The issue, as far as they were concerned, was not patent infringement.
The path of technological development rarely describes a straight line. Dead ends and blunders interplay with hard work and dumb luck, leading sometimes to fitful, expensive progress. By the time Brett Kingstone met him, Steve Sedlmayr had spent $10 million and four years trying to construct fiber-optic screens by machine. The breakthrough process -- which was not even imagined by Sedlmayr when he set out -- was the third that the company had tried.
ADTI established elaborate security procedures within its facility, believing it had something to protect. What did it have? It had common tools of the trade: spacers, clamps, glues. These seemed to fall into the public domain. But ADTI had done much of its own tooling, altering, and customizing of these parts as the technical task intensified. In time, the company produced proprietary variations on common themes. More to the point, it was these parts and processes, used in concert, that produced a unique result -- and moved Mitsubishi to fork over $5 million.
The fruit of ADTI's labor was embodied in the six-by-six-inch modules that make up its larger screen. One such module found its way through ADTI security and into the trunk of Doug Gordon's car. From there it went to presentations given by Kingstone to potential investors. One such investor was Panasonic. Its representatives met with Kingstone in early August 1988. Here was Kingstone, who would later assert that ADTI had sold out a valuable technology to the Japanese, trying to sell that same technology to the Japanese. Here was Kingstone, holding up the Glenn patents as the basis for the module's existence, while Glenn's patents called for an altogether different device.
The Panasonic presentation was too much for FiberView's marketing vice-president, Michael O'Rourke. He was upset. He had followed Kingstone over from ADTI because three days before he got married he had learned that ADTI, short of funds, was going to lay him off. He'd worked for two months without pay. Moreover, Brett Kingstone appealed to him. "This guy's a doer," says O'Rourke. "Brett's ambitious; I wanted to work for a guy like that."
But O'Rourke began having second thoughts. In December he left FiberView, and the following month he sent a copy of FiberView's business plan in a plain brown envelope to ADTI. The plan detailed Kingstone's efforts to do business with Mitsubishi or other receptive parties. It read: "If we are not able to reach an amicable agreement with Mitsubishi, we intend to approach their competition, namely Asahi and Toray, who have already indicated a strong interest in bidding for the technology."
Rumors had been swirling all summer that Kingstone had formed a company. But this exceeded ADTI's worst fear. Kingstone, it appeared, had disclosed ADTI's trade secrets to major competitors of Mitsubishi -- companies not bound by a license agreement. ADTI knew it had to go after Kingstone. But would it ever get the chance? By fall the company was all but broke.
Desperate, ADTI negotiated an accelerated royalty payment of $350,000 from Mitsubishi and got $1 million in working capital from a large investor. Still, Sedlmayr resisted suing. "I decided that if I was going to sign off on the lawsuit I had to go see for myself." Late one night in January 1989 Sedlmayr drove to Boulder and shone a flashlight through a window in FiberView's building. "My jaw dropped. I could have been looking at the back of our shop." Sedlmayr saw a host of parts and assemblies he instantly recognized. He had to restrain himself from breaking into the building. He then climbed into a nearby dumpster, where he found drawings of ADTI parts and a payroll listing ex-ADTI employees.
Sedlmayr collected four bags of garbage and drove back to ADTI. He stayed up all night sorting through it on his office floor. His first move after daybreak was to call his lawyer. "My adrenaline was running at that point. I was really mad. I couldn't believe that anyone would be so stupid as to copy exactly what we do."
The weight of such evidence brought the unusual seizure and impoundment of March 27 down on FiberView. On April 19 a four-day hearing -- which amounted to a trial -- began. The U.S. marshal found what the garbage had only hinted at. The search produced a complete assembly line for making fiber-optic screens. It turned up engineering drawings made by FiberView that contained parts remarkably similar to ADTI's parts. It turned up an ADTI title block excised from ADTI drawings. FiberView's master list of drawings also was strikingly similar to ADTI's. Steve Sedlmayr had chosen an unorthodox numbering system for his drawings -- five digits based on the date the drawing was done. FiberView did likewise.
There was more: sketches of ADTI parts and a list, which could be traced to Sedlmayr's computer, that broke down costs associated with manufacturing screens. And the search yielded a file of correspondence with Japanese multinational Olympus Optical Co. as well as letters to potential investors claiming that Olympus was interested in negotiating a license and making an equity investment in FiberView.
The judge in the case, Lewis T. Babcock of the U.S. District Court in Colorado, issued a temporary order enjoining FiberView from using any of ADTI's trade secrets. The order essentially put FiberView out of business. In concluding that FiberView had used the Glenn patents as a cover to steal trade secrets, Babcock wrote: "I find Mr. Kingstone to be 100% incredible. I don't believe a thing he says." He then added, "I find as a matter of fact, Mr. Kingstone set out to and did, in fact, misappropriate ADTI's entire process. . . . [FiberView] literally picked up the process, lock, stock, and barrel, and took it from ADTI's shop and put it in FiberView's shop."
Brett Kingstone is a stocky, red-haired man of medium height and of persuasive mien. Broad shouldered yet lithe, he conveys a sense of energy barely contained -- a portrait of order forever flirting with chaos. Leaning back in his desk chair one minute, Kingstone leaps to his f
