Four other employees came over from ADTI. All had signed confidentiality agreements with ADTI. The group included Michael O'Rourke, who would serve as FiberView's vice-president of marketing; Michael Cuypers, a mechanical engineer; Robert Vela, a draftsman; and Al Pelehowski, a machinist.
During 1988 Brett Kingstone raised $1.3 million to capitalize FiberView. Kingstone, as a cofounder of FiberView, took three quarters of the company's stock in exchange for what he saw as one and a half years' service to a brand-new company. Jeff Robinson, a major investor in ADTI who would later have cause to look into FiberView, was stunned that Kingstone could get so much for so little. "It was awesome. That's the strongest raise I've ever seen -- and on just a license. That might happen in Silicon Valley with a guy who had done four or five deals before. You have to remember, Kingstone did not put a nickel in. He spent other people's money."
If his investors had been more prudent, they might have asked Brett Kingstone, 28 at the time, why he advertised himself as a man with some 10 years' experience in fiber optics. Actually, for the previous 5 years, Kingstone had been a stockbroker. In fact, the National Association of Securities Dealers had filed a complaint against him alleging the improper sale of restricted securities. He was fined $4,000. He did not pay it. The NASD then revoked his registration.
Kingstone's investors might also have asked why, with such a research-intensive technology, he planned to hire only one "R&D machinist" at an annual salary of $12,000, why he had only one electrical engineer on staff, why he had allotted only four to six weeks for design and six weeks to fabricate fiber-optic screens. These would have been appropriate questions. The American Electronics Association, after all, had told Congress it believed that a national R&D investment of $600 million over the next three years was required if the United States were to prevail against Japan and Europe in the race to commercially produce HDTV.
Instead, perhaps the focus was on Kingstone's ardent insistence that ADTI was infringing on the Glenn patents -- rightfully licensed by FiberView. Kingstone recently said in an interview, "The only reason we didn't sue ADTI was that they were close to Chapter 7. There was nothing to get out of them. Everything about these two companies shows you what's right and what's wrong with American industry. We decided not to sue. We decided to invest in the business and in the product. They decided to sue us."
In fact, during the fall of 1988 Kingstone asked NYIT to sue ADTI "many times," Schure claims. His appeals concluded with an all-day visit to Schure's home on December 4, during which he importuned Schure to sue. Schure said no.
Kingstone also contacted Mitsubishi, warning it was infringing on the Glenn patents. But instead of suing, he then sought to do business with Mitsubishi and supplant ADTI as the licenser of the technology. His business plan notes: "We have made Mr. Nogami [of Mitsubishi] aware of the fact that both ADTI and Mitsubishi are currently infringing on patents that we control. . . . Mr. Nogami flew to Colorado to indicate his interest in discussing the possibilities of sublicensing this technology from FiberView and/or obtaining an investment position in the company."
By September 1988 ADTI's officers hadn't paid themselves a salary for 11 months. The company seemed headed for bankruptcy. FiberView's existence seemed equally tenuous -- but in a different sense. Its reason for being rested on one issue: ADTI's infringement of the Glenn patents. Thus, any of ADTI's purported "trade secrets" would actually belong to FiberView.
Was there infringement?
Glenn held two patents. One described the device; the other described the method of making it.
The devices clearly varied. Sedlmayr's screen had a long, flexible tail of fibers protruding out the back. The tail on the Glenn screen was stubby and inflexible.
The different configurations, in turn, dictated different methods of assembly. Glenn's concept was to build a single solid screen. Sedlmayr's intent was to build modules -- pieces of screen measuring six by six inches -- and then assemble them mosaic-like into the larger screen. In addition, while both Sedlmayr and Glenn intended a process of "wrapping and winding" fibers to build their devices, Sedlmayr had developed a unique apparatus to wrap and wind that was never mentioned in Glenn's or any other patent.
In starting ADTI, Sedlmayr had consulted with his patent attorney, Ancel W. Lewis Jr., about the Glenn patents -- to ensure that he would avoid conflict with Glenn.Lewis, a former U.S. patent examiner, emphasizes this is part and parcel of the process. "When you present your patent it must clearly be beyond the prior art." If Sedlmayr's concept was not a clear advancement of what Glenn had in mind, Lewis argues, he never would have received his patent in the first place.
Glenn, meanwhile, had worked off and on for almost 10 years trying to make a fiber-optic screen. In that time how many had he made? Two -- by hand. Glenn had even told Steven Sedlmayr he had gone to around 10 major U.S. corporations trying to interest them in his method. They all told him that under his patents the screen was "not manufacturable."
Mitsubishi, a research leader in plastic fiber optics, had spent seven years and untold millions trying -- unsuccessfully -- to mass-produce a screen. "Before we bought the technology from ADTI, our R&D people reviewed all technologies worldwide," says Yuichiro Nogami, until recently Mitsubishi Rayon's representative in the United States. "We reviewed the Glenn technology. They make a screen, but it's not practical. That's the key point. Everybody can make a screen. The important thing is that ADTI's is very unique. It's mass-producible."
Why would Mitsubishi spend $5 million for a technology if it felt it belonged to someone else? Even Quixote's attorney, William Webb, when asked in a deposition if he considered the sketch of ADTI's method sent him by Kingstone a possible trade secret, replied yes. He had asked Kingstone about it. Kingstone had replied it was not a trade secret. This denial apparently satisfied him.
