Thin Film Lab, Inc. v. Comito

• Decision Date: 03 September 2002
• Docket Number: No. 00 CIV. 3489 MDF.,00 CIV. 3489 MDF.
• Citation: 218 F.Supp.2d 513
• Parties: THIN FILM LAB, INC., Plaintiff, v. Carmelo COMITO, individually and doing business as Universal Thin Film Lab and Universal Thin Film Lab, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

218 F.Supp.2d 513

THIN FILM LAB, INC., Plaintiff, v. Carmelo COMITO, individually and doing business as Universal Thin Film Lab and Universal Thin Film Lab, Inc., Defendants.

No. 00 CIV. 3489 MDF.

United States District Court, S.D. New York.

September 3, 2002.

Jon A. Simonson, Blatchly & Simonson, New Paltz, New York, Robert J. Berman, Hackensack, New Jersey.

DECISION ORDER

FOX, United States Magistrate Judge.

The parties consented to try this matter before me pursuant to 28 U.S.C. § 636(c). Plaintiff Thin Film Lab, Inc. ("Thin Film"), an optical coating firm headed by Gregory Enzor ("Enzor"), commenced this lawsuit in April 2000 against Defendant Carmelo Comito ("Comito"), a former employee who created his own optical coating firm, Defendant Universal Thin Film Lab, Inc. ("Universal"). Enzor seeks injunctive relief and damages for misappropriation of trade secrets and unfair competition. In particular, Enzor argues that Comito unfairly solicited Lucent Technologies, a former customer of Thin Film, using confidential information, stole confidential coating designs for the bismuth-iron-garnet ("BIG") substrate from Thin Film's laboratories, and created a double-planetary rotation device ("DPRD") similar to Enzor's, using designs stolen from Enzor. Comito denies these allegations and seeks pro-rated back-payment of bonuses to which he claims he is entitled pursuant to his employment agreement with Enzor.

A bench trial in this matter commenced on May 13, 2002, and concluded on June 20, 2002. For the reasons that follow, the court finds that Comito and Universal violated Thin Film's trade secrets by unlawfully soliciting one of its most lucrative customers and creating a double-planetary rotation device that was nearly identical to the unique DPRD originally crafted by Enzor. However, Thin Film has failed to demonstrate that Comito violated its trade secrets regarding the Si02-Hf02-Si02 coating formula for the BIG substrate. Finally, Comito has failed to show that he is entitled to the back-payment of pro-rated bonuses for 1997. The following constitutes the court's findings of fact and conclusions of law.

FINDINGS OF FACT

I. Plaintiff Thin Film Lab, Inc.

Thin Film is a privately-held corporation, originally incorporated in West Hurley, New York. (T: 93).¹ Thin Film's primary business is the designing of antireflective coatings for optical lenses used in military devices, fiber-optic communications cables and mundane items such as glasses and camera lenses. (T: 14-15). Gregory Enzor is an optical engineer and the president of Thin Film. (T: 14).

Enzor started working in the optical coating field in 1968, when he began employment with Vacuum Instrument Corporation making parts for vacuum systems within which the optical coatings were done. (T: 17). From 1976 to 1980, he worked at Broomer Research building and repairing vacuum systems as well as performing a variety of optical coatings. (T: 18). At Transworld Optics, from 1980 to 1983, Enzor performed optical coatings, created optical coating designs, and maintained and repaired vacuum coating chambers, including planetary rotation devices. (T: 19, 23-24). In 1983, Enzor began working at Continental Optical, where he built a coating device, created coating designs and performed optical coatings. (T: 24). There, he worked alongside Defendant Comito, and they co-managed the coating engineer group, creating coating designs and operating vacuum chambers. (T: 26). While both were working at Continental, Comito taught Enzor how to use the Songer computer software to create coating designs and formulas, as it was the standard in the industry to use this software for this purpose. (T: 546-47, 560). This computer program was created by Larry Songer, a consultant at Continental. (T: 882). From 1984 to 1986, Enzor worked at Photronics Corporation, doing design work, using planetary rotation devices to do optical coatings, and maintaining and repairing coating equipment. (T: 29). In all of these work experiences, Enzor occasionally used silicon dioxide ("Si02") and hafnium oxide ("Hf02") to coat substrates. (T: 484). Every facility at which Enzor worked was locked with a security system and armed with a burglar alarm system; public access to the facilities was denied, and the coating designs used by each company were kept in secure filing cabinets. (T: 33).

In 1986, Enzor started his own business, Thin Film. (T: 34). First, he purchased a Balzer 510 vacuum chamber and created a double planetary rotation device largely by his own hand. (T: 35). Because of coating problems that he had seen from his prior work experience, such as unreliability, warping and jamming of the coating system (T: 27-28), Enzor created his planetary rotation device to be different from all those that he had previously seen. (T: 36). Although some of the parts used to create his first planetary rotation device were store-bought, Enzor hand-made many of them, and he modified the storebought pieces to suit his own specifications and to prevent the problems that arose with other planetaries. (T: 77). Every piece, from the sprockets to the spindles to the mounting systems to the monitor bridge, was different from anything that Enzor had seen on planetary systems in his prior experience. (T: 52-64). These precise modifications allowed the planetary to have increased productivity due to less frequent break-downs, fewer machine jams, and more accurate coatings, and generally resulted in a machine that was better than any Enzor had seen before. (T: 420-21, 491). In total, Enzor spent about three months and approximately $11,000 to $17,000 building this first double planetary rotation device. (T: 490). The design for Enzor's planetary rotation device was completed and written down in October of 1986. (T: 37-38). Enzor later created four more planetaries based on this original design, and those machines were put together by Thin Film machinist Tom Schofield. (T: 39-40, 122-3).

Enzor then set out to find customers for his new company by advertising in industry trade papers, making hundreds of cold calls to potential customers and mailing out hundreds of solicitations over a span of one and a half years. (T: 93-94). As a result of Enzor's efforts, Optics For Research ("OFR") became one of Thin Film's anti-reflective optical coating customers. (T: 95-96). Enzor utilized the Songer computer software for Thin Film's coating work as well. (T: 93). In the course of performing coatings for OFR, Enzor became familiar with a substrate called BIG, or bismuth-iron-garnet, an infrared material which was manufactured by a company then known as Bell Labs, and used by OFR in its products. (T: 96). OFR requested that Thin Film place an anti-reflective coating on BIG. (T: 97). Because BIG was going to be used in undersea fiber-optic cables, Thin Film was required to coat BIG so that it passed several endurance tests, such as a slicing operation, an adhesion test, and a boiling water test, to ensure that the coating remained firm and without defects. (T: 98-99). Enzor created the coating design for BIG by himself, and in 1990, he began to coat the substrate using the Herpin theory to create a three-layer combination of Si02 and Hf02. (T: 101).

Bell Labs later became Lucent Technologies. (T: 109). Thin Film was one of two companies that passed the qualification tests for coating BIG for Lucent. (T: 149, 194). From 1990 until 1999, Thin Film performed a large bulk of Lucent's BIG coating work, and Lucent quickly became one of Thin Film's largest and most lucrative customers. (T: 111). During this time, Enzor dealt mainly with Steve Licht, the gentleman in charge of the BIG program at Lucent. (T: 112). Licht came to see Enzor at least twice, either at the original West Hurley location or at the subsequent Milford location. (T: 112).

In 1991, Enzor hired his former co-worker, Comito, on a part-time basis for help in getting a vacuum chamber up and running. (T: 114). Comito later became employed by Thin Film on a full-time basis under an employment agreement in which Enzor promised Comito an end-of-year incentive bonus of 10% of profits over $400,000 for that year. The agreement did not specify the duration of the employment and stated that it provided "no protection for either of us." (T: 115-16, 567). Comito's duties at Thin Film included building and fixing machines, creating coating designs and assisting Enzor with major business decisions. (T: 117). Enzor also designated Comito as the vice-president of Thin Film Lab, Inc. (T: 117). Comito did not participate in the creation of the BIG coating design, or in the actual coating process itself. (T: 112, 868). However, the main room where all the coating work was performed was small enough so that Comito was always within a few feet of the BIG coating chambers or the BIG coating run sheets. (T: 125-26). Here, Comito used Si02 and Hf02 to coat materials other than BIG. (T: 871-72). The Songer computer program was utilized at Thin Film to assist in the creation and formulation of the various coating designs. (T: 884).

In 1995, Thin Film moved to Milford, Pennsylvania and became incorporated under the laws of that state. (T: 441). Some employees of Thin Film, including Comito, possessed keys to the facilities at West Hurley and Milford. (T: 119-20). The plants were, however, armed with burglar alarm systems and locked to the public so that no one but those authorized could look at the run sheets used to guide the coating engineers in their coating runs. (T: 120). Enzor, in fact, gave specific instructions to his staff to keep the coating materials and designs confidential, and stamped his run sheets "confidential." (T: 119-20). Enzor also gave similar instructions regarding the designs and plans that he created for the planetary rotation device. (T: 418). In addition, each employee was required to sign a company policy acknowledging the prohibition against stealing Thin...