at Continental Optical as a coating technician. (T: 811). While at
Continental, Comito became a coating engineer and manager, supervising
the design and processing of thin film coatings. (T: 812). When creating
designs for coating various substrates, Comito used the Songer computer
software. (T: 820). About two years after Comito started working at
Continental, Enzor also became employed there and worked with Comito in
the coatings department. (T: 812). Although Comito was not involved in
the creation of any planetary rotation devices at Continental, he,
together with Enzor and others, helped to modify and maintain the
machines. (T: 813-14). Comito left Continental in 1985 and began
employment at Inrad Incorporated, first as a coating engineer, then as
vice president of coating. (T: 815). At Inrad, Comito continued his work
on modifying and maintaining double planetary rotation devices, and again
used the Songer computer software to create coating designs. (T:
818-20). Using the Herpin theory, he performed many coatings on a
substrate called lithium niobate, using a combination of Si02 and Hf02.
After five years at Inrad, Comito started work at Thin Film in 1990,
first as a part-time engineer, and later as a full-time employee. (T:
835). As per the terms of the employment agreement, every January, Enzor
was to pay Comito an annual bonus of 10% of the profit exceeding $400,000
from the previous calendar year. (T: 838). Enzor and Comito never
discussed the payment of pro-rated bonuses should Comito's employment be
terminated before the end of a calendar year. (T: 839). In addition,
Comito understood Enzor's statement that "no protection for either of us"
spoke for itself. (T: 841).
During Comito's employment with Thin Film, Enzor referred to him as
vice president, and payroll records indicated that Comito was vice
president of Thin Film. (T: 118, 842). As vice-president of Thin Film,
Comito was authorized to interact with customers, make binding agreements
such as giving price quotes to potential customers, and sign official
documents. (T: 424). For example, Comito signed state sales tax exemption
certificates using the letters "VP" by his signature. (T: 118).
When Comito arrived at Thin Film, a double planetary rotation device,
created by Enzor, was already in use. (T: 844). In fact, Comito was not
involved in the creation of double planetary rotation devices at Thin
Film at all. (T: 234). Comito normally worked on a coating device that
was obtained after he began his employment at Thin Film, and used the
other machines very infrequently. (T: 845). He worked on several hundred
to a thousand coating designs at Thin Film, and usually created run
sheets for each of these. (T: 845-46). While Comito was at Thin Film, he
used the Si02-Hf02 combination for coating. (T: 437).
Comito knew that Thin Film was coating the BIG substrate for Lucent
Technologies, and that Si02 and Hf02 were two of the materials used. (T:
848-49). However, he never coated or assisted in coating BIG while at
Thin Film, nor was he otherwise involved in BIG coating. (T: 846, 849).
Comito had opportunity to be introduced to the Lucent representatives who
visited the Thin Film plant, including Steve Licht, and knew Licht to be
associated with the BIG coating program at Lucent. (T: 271, 849-50).
In May of 1997, Comito submitted a letter of resignation to Enzor in
which he offered to continue working for an increase in salary in place
of an annual bonus. (T: 851-52). Enzor refused these altered employment
terms and asked Comito to leave Thin Film immediately. (T: 853). Comito
did so, and in the belongings he packed, he included a Rolodex which
among other entries, the names, phone numbers and addresses for clients,
business contacts and suppliers of Thin Film. (T: 445, 854). He did not
take any run sheets for coatings that he had performed. (T: 854-55).
Within a month of leaving Thin Film, Comito decided to open his own
optical coating business. (T: 856). In the summer of 1997, he incorporated
Universal, and that fall, he obtained a facility in Newburgh, New York.
(T: 857). Comito performed some coating work on behalf of Kevin McKeon,
who polished materials and routed them to Comito for coating. (T: 859).
Comito became aware that McKeon was sending him coating jobs for Lucent
Technologies. (T: 154, 860). Thereafter, he decided to call Steve Licht
at Lucent, and informed McKeon that he could coat the BIG substrate and
that Licht knew this. (T: 271-72). As a result, McKeon gave Comito's
phone number to Licht and instructed him to call Comito for details
regarding Comito's ability to coat BIG. (T: 159, 275). Licht asked his
co-worker Bob O'Connor to send samples of BIG to Universal to see if it
qualified to perform the coating work required. (T: 200). O'Connor was
led to believe that Comito developed the BIG coating process while at
Thin Film and performed BIG coatings for Thin Film. (T: 202-03).
Ultimately, Universal qualified to coat BIG for Lucent. (T: 204).
Comito then began coating BIG for Lucent, using the Herpin theory to
develop a three-layer coating combination of Si02 and Hf02, telling
O'Connor that the coating information was created by him and was
proprietary. (T: 211, 867, 869). He encountered similar difficulties in
coating Lucent's BIG as Enzor had seen, such as wax buildup on the BIG
samples and adhesion problems. (T: 863-64). He resolved these issues and
offered Lucent a 24-hour turnaround time period for delivery of the
coated BIG. (T: 867). By 1999, Universal had obtained about 90-95% of
Lucent's BIG coating business. (T: 206).
Also in 1999, Comito began to employ Schofield as a machinist, first on
a part-time basis, then on a full-time status. (T: 235). Working off of
"rough sketches" that Comito possessed, Schofield created a double
planetary rotation device for Comito, designated the CHA-2, that was the
spitting image of Enzor's first machine. (T: 236). In fact, Enzor's
machine and the CHA-2 that Schofield built for Comito based on the rough
sketches were "virtually identical," and the first time Schofield saw any
machines like these was at Thin Film. (T: 238-39). Schofield recognized
some of the rough sketches as being those that Enzor created for Thin
Film and that he referred to when building Thin Film's planetary rotation
devices. (T: 237). After completion of the planetary rotation device,
Schofield reorganized, redrew and standardized the rough sketches,
informing Comito that he would throw the old, rough sketches away. (T:
247). Comito gave no Schofield no instruction to keep the rough
sketches, nor did he inform Schofield that this lawsuit was pending at
the time; had he done so, Schofield would not have thrown the rough
sketches away. (T: 247, 249).
CONCLUSIONS OF LAW
I. Defendant Violated Plaintiff's Trade Secrets By Obtaining Lucent
Technologies as a Customer and Constructing and Operating a Double
Planetary Rotation Device Utilizing Plaintiff's Design, But Did Not
Violate Plaintiff's Trade Secrets By Using a Similar Si02-Hf02-Si02
Coating Formula for the Bismuth-Iron-Garnet Substrate.
A. Trade Secrets: In General
In New York, a trade secret is defined as "any formula, patterns,
device or compilation
of information [that] is used in one's business, and [that] gives [the
owner] an opportunity to obtain an advantage over competitors who do not
know or use it." Softel, Inc. v. Dragon Medical & Scientific
Communications, Inc., 118 F.3d 955, 968 (2d Cir. 1997) (quoting
Restatement of Torts, § 757 comment b (1939)), cert. denied,
523 U.S. 1020, 118 S.Ct. 1300, 140 L.Ed.2d 466 (1998); see also, Hudson
Hotels Corp. v. Choice Hotels Intern., 995 F.2d 1173, 1176 (2d Cir.
1993); Integrated Cash Mgmt. Serv., Inc. v. Digital Transactions,
920 F.2d 171, 173 (2d Cir. 1990); Delta Filter Corp. v. Morin,
108 A.D.2d 991, 992, 485 N.Y.S.2d 143, 144 (3d Dept. 1985).
Courts have considered the following six factors to be relevant in
deciding whether particular information is a trade secret: "(1) the
extent to which the information is known outside of the [plaintiffs]
business; (2) the extent to which it is known by employees and others
involved in the business; (3) the extent of measures taken by the owner
to guard the secrecy of the information; (4) the value of the information
to the owner and to his competitor; (5) the amount of effort or money
expended in developing the information; and, (6) the ease or difficulty
with which the information could be properly acquired or duplicated by
others." Anacomp, Inc. v. Shell Knob Services, Inc., 1994 WL 9681, at
*6-7 (S.D.N.Y. 1994) (internal quotations omitted); see also, Ashland
Mgmt. Inc. v. Janien, 82 N.Y.2d 395, 407, 604 N.Y.S.2d 912, 917-18,
624 N.E.2d 1007, 1012-13 (1993). The most important factor is whether the
information is secret. See Lehman v. Dow Jones & Co., 783 F.2d 285,
289 (2d Cir. 1986). "Absolute secrecy, however, is not required."
Anacomp, Inc., 1994 WL 9681, at *9, citing A.H. Emery Co. v. Marcan
Products Corp., 389 F.2d 11, 16 (2d Cir.), cert. denied, 393 U.S. 835, 89
S.Ct. 109, 21 L.Ed.2d 106 (1968). "The rule is only that a "substantial
element of secrecy must exist and this means so much that except by use
of improper means, there would be difficulty in acquiring the
information.'" Q-Co Industries, Inc. v. Hoffman, 625 F. Supp. 608, 617
(S.D.N.Y. 1985) (quoting A.H. Emery Co., 389 F.2d at 16).
In order for a party to succeed on a claim for misappropriation of
trade secrets, the party must show that "(i) it possessed a trade secret
and (ii) that the defendant used that trade secret in breach of an
agreement, a confidential relationship, or duty, or as a result of
discovery by improper means." Hudson Hotels Corp., 995 F.2d at 1176; see
also, Integrated Cash Mgmt. Serv., 920 F.2d at 173. Further, "a former
employee can be prohibited from taking trade secrets from his former
employ[er] whether or not there exists an employment contract which
prohibits competition." Computer Associates Intern., Inc. v. Bryan,
784 F. Supp. 982, 988 (E.D.N.Y. 1992). However, protection of the trade
secret will not attach "where the alleged confidential information is
readily ascertainable from nonconfidential sources." Cosmos Forms, Ltd.
v. American Computer Forms, Inc., 193 A.D.2d 577, 579, 596 N.Y.S.2d 862
Second Circuit courts have held that "an agent has a duty "not to use
confidential knowledge acquired in his employment in competition with his
principal.'" North Atlantic Instruments, Inc., v. Haber 188 F.3d 38, 47
(2d Cir. 1999) (internal quotations omitted). See also, Unisource
Worldwide, Inc. v. Valenti, 196 F. Supp.2d 269, 280 (E.D.N.Y. 2002). The
agent's duty exists during employment, "as well as after the employment
is terminated." North Atlantic instruments, Inc., 188 F.3d at 47
(internal quotations omitted). This fiduciary duty "does not need to be
formalized in writing . . . and any inquiry into whether such obligation
exists is necessarily fact-specific to the
particular case." AM Cosmetics, Inc. v. Solomon, 67 F. Supp.2d 312, 320
(S.D.N.Y. 1999). A court may examine "whether a party reposed confidence
in another and reasonably relied on the other's superior expertise or
knowledge." Id.; see also, Manufacturers Hanover Trust Co. v. Yanakas,
7 F.3d 310, 318 (2d Cir.), motion to vacate denied, 11 F.3d 381 (2d Cir.
1993); Chester Color Separations v. Trefoil Capital Corp., 222 A.D.2d 276,
636 N.Y.S.2d 613 (1995). In essence, "ongoing conduct between parties may
give rise to a fiduciary relationship that will be recognized by the
Here, the Court finds that Enzor, the sole shareholder of Thin Film,
designated Comito as vice president of Thin Film. On cross-examination,
Comito conceded that Enzor entrusted him with the duties of vice
president, including administrative and decision-making responsibilities,
thereby creating a fiduciary relationship between the two men:
Q: Now, at Thin Film Lab, weren't you designated
as a vice president of the company?
Comito: On occasion.