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November 30, 1994



The opinion of the court was delivered by: LORETTA A. PRESKA


Plaintiff, Mobius Management Systems, Inc. ("Mobius"), seeks damages and a permanent injunction against defendant, Fourth Dimension Software, Inc. ("Fourth Dimension"), for breach of contract, for violations of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and for common law unfair competition. After holding a bench trial on October 6 and 7, 1994, I find that Mobius is entitled to injunctive relief, damages in the amount of $ 63,026.40, the amount of reasonable attorney fees it expended on this matter, and the costs of this action.


 Both Mobius and Fourth Dimension market software products for customers that use IBM mainframe computers. After Mobius brought a Lanham Act claim against Fourth Dimension concerning a side-by-side comparison of the products distributed by Fourth Dimension, the parties entered into a settlement agreement that contained a list of representations that Fourth Dimension could not make about Mobius's software package. Mobius brought the instant action after Fourth Dimension sent a letter to a prospective Mobius customer that compared the Mobius product to the Fourth Dimension product. That letter stated that, because of various advantages that the Fourth Dimension had over the Mobius software, the customer would save money if it purchased the Fourth Dimension product instead. According to Mobius, that correspondence contained several statements that Fourth Dimension had promised not to make in the previous settlement. In addition, Mobius argues, those statements, as well as several others mentioned in the letter, were false and therefore violated § 43(a) of the Lanham Act.

 The parties made cross motions for summary judgment. I denied those motions for two reasons: first, I found that the settlement agreement was ambiguous as to whether certain statements listed in the agreement categorically could not be repeated by Fourth Dimension; and second, explanation about the technical aspects of the subject matter was needed before the truth or falsity of the statements could be determined. A bench trial was held on October 6-7, 1994. After observing the witnesses who testified at trial and reviewing that testimony and the parties' submissions, I make the following findings of fact and conclusions of law.

 I. Findings of Fact

 A. Background

 Mobius and Fourth Dimension are both in the business of, among other things, developing and marketing computer soft ware programs for MVS *fn1" system main frame computers. (Tr. 16 (Gross); *fn2" Tr. 120 (Hollander); Miller Dep. at 32; Complaint PP 1-2).

 Mobius's flagship product, introduced in 1982 under the name "INFOPAC," is a report distribution system, a product that allows large organizations to process, store, and retrieve reports containing financial data and other information. It saves substantial paper and human resources by permitting reports to be viewed on-line or printed out in packets automatically collated for each recipient. (Tr. 13-14 (Gross)). After this product attained marketplace success, Mobius began using the name INFOPAC for nearly its whole line of products; its report distribution system was renamed INFOPAC-RDS. (Tr. 13, 15-16 (Gross)).

 Fourth Dimension markets a report distribution product, called CONTROL-D, which is in direct competition with INFOPAC-RDS. (Tr. 21 (Gross)).

 B. The First Advertisement

 In or about April, 1993, Mobius became aware that Fourth Dimension had provided a potential customer with a document entitled "REPORT DISTRIBUTION, A Quick Comparison." (Plaintiff's Exh. 2 (the "First Advertisement")). The First Advertisement contained a chart listing approximately 100 product functions or features, indicating CONTROL-D's purported superiority over INFOPAC with a series of "Y's" and "N's." The context of the document -- focusing on report distribution -- made clear that CONTROL-D was being compared with Mobius's competing product, INFOPAC-RDS. Many of the statements concerned the basic architecture of the products and went to features and functions critical to the operation of a report distribution product. (Tr. 21-23, 26 (Gross)).

 Alleging that the First Advertisement contained more than 70 false statements, and having been unsuccessful in obtaining a retraction or apology, Mobius commenced a Lanham Act suit against Fourth Dimension in this Court in May 1993. The parties entered into a settlement agreement (the "Agreement") in June of 1993. Under the Agreement (Plaintiff's Exh. 3 at 2), Fourth Dimension promised, among other things, to destroy all copies of the First Advertisement and not to "disseminate, either orally or in writing" 65 statements about INFOPAC contained in the First Advertisement. The prohibited statements were listed in Appendix 2 to the Agreement (the "Appendix 2 Statements").

 The only first-hand account of the negotiations leading to the settlement was provided by Mr. Gross. Although Fourth Dimension was represented in the negotiations by two attorneys and a staff member, Bob Weslosky, it only offered testimony as to the intent of the parties by its President, Yossie Hollander, who was not present at the negotiations and never spoke with anyone from Mobius about the terms of the settlement. (Tr. 155 (Hollander)). I credit Mr. Gross's account, both because of his personal knowledge of the events at issue and because I find his account to be credible.

 Mr. Gross met with Mr. Weslosky and attorneys for both sides in on-and-off discussions over three days in early June 1993, during and after Mr. Gross's deposition in the prior action. Demonstrating INFOPAC-RDS on a computer screen and referring to the INFOPAC-RDS User's Manual, Mr. Gross explained to Fourth Dimension's representatives why each of the challenged Fourth Dimension claims about INFOPAC-RDS was false. The parties agreed, item by item, what to include in Appendix 2 only after agreeing that each such item was in fact false. Certain items were rephrased before being included, and others were omitted because Mr. Gross was unable to convince Fourth Dimension's representatives that they were false. (Tr. 28-42 (Gross)).

 In particular, the parties discussed and agreed on the falsity of three items that came to be implicated in this action: Item 8 ("INFOPAC provides for pre-allocated VSAM datasets"); Item 9 ("INFOPAC does not provide for dynamic allocation of required space"); and Item 65 ("INFOPAC creates 2 VSAM datasets for every report version"). (Tr. 33-42 (Gross)). As to at least Item 65, Mr. Hollander personally was consulted by phone and had to be convinced of the item's falsity before authorizing Mr. Weslosky to add it to the list of prohibited statements. (Tr. 328-30 (Gross)). Thus, the testimony conclusively shows that the parties agreed that the statements included in Appendix 2 were false.

 These negotiations focused almost exclusively on the INFOPAC-RDS product. It was INFOPAC-RDS that was compared to CONTROL-D in the First Advertisement. Fourth Dimension even obtained a ruling from this Court that Mr. Gross's demonstration during his deposition involve only the functions of INFOPAC-RDS. In any event, I credit Mr. Gross's testimony that most of the items included in Appendix 2 make sense only as applied to a report distribution product. (Tr. 30-31, 42-45, 330-31 (Gross)). Although Fourth Dimension notes that Mr. Gross distinguished in his deposition between INFOPAC and INFOPAC-RDS, (Gross Dep. at 13-14, 266), the parties appear otherwise to have used the terms interchangeably. ( Plaintiff's Exh. 1 P 8 (prior Complaint using both terms); Gross Dep. at 13, 258 (Fourth Dimension counsel referring to INFOPAC)). Fourth Dimension's counsel stressed that "if I use the term INFOPAC, I am referring to INFOPAC-RDS." (Gross Dep. at 13; Miller Dep. at 110 (customer testifies terms used interchangeably)).

 On May 17, 1993, counsel for Mobius sent a draft of a settlement agreement to counsel for Fourth Dimension. (Defendant's Exh. B). Yossie Hollander, Fourth Dimension's Chief Executive Officer who was responsible for approving the settlement agreement, (Tr. 135 (Hollander)), had two principal objections to that draft. First, the draft would have prohibited Fourth Dimension from making certain statements "or their equivalent." (Tr. 132 (Hollander); Defendant's Exh. B at 3). Hollander objected to this because he felt that no person could understand what an "equivalent" statement was. (Tr. 132 (Hollander 132)). Second, the draft had no provision permitting Fourth Dimension to make truthful statements. Hollander would not sign an agreement unless it contained a provision permitting truthful claims. (Tr. 141 (Hollander)). This "truthful claims provision" was included as paragraph 7 of the agreement to assure that Fourth Dimension would be free to make truthful comparative statements about Mobius products. *fn3"

 Fourth Dimension also expressed concern about agreeing to bar statements about products that were subject to evolving technology. This concern was addressed by limiting the life of the Agreement to three years through what is commonly referred to as a "sunset clause." (Tr. 47-48 (Gross)).

 The action finally was settled pursuant to a Stipulation and Agreement of Settlement dated June 7, 1993 (Plaintiff's Exh. 3; Tr. 25-27 (Gross)). The agreement included, among other things, the truthful statements provision (paragraph 7), the three year sunset provision, and a list of 65 statements that could not be said by Fourth Dimension because the parties had determined that they were false (Appendix 2). The overwhelming weight of the evidence establishes that the parties understood, agreed and intended (a) that the Appendix 2 Statements applied to the RDS product, (b) that the Appendix 2 statements were false, (c) that the intent of the Agreement was to bar Fourth Dimension from repeating those statements not just as applied to INFOPAC products generally but also and more particularly as applied to INFOPAC-RDS. (Tr. 42-45, 331-33 (Gross)).

 C. The Second Advertisement

 In late 1993, Mobius and Fourth Dimension were competing for the business of M&I Data Services, Inc. ("M&I"), a Wisconsin company that processes customer statements and other data for banks. M&I signed a contract on December 31 to purchase INFOPAC-RDS, subject to an "acceptance clause" permitting it to test the product for 60 days and reject it if not satisfied. Starting in late 1993 and continuing into early 1994, M&I ran tests on both INFOPAC-RDS and CONTROL-D. (Tr. 50-53 (Gross)).

 Fourth Dimension sent a letter to M&I on or about December 16, 1993, listing a series of purported advantages of CONTROL-D over INFOPAC-RDS that closely tracked the Appendix 2 Statements, but were phrased to avoid express mention of INFOPAC. After hearing Fourth Dimension's witnesses Michael Anderson and Thomas Trogdon testify about the origination of this letter, I find that Fourth Dimension understood both that the substance of the Appendix 2 Statements applied to the RDS product and that making such statements about INFOPAC-RDS would violate the Agreement. (Tr. 169, 175-76 (Anderson); Tr. 245-49 (Trogdon)).

 On or about January 6, 1994, Charles Miller, an M&I employee principally involved with the testing of CONTROL-D and in favor of M&I's purchasing the Fourth Dimension product, telecopied to Thomas Trogdon, Fourth Dimension's Vice-President in charge of marketing in the Midwest, a two-page document purporting to reflect one set of results emanating from the testing. (Defendant's Exh. L (the "January 6 Chart")). Mr. Miller did not Create the document, and was only involved to a minor extent in the underlying testing of the INFOPAC product. No Fourth Dimension representatives were directly involved in the INFOPAC testing. (Miller Dep. at 20-21, 35-36, 57; Tr. 214 (Anderson)).

 The January 6 Chart -- which was the sole basis offered at trial by Fourth Dimension for the truth of its statements (Tr. 169 (Anderson)) -- does not indicate many important variables underlying the testing, does not reflect changes in subsequent testing leading to different results, and does not establish the basic functional abilities of either product. (Tr. 334-41 (Gross)). It provided, at best, a snapshot of certain results of the testing being conducted at that point. (Tr. 219 (Anderson)).

 On January 10, 1994, Mr. Trogdon sent to Mike Hayford, a Senior Vice-President of M&I, a two page letter accompanied by an eight page memo outlining purported cost savings of nearly $ 5.6 million that would accrue to M&I if it chose CONTROL-D over INFOPAC-RDS. (Defendant's Exh. K (the "Second Advertisement")). Michael Anderson, a Fourth Dimension technical manager who assisted in preparing the Second Advertisement, defended its truth only as applied to testing data contained in the January 6 Chart, and disclaimed any knowledge of subsequent testing. (Tr. 219 (Anderson)). Mr. Anderson never saw the INFOPAC-RDS User's Manual, never saw the product's source code, had no regular experience running the product, and thus admitted that he did not know all the things INFOPAC-RDS can do. (Tr. 211-13 (Anderson)).

 Mr. Anderson conceded that much of the Second Advertisement would be false, or its truth or falsity would be beyond his knowledge, if the document were read as applying to the overall functions and capabilities of INFOPAC-RDS. (Tr. 219-25 (Anderson)). However, the Second Advertisement on its face purports not to summarize particular testing but to "prove" that CONTROL-D will provide savings over INFOPAC in actual use. (Defendant's Exh. K, p. 2 of 8). Indeed, Mr. Trogdon confirmed that the Second Advertisement was meant to contrast the basic capabilities of the two products. (Tr. 249 (Trogdon)). In fact, despite some attempt at the inclusion of a disclaimer, Fourth Dimension made blanket statements about the capabilities of Mobius's product -- statements that were untrue, indeed, some of which that had been demonstrated false during the previous litigation.

 D. Specific Statements in the Second Advertisement

 1. Statements Regarding Dynamic Space Allocation

 The Second Advertisement purported to contrast the abilities of CONTROL-D and INFOPAC-RDS to store data efficiently:


VSAM datasets require a pre-defined allocation of DASD space, and this pre-allocation of space for each job/report must be at least large enough to handle the largest output from a job for any given day/week/month/year. The tests conducted by M&I Data used optimal VSAM parameters for the number of lines done in the test. If at any time during the year, there will be more lines in the report than in the test, the job will abend on B37. In reality, M&I Data Services will probably allocate the VSAM file as large as the largest annual report! Because its [sic] not possible to free the space at the end of the job, the actual compression rate of Infopac will be 0 or even larger than the non-compressed allocation (on regular daily runs).

 (Defendant's Exh. K, p. 5 of 8).

 As explained by Mr. Gross, this paragraph claims (1) that INFOPAC-RDS requires users to determine in advance the amount of disk space to be allocated to each "dataset," or file; (2) that the system will malfunction if reports containing more than the pre-allocated amount of space are processed, because additional space cannot be allocated dynamically (i.e., at the time of need); and (3) that to avoid this result, INFOPAC requires over-allocation of space that cannot be reclaimed, with a negative result in "compression," or storage efficiency. (Tr. 60-62, 65-70 (Gross)).

 These claims repeat two of the Appendix 2 Statements: "INFOPAC provides for pre-allocated VSAM datasets" (Item 8), and "INFOPAC does not provide for dynamic allocation of required space" (Item 9). Fourth Dimension has offered no meaningful distinction between these statements on the one hand and the statements that INFOPAC's VSAM datasets "require a pre-defined allocation of DASD space" and a "pre-allocation of space" on the other. (Defendant's Exh. K at p. 5 of 8). I credit Mr. Gross's testimony that the statements are indistinguishable. (Tr. 60-62 (Gross).

 Mr. Gross further explained, and Mr. Anderson agreed, that INFOPAC does not require pre-allocation of DASD storage space. To the contrary, INFOPAC provides for dynamic allocation of disk space -- i.e., automatic allocation of space at the time of need, rather than in advance. (Tr. 33-36, 65-75 (Gross); Tr. 197, 222 (Anderson)). Mr. Miller confirmed this in his deposition. (Miller Dep. at 63-73).

 Mr. Anderson testified that the statement about space allocation in the Second Advertisement was meant only to suggest that INFOPAC required the pre-determination of certain parameters according to which space is later dynamically allocated in portions known as "extents":


Q: Your intended statement was that INFOPAC requires the parameters of the extent to be predetermined, not that the actual space needed to be allocated?


A: Correct.


* * *


Q: So it would be a false statement to say that the storage space had to be pre allocated under INFOPAC?


A: That is correct.

 (Tr. 222 (Anderson)).

 However, the Second Advertisement is plainly addressing the allocation of space, not the setting of parameters: INFOPAC's datasets are claimed to require "a pre-defined allocation of space," and this "pre-allocation of space" -- rather than the setting of parameters -- must anticipate the largest possible report: using INFOPAC, "M&I Data Services will probably allocate the VSAM file as large as the largest annual report!" (Defendant's Exh. K, p. 5 of 8 (emphasis added)). By Fourth Dimension's own admission, then, the plain reading of its statement is false; I do not credit Mr. Anderson's testimony to the contrary.

 The statement that with INFOPAC "its [sic] not possible to free the space at the end of the job," (Defendant's Exh. K, p. 5 of 8), is also false because INFOPAC provides for the automatic releasing of unused disk space. (Tr. 69-70 (Gross)). No Fourth Dimension witness disputed this. Fourth Dimension pointed only to a problem that M&I was having during testing with the space release function, but this was due to a set-up problem of M&I that did not require any programming change from Mobius. (Miller Dep. at 90-91; Tr. 301-02, 344 (Gross)).

 In any event, for M&I to have a problem with a known feature of INFOPAC does not establish that the feature does not exist. Moreover, Fourth Dimension does not argue that the testing data suggests that INFOPAC does not allocate space dynamically. Thus, even if the Second Advertisement could be read as making claims only with respect to the test results, the statements about space allocation would be false.

 2. Statements Regarding Two Datasets

 The Second Advertisement further stated:


To the best of our knowledge, Infopac/RDS creates two datasets - one for printing and one for on-line viewing. If we assume . . . Infopac/RDS creates two datasets per report (when both print and on-line viewing are needed), then Infopac/RDS must require at least 2 times the amount of DASD than CONTROL-D.

 (Defendant's Exh. K, p. 4 of 8). Item 65 of Appendix 2 reads: "INFOPAC creates two VSAM datasets for every report version." Since it is undisputed that printing and viewing are critical functions of a report distribution system, the statement that INFOPAC creates two datasets for viewing and printing is in substance the same as the statement that it creates two datasets for every report. (Tr. 62-63 (Gross)). Once again, the prohibited statement and the statement in the Second Advertisement are indistinguishable.

 Mr. Gross also persuasively explained why the statement is false: INFOPAC can create two datasets for each report, but it can accomplish all of its basic functions by creating only one dataset. For example, a report may be stored and viewed in an On-line Archives dataset, and a hard copy may be printed out directly from that dataset. In certain circumstances, the user may choose to create a second dataset for printing, but that option is only selected if it is more efficient; in that instance, the second dataset is generally not stored but is instead discarded before the job finishes processing. Additional data sets -- essentially extra copies -- of particular files generally are not saved unless a back-up is desired. Thus, even where the INFOPAC user chooses to create a second dataset, the system does not use twice the amount of DASD storage space. (Tr. 37-41, 76 79, 341-44 (Gross)). Mr. Anderson did not dispute this explanation. (Tr. 221-22 (Anderson)).

 Fourth Dimension's purported reliance on the testing data does not establish the truth of its "two dataset" statements. The statements in the Second Advertisement are phrased in terms of the product's basic capabilities -- e.g., "Infopac/RDS creates two datasets" -- rather than expressly being limited to an evaluation of testing results. Moreover, the January 6 Chart does not establish that INFOPAC always creates two datasets -- it only suggests that M&I had chosen to run the product that way for one particular test. (Tr. 334-38 (Gross)).

 Fourth Dimension's false statements about dynamic allocation of space and the creation of two datasets were material. They went to the basic efficiency of the INFOPAC product, and Fourth Dimension itself attributed $ 2,256,000 of the alleged cost savings to these two factors alone. (Tr. 65 (Gross); Defendant's Exh. K at 2).

 Fourth Dimension made these statements knowing they were false. Mr. Hollander personally reviewed the Second Advertisement before it went out and made changes to it. (Tr. 151 (Hollander)). He retained these statements despite knowing that Fourth Dimension had agreed that the same statements were false in the First Advertisement. (Tr. 45-48, 328-32 (Gross)). Mr. Trogdon, who signed the letter, also was familiar with the statements included in Appendix 2. (Tr. 245-46 (Trogdon)). And Mr. Anderson, who provided technical input for the Second Advertisement, knew at least that the statements regarding INFOPAC's allocation of DASD space were false. (Tr. 222 (Anderson)).

 3. Statements Regarding AFP Printing

 The Second Advertisement stated:


CONTROL-D has the ability to calculate the number of AFP pages that are printed by users thereby allowing for correctly charging back AFP printing to the users. CONTROL-D is the only product that can do this. Other products cannot determine when AFP page mode report pages begin or end, and with this limitation, users cannot be charged when printing AFP reports.


If we assume that M&I Data Services cannot charge back, say, $ 30,000 a month to customers for AFP printing or re-printing of AFP reports, this is revenue that M&I will be leaving on the table. . . . [extrapolation of "revenue loss"]


M&I personnel spend up to 20 hours a week (if not more) just re-printing AFP statements for the bankr. CONTROL-D will allow the users at the banks (logged on via IMS/DC or CICS or VTAM) to request their own reprints of these statements without any intervention from M&I personnel, and CONTROL-D will automatically print the correct AFP characteristics with the statements.

 (Defendant's Exh. K, p. 7 of 8 (emphasis added)).

 Advanced Function Presentation (AFP) is an IBM product that allows for automated high speed printing of data and forms together, thus eliminating the need for expensive pre-printed forms for bank statements and similar reports. The ability to support AFP printing is a crucial function of any report distribution software product. (Tr. 81-82 (Gross)).

 The passage quoted above asserts (1) that INFOPAC-RDS cannot calculate the number of AFP pages printed, and thus does not enable users to charge their customers for printing, and (2) that INFOPAC-RDS cannot allow the customer of a user (e.g., a bank serviced by M&I) to access the system directly to reprint a particular report. Fourth Dimension assigned five year costs to each of the two functions, making clear that the comparison being presented was between CONTROL-D and INFOPAC-RDS. (Defendant's Exh. K at 2; Tr. 224-25 (Anderson)).

 These statements about the AFP capabilities of INFOPAC-RDS are false. INFOPAC-RDS determines page boundaries, stores each page, and makes a record of the number of AFP pages read and the output generated. Statistics, including the number of pages printed, are available to users in two different files, and INFOPAC-RDS users routinely charge their customers for AFP printing. Moreover, INFOPAC-RDS provides for customers of users to access the system directly to reprint reports, either by storing AFP printing commands with the pages originally printed, or by automatically inserting print commands when reprints are requested. (Tr. 81-89 (Gross)).

 Fourth Dimension did not claim at trial that the M&I testing data supported the specific claims about AFP printing described above. It pointed only to a temporary problem that M&I had with INFOPAC-RDS in printing out single pages within reports. However, Mr. Gross testified, without contradiction, that this resulted not from a problem with the INFOPAC software, but from M&I's initial failure to provide certain indexing information necessary for INFOPAC-RDS to interface properly with M&I's systems. (Tr. 86-87 (Gross)).

 4. Statements Regarding Processing Time

 The Second Advertisement contained two challenged statements about INFOPAC-RDS's processing efficiency. First, in comparing test results of the two products, Fourth Dimension claimed that CONTROL-D's actual processing time would be less than indicated because it, unlike INFOPAC-RDS, could write reports directly to a dataset, without first requiring creation of an intermediate file:


Infopac/RDS will always require the intermediate file (with all possible B37 danger); therefore, the Infopac/RDS results represent a true figure.

 (Defendant's Exh. K, p. 2 of 8). The reference to "B37 danger" indicates the increased risk of malfunction that would allegedly accompany this extra necessary step. (Tr. 92-94 (Gross)).

 The statement that INFOPAC-RDS always requires creation of an intermediate file is false. As Mr. Gross explained, INFOPAC permits users to write reports directly to datasets through the use of the INFOPAC-RDS Application Program Interface (API), which serves as an interface between the user's system and the INFOPAC dataset. (Tr. 92-94 (Gross)). Mr. Anderson testified that he had no reason to doubt that INFOPAC-RDS had the ability to avoid the intermediate file, although he believed this would require additional programming. He admitted that Fourth Dimension's statement about the intermediate file was false as applied to INFOPAC-RDS generally. (Tr. 219-21 (Anderson)).

 The Second Advertisement also repeated the "two data set" statement in claiming superior processing efficiency:


The hard copy reports are also designated (eventually) for on-line viewing. In such a case, Infopac/RDS will create a second data set, and therefore will run even longer. We have included an estimate for it as well (20% longer).

 (Defendant's Exh. K, p. 3 of 8). This statement is false for the same reasons described above: INFOPAC-RDS does not always create two datasets, and in fact is designed to do so only when that choice results in greater processing efficiency. (Tr. 76-78 (Gross)).

 5. Statements Regarding Spool Space Reduction

 The Second Advertisement also made claims about CONTROL-D's allegedly unique ability to regulate storage space in connection with printing reports:


CONTROL-D is the only product that can regulate the amount of print output that is sent to the JES Spool for printing. . . . Unlike Infopac/RDS, CONTROL-D will not reclaim the DASD it "saves" you by bypassing the Spool.

 (Defendant's Exh. K, p. 6 of 8).

 The Spool is a key component of IBM computers that controls routing to and operation of peripheral devices such as printers. Fourth Dimension's claim is that INFOPAC-RDS does not have the ability to control the flow of output headed for the printer, with the result that reports waiting to be printed will take up inordinate amounts of disk storage space. Thus, Fourth Dimension claims, even if INFOPAC-RDS is able to bypass the Spool by writing reports directly to datasets, it will "reclaim" the space thus saved by wasting it at the printing stage. (Tr. 95-98 (Gross)).

 Fourth Dimension's statement about controlling the flow of output to the printer is false. First, Fourth Dimension did not dispute Mr. Gross's testimony that other products regulate output to the printer in precisely the same way as CONTROL-D -- by "chunking" output by number of lines. (Tr. 345 (Gross)). Nor does Fourth Dimension dispute that INFOPAC-RDS also permits the amount of output to be regulated through a different mechanism, the creation of "report groups," which permit material to be sent to the Spool in various regulated combinations and categories. (Tr. 96, 345-46 (Gross)). Fourth Dimension's argument that report groups must be set up in advance and are not created automatically, (Tr. 203-04 (Anderson)), is irrelevant to the truth of its claim in the Second Advertisement that INFOPAC cannot "regulate the amount of print output."

 The additional false statements described above were material. They went to basic functions and features of the INFOPAC-RDS product, and purported to establish an additional nearly $ 3 million advantage for using CONTROL-D. (Tr. 99 (Gross); Defendant's Exh. K at 2). Overall, if the claims in Fourth Dimension's letter were true, Mr. Trogdon agreed that M&I would have been crazy to buy INFOPAC-RDS. (Tr. 250 (Trogdon)).

 E. The Impact of the Second Advertisement

 After receiving Fourth Dimension's document, M&I became suspicious of Mobius, began questioning INFOPAC-RDS product, and expanded its testing. Mobius personnel in several areas -- including product development, technical support, and sales -- were mobilized to convince M&I that Fourth Dimension's statements were false and that the INFOPAC product in fact did what Mobius claimed. (Tr. 100-03 (Gross)). I find that Mobius's response to devote additional personnel and resources to respond to the Fourth Dimension letter to save the M&I sale was reasonable. This effort involved several senior employees who would not otherwise have been involved in a routine installation, including Mr. Gross himself, Mobius's Executive Vice-President Joseph Albracht, Walter Giernoth, a senior systems troubleshooter, Kary Kleeman, regional marketing manager for the Midwest, and Joe Tinorello, national sales manager. (Tr. 264-76 (Gross)).

 M&I, which had signed the contract to purchase Mobius's product at the end of December, 1993, had a contractual right to back out of the contract for a period of 60 days (the "acceptance clause"). (Tr. 52 (Gross)). This acceptance period, therefore, expired by the end of February, 1994. M&I ultimately decided not to exercise this right under the acceptance clause to cancel its contract to buy INFOPAC-RDS.

 Mr. Gross offered estimates of the time devoted to Mobius's efforts to correct the confusion caused by Fourth Dimension's false statements, based on his personal knowledge of Mobius's operations and backed up where possible by business records of Mobius. (Tr. 103-10, 264-79 (Gross); Plaintiff's Exh. 8; Plaintiff's Exh. 9). Mr. Gross estimated that the time and expenses devoted to the corrective effort through April 1994 totalled approximately $ 50,402. Although this figure would have been reasonable had the effort continued through April, I find that the efforts to convince M&I of the falsehood of Fourth Dimension's letter and repair the relationship with M&I substantially had ended by the end of February; those efforts undertaken thereafter related to implementation of M&I's system rather than repairing damage caused by Fourth Dimension's statements. Thus, Mobius has met its burden of proof that it incurred costs while taking reasonable corrective steps before the end of February, but, Mobius has failed to prove that it took actions (and incurred costs) after that time that it would not have taken in any customer implementation context. After examining the records admitted into evidence, as explained by Mr. Gross, I calculate that Mobius expended costs in the amount of $ 21,008.80 to reasonably respond to Fourth Dimension's false statements. n4 n4 Mobius presented documentary evidence showing that the following Mobius personnel expended time between January 10 and February 28, 1994 saving the M&I sale: . Garrity 16.0 hours . Giernath 140.0 hours . McGuigan 4.5 hours . Jaffier 1.0 hour . Kleeman 32.0 hours . Labono 8.0 hours . Morgan .5 hours . Milton 32.0 hours . Ortiz .5 hours . Yokubonis 8.0 hours


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