Two companies fight over the patent rights to fiber optic HDTV (high-definition television).
The mortal struggle between two young companies for control of a revolutionary technology
Brett Kingstone could have been the entrepreneur to save a potential $30-billion industry from Asian domination. Instead, his high-flying start-up has been shut down -- the victim, he claims, of a conspiracy among a Colorado judge, a ruthless competitor, and a Japanese conglomerate. What's really happening? -- E.O.W.
On March 22 of this year Brett Kingstone testified on Capitol Hill before the House Committee on Science, Space, and Technology. Seated at the witness table next to the chairman of Zenith Electronics Corp., Kingstone proceeded to lay out the promise -- and the challenge -- of high-definition television (HDTV). "I do not believe it's a foregone conclusion that the United States has lost the war in HDTV development before the first battle has been fought," Kingstone said. "In our small company our goal is to take on the world's TV giants in the hopes of providing an American innovation that will leap over the existing technologies."
Kingstone unveiled a three-by-four-foot fiber-optic display screen. Made by his 10-month-old company, FiberView Corp., in Boulder, Colo., it dazzled the committee. He announced that he was ready to commercially produce six-by-eight-foot screens, surpassing in quality whatever the industry leaders, Sony and Mitsubishi, currently offered.
The committee room was packed that day. In the audience were representatives from AT&T Bell Laboratories, from the Commerce Department, and from the Defense Advanced Research Projects Agency (DARPA), the Pentagon's R&D arm. Here was Kingstone with a forum at the highest levels of government, commanding attention in the sort of setting where issues of profound economic consequence often take shape. Kingstone's session was no different from those that determined import quotas or the fate of the B-2 bomber or funding for superconductivity research. The legislators sat enrapt, presented with the energy and conviction of an entrepreneur who believed he could change the world. Brett Kingstone was all of 29 years old.
Startling as it seemed, Kingstone's presence on Capitol Hill that day was perhaps not a total surprise. By the time he had graduated from Stanford, he had already written a best-selling book on entrepreneurship and cofounded a company that made fiber-optics display signs, grossing $500,000 a year. Now, with FiberView less than a year old, the company had been chosen by Microelectronics & Computer Technology Corp. to join an eight-company consortium bidding for DARPA contracts in high-definition systems. The group included such blue-chip stalwarts as Harris, National Semiconductor, LTV Missiles & Electronics Group, and Eastman Kodak.
Kingstone's message was visionary. Fiber-optic screens would eventually replace every cathode-ray tube in use -- every computer screen on every desktop, every TV in every home. Signs, billboards, and scoreboards would one day soon be made of fiber optics, too. This was an industry America couldn't afford to lose. Yet that peril was all too real, epitomized by the VCR, the technology that America invented -- and then abandoned to Asian manufacturers. What would prevent HDTV from suffering the same fate? The answer, thought the listeners in Washington that day, lay with the likes of Brett Kingstone. With entrepreneurs such as Kingstone in the vanguard, maybe we had a chance.
Five days later, on March 27, Kingstone was back in Boulder. At 9:00 a.m. officers of the U.S. marshal burst into his offices and flashed badges. Anyone getting in the way risked arrest. The officers, bearing a seizure-and-impoundment order signed by a federal judge in Denver, proceeded to rifle through FiberView's files. Documents went out of the building by the cartload and into a large truck. Parts and machine tools followed. When Ed Payne, FiberView's vice-president of sales and marketing, protested that FiberView was entitled to have a lawyer present, the reply came that he had 10 minutes to get one. "A lot of good that did us," Payne recalls. "Our law firm is in San Francisco." Payne grabbed the telephone book and started calling local lawyers.
Behind the bust was Advance Display Technologies Inc. (ADTI), a competitor in nearby Golden. Claiming misappropriation of its trade secrets by FiberView, ADTI had persuaded a federal judge to issue an order without first allowing FiberView to respond to the complaint. In civil cases this type of order, a so-called ex parte temporary restraining order including seizure of assets, is almost unheard of.
Kingstone was incredulous. He had duly licensed two patents from the New York Institute of Technology (NYIT) and based his processes on them. The patents' assignee -- the inventor -- was a William E. Glenn, director of research at NYIT's telecommunications lab. Glenn, holder of more than 100 patents, was an éminence grise in HDTV. What really galled Kingstone was that ADTI appeared to be everything that FiberView was not. It represented the sort of industrial complacency he had been warning against in Washington less than a week before.
ADTI had been in business for five years. It had spent close to $10 million and struggled mightily just to produce a prototype of a fiber-optics display screen. FiberView had spent $400,000; it had simply relied on a U.S. scientist's patents and the hard work of its 12 employees. ADTI was backed by a Japanese behemoth, Mitsubishi Rayon Co., which had poured some $5 million into the company and in return received access to its fiber-optic technology.
Within a few hours, FiberView, a pioneering company in a potentially crucial industry, had been shut down by an aggressive competitor and a judge's decree. Recalls Ed Payne of the bust that Monday morning in March, "I hate to use the term, because it's so violent, but this was rape. It really was." That was FiberView's story.
Shocking as it was, the bust merely reflected a prevailing reality. Promising technologies attract predators. The payoffs are too huge for the rules of fair play always to apply. The chain of events that led to this nightmare for Brett Kingstone began six years earlier in deceptively innocent fashion, when a man named Steven R. Sedlmayr took his niece to the Ice Capades in Denver. There he bought her a small wand that glowed in the dark.
