team at Virginia Tech, worked for nearly 25 years developing the pallet-design software originally created by Dr. Joseph Loferski in 1984 into the industry-standard pallet-design system it is today. Dr. White is honored by the industry's response to PDS."
All sides appear to want to get past this very costly and disruptive legal process. PalletOne described the settlement as "amicable." And the NWPCA proclaimed it as "positive for NWPCA, our members and the industry."
