CVD Incorporated Vs. A.S.

Markham Corporation
The case that Bob Donadio and Joe Connolly were fighting was a double edged sword for them.
On one hand if they lose the trial, their company CVD Incorporated would have to close its
operations and on the other hand if they win the case, there is fear that Markham may prolong
the case with an appeal in higher courts. Prolonging the case would result in higher expenses and
frustration for the two founders of CVD Incorporated.
It all started when Donadio, a former employee of Markham Corporation, had an idea to supply
zinc selenide (ZnSe/cvd) to some optical fabricating clients. At that time Donadio was working
in the Advanced Materials Department of the company and Connolly was reporting to him.
When the company rejected the idea of making zinc selenide, they teamed up to setup their own
company called CVD Incorporated. Faced with the threat of law suits from Markham, CVD
Incorporated entered into a licensing agreement with Markham. Little did CVD know that the
royalties would be a big burden on their bottom line leading to losses for the startup company.
When CVD approached Markham for renegotiation of the licensing terms, Markham declined.
Both the companies entered into a litigation to solve the issue.
Markhams claims were following:

Markham had trade secrets and that CVD stole their secrets and, confidential and
proprietary information.
There is a skill required for the CVD process and Donadio and Connolly learned about
CVD process when they were working for Markham; they both have therefore violated
their employment contracts. As of 1993, Markham was the only company with the
capability to produce zinc selenide and zinc sulfide.

CVDs claims were following:

The chemical vapor deposition process is a common knowledge that many chemical
engineers and scientists had; it was also taught in many chemistry courses in schools. So
Donadio and Connolly claimed that they acquired the knowledge about CVD much
before they joined the company.
There was a patent issued to H.J. Gould for certain parts of the CVD process and so it is
not proprietary to Markham.
Donadio and Connolly were forced to sign a licensing agreement in which the royalties
were too high, leading to continuous losses for their company.