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UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

THE LAW OFFICES OF SEAN R. CALLAGY, LLC

650 From Road – Suite 565

Paramus, New Jersey 07052

201-261-1700

Benjamin D. Light, Esq.

Federal Bar No.: BDL 7774

DEMODULATION, INC.

Plaintiff,

vs.

CORNING INCORPORATED., ALFRED 

UNIVERSITY, and ALFRED TECHNOLOGY 

RESOURCES, INC., 

 

Defendants.

CIVIL ACTION NO:

2:11-cv-00296 (WJM)

SECONDFIRST AMENDED 

COMPLAINT

1. Demodulation, Inc. (" DEMOD" or "plaintiff") is a Delaware

corporation with its principal place of business at 121

Goodwin Terrace, Westwood, New Jersey.

2. DEMOD is the sole successor in interest to all the rights

and liabilities of Demodulation, L.L.C., a New Jersey limited 

liability company.

3. Defendant Applied DNA Sciences, Inc. ("ADNAS") is a Nevada

corporation with its principal place of business at 25

Health Sciences Drive, Suite 113, Stony Brook, New York.

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4.3. Defendant Corning Incorporated is a New York 

corporation with its principal place of business at One 

Riverfront Plaza, Corning, New York.

5.4. Defendant Alfred University is a private university

organized under the laws of the State of New York with its

principal place of business in Alfred, New York.

6.5. Defendant Alfred Technology Resources, Inc. ("ATRI") 

is registered as a non-profit corporation of the State of New

York with its principal place of business at 200 North Main

Street, Alfred, New York.

JURISDICTION AND VENUE

67. Jurisdiction is proper in this court pursuant to 28 U. S. 

C. § 1331, 28 U.S.C. § 1332 and 28 U.S.C. 1343(3). Plaintiff is 

a resident of the State of New Jersey while all of the

defendants are residents of states other than New Jersey. The 

amount in controversy exceeds $75,000. Pendant jurisdiction of 

state law claims is conferred by 28 U.S.C. § 1367.

78. Venue is proper in this court pursuant to 28 U. S. C. § 

1391 (b) (1), 18 U.S.C. § 1965, 15 U.S.C. § 15 and 28 U.S.C. 

1391 (c).

COMMON FACTUAL ALLEGATIONS

9. DEMOD owned the rights to certain patents, trade secrets

and other property concerning amorphous glass coated microwire 

("microwire”).

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10. The Defendants have conspired to steal DEMOD's trade

secrets and to otherwise interfere in DEMOD's business

opportunities.

11. DEMOD relied upon the defendants with whom it had

contracts, namely Alfred, Corning and ATRI, to fulfill those 

contracts in good faith. In fact, these defendants failed to 

perform under their contracts and actively prevented DEMOD from 

benefitting from the expected fruits of those contracts.

12. DEMOD had taken reasonable steps to investigate the

actions of the defendants but has not been able to fully

complete its investigation because the defendants are in

exclusive control of certain testimonial and documentary

evidence. For example, DEMOD has attempted to speak with Dr. 

Alan Goldstein concerning some of the allegations below. He has 

indicated that due to a confidentiality agreement with Alfred, 

he is not permitted to speak to DEMOD about Alfred and Alfred 

has refused DEMOD's request to relieve Dr. Goldstein of his 

obligations under the confidentiality agreement.

8. DEMOD was formed as a start-up company in 2001 with the 

objective of manufacturing and commercializing the exclusive 

rights it had obtained to United States Patent Number 6,270,591 

– Amorphous and Nanocrystalline Glass-Covered Wires (“591 

Patent”). The glass-covered wired described by the patent are 

referred to throughout this pleading as “microwire.”

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913. Microwire is a hair-like fiber that has properties

which enable its remote detection upon its exposure to radio 

frequency waves or a magnetic field. Microwire also serves as a 

sensor in that it may detect and transmit information concerning 

the environment where the microwire is located. In this respect, 

microwire is a covert means of tracking items. Microwire is 

suitable for many other purposes and applications such as 

rendering ships nearly invisible to radar. The signal from a 

small strand of microwire may be detected from several 

kilometers without the need for any power source connected to 

the microwire.

10. Microwire is superior to and serves substantially the same 

purpose as radio frequency identification (“RFID”) technology. A 

consumer seeking to track the location of items, such as a 

retail establishment, could choose either microwire or RFID for 

that purpose. Accordingly, microwire technology competes with 

RFID.

11. Between 2001 and 2008, Demodulation obtained the exclusive 

rights to patents through assignment from its employees and 

others which related to microwire. For example, Demodulation 

obtained rights to patents which provided it the exclusive right 

to detect and encode microwire. Along with the 591 Patent, all 

of these patents are collectively referred to as Demod’s 

patents. 

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12. In addition to Demod’s patents, it owned and still owns 

certain trade secrets related to microwire such as business 

plans, means for altering the signal produced by microwire, 

applications for microwire and other matters that were and 

remain confidential and proprietary. 

14. 13. DEMOD's trade secrets and patents concern, among 

other things, several specific methods and systems for

manufacturing and engineering microwire, detecting and reading 

the signal produced by microwire at both short and long 

distances, including various means to modify and/or configure 

the microwire to elicit the desired performance. In order to 

manufacture microwire products having the appropriate behaviors 

and properties, highly engineered combinations of materials are 

selected and processed to achieve a composite structure; each 

structure or configuration will yield a unique magnetic 

structure which, in turn, defines the electromagnetic behavior 

needed for a given application.

15. 14. Microwire has properties with myriad applications 

for the homeland security, national defense, article tracking

and authentication, energy and other industries. The United 

States Department of Energy, through its laboratory at Oak 

Ridge, Tennessee, has thoroughly evaluated DEMOD's technology 

and trade secrets and reached the following conclusions: tension 

on the microwire alters the response from the microwire making 

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it suitable for "temperature, pressure, chemical and biological 

sensing”; the microwire's response is altered by its angular 

relation to an alternating magnetic field making it suitable for 

a "pitch, yaw and roll” sensor; a break in the microwire can be

detected making it suitable for tamper indication; the microwire 

can detect tension when deployed in non-ferrous material; 

"Microwires appear to have unique signatures, similar to 

differences among fingerprints or snowflakes. These signatures 

can be modified by incorporating minute magnetic material at 

different locations along the length of the microwire. In 

addition, if localized stress variations along the length are 

incorporated, these too, change the signature. This experiment 

validated the belief that an encoding method is feasible and 

supports Demodulation's encoding patents. The unique signature

and/or ability for encoding could have many benefits, including 

a defense for counterfeiting;” DEMOD's microwire was superior to 

magnetic strips found on credit cards and other similar 

technologies because microwire is practically invisible and 

never wears out, unlike the magnetic strips; DEMOD's microwire 

was an "excellent candidate” for in-situ sensors and there is a 

robust market with "few competing products” "available for 

exploitation;” microwire was well suited for detection of 

particular “gas, pressure, temperature, humidity;” If microwire 

were attached to a seal, a broken seal would be identified; the 

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glass coating on a microwire may be "coated with a substance 

that will react when attacked by a chemical or biological 

agent;”

16. 15. DEMOD recognized these applications and others 

well before the DOE's evaluation. To capitalize on these

applications, DEMOD partnered with Alfred University through a 

contract effective July 1, 2002 executed by David Szerbacki, the 

Provost of Alfred University at the time (“Alfred Contract”). 

designed to maximize the commercial and governmental 

applications for microwire and to attract research funds to 

accomplish this goal.

17. In 2003, DEMOD and Alfred signed an agreement whereby,

among other things, Alfred was granted a one percent (1%)

royalty on DEMOD's gross sales of commercial products in

exchange for Alfred's endeavoring to gain state, federal and 

private funding and support for the advancement of applications 

of DEMOD's technology and trade secrets, and for Alfred's 

support in commercializing DEMOD's technology. This agreement 

was modified from time to time by the parties and continued in 

effect until 2008.

16. The Alfred Contract required Alfred to seek funding for 

DEMOD from the “U.S. Government, New York State government and 

other research sponsors” and to “provide facilities, equipment, 

and personnel to pursue the Project.” In exchange, Alfred was 

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granted a one percent (1%) royalty on DEMOD’s gross sales of 

commercial products. This Alfred Contract was modified from time 

to time by the parties and continued in effect until 2008. 

18. 17. At about the time Alfred Contract was executed,

and DEMOD entered this agreement, Alfred stated in writing that 

microwire rivaled the laser in terms of potential economic 

impact and that the probable annual market for microwire 

products was between $250,000,000 (TWO HUNDRED FIFTY MILLION 

DOLLARS) and $20,000,000,000 (TWENTY BILLION DOLLARS). In 2008, 

Alfred stated that microwire technology was still worth hundreds 

of millions, if not billions, of dollars per year.

19. 18. Pursuant to Alfred's contractual obligations the 

Alfred Contract, DEMOD was invited by Alfred to locate its New 

York operations at the Ceramic Corridor Innovation Center 

("CCIC") at Alfred, New York at no cost to DEMOD. CCIC was and 

is owned and managed by Alfred Technology Resources, Inc.

("ATRI"), which is a non-profit corporation jointly formed as a 

result of a partnership agreement between Alfred and Corning. On 

information and belief, the agreement between Alfred and Corning 

to create and operate ATRI was reduced to writing by them. , 

owned and operated by Alfred and Corning. Robert Ecklin, an 

Executive Vice President at Corning and a member of the board of 

the SUNY-Research Foundation ("RF") and Chair of its Audit 

Committee, was also President of ATRI. The management team of 

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ATRI consisted solely of either Alfred or Corning personnel or 

persons tied closely to those two entities.

19. DEMOD accepted the offer to move into the CCIC and thereby 

entered into a contract with ATRI. DEMOD moved into the CCIC in 

2003 and remained there until 2008. The terms of the contract 

with ATRI required ATRI to provide DEMOD with access to the CCIC 

facilities and “intellectual property management,” 

”investor/strategic partner linkages,” “links to higher 

education institutions,” “international trade assistance,” 

“general legal services,” and “technology commercialization” and 

other services. In addition, Demod also entered into a nondisclosure agreement with ATRI which required ARTI to hold in 

confidence all confidential information revealed to it by Demod. 

20. CCIC ATRI was established and financed with at least 

$10,000,000 in New York and federal government funds to act as a 

business incubator to provide facilities and the services listed 

above, services and other assets to emerging companies like 

DEMOD for the development of ceramics-related technologies. and 

jobs related to those technologies. CCIC advertised that the 

companies that become its tenants were "under its care.” In 

addition to facilities, some of the services offered by ATRI to 

DEMOD and others through the CCIC were: "intellectual property

management,” "investor/strategic partner linkages,” "links to 

higher education institutions,” "international trade

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assistance," "general legal services,” and "technology

commercialization.”

21. DEMOD accepted the offer to move into the CCIC and

thereby entered into a contract with ATRI; the terms of which 

required ATRI, at a minimum, to provide the services mentioned 

in the preceding paragraph. DEMOD moved into the CCIC in 2003 

and remained there until 2008. ATRI was entrusted with at least 

$10,000,000 in funds from New York state and the federal 

government to manage and spend for the benefit of start-up 

companies like DEMOD. ATRI was therefore a trustee of those 

funds and DEMOD was a beneficiary to whom ATRI owed fiduciary 

obligations. 

22. DEMOD executed written non-disclosure agreements with

Alfred, ATRI and Corning to protect the intellectual property 

and trade secrets it agreed to reveal to those defendants. DEMOD 

revealed extensive trade secrets to these defendants. Alfred 

also arranged for and encouraged DEMOD to explore a business 

relationship with Corning. As a result of Alfred’s referral, 

DEMOD and Corning entered into a written “Confidentiality 

Agreement” on May 23, 2002 which was subsequently amended and 

re-affirmed on July 15, 2004. This agreement required Corning to 

hold DEMOD’s confidential information in confidence and to not 

use the information “other than for the purposes of its business 

with Demodulation.”

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23. After DEMOD established its contractual relationships

with Corning, Alfred, and ATRI, and after DEMOD revealed

confidential information to them, Corning met with

representatives of Advanced Coding Systems ("ACS”), an Israeli 

corporation and a competitor of DEMOD's at that time in that ACS 

was producing in Israel what it referred to as "glass coated 

amorphous magnetic MicroWires.” ACS was and remains a subsidiary 

of Elbit Systems, Ltd., ("Elbit”) a multinational Israeli 

defense contractor. Demod revealed written confidential 

information to Corning including a copy of a business plan 

within weeks after execution of the Confidentiality Agreement. 

This business plan included ideas concerning the market, 

applications, expenses and expected returns. 

24. Corning and Elbit were partners in a company called

CyOptics, Inc. At the time Corning entered into the 

Confidentiality Agreement with DEMOD and while Corning was 

operating ATRI, Corning was engaged in efforts that competed 

with DEMOD and which were not disclosed by Corning to Demod. 

25. Corning had invested approximately $800,000,000 to

purchase a company called Intellisense, thereby forming Corning 

Intellisense, which produced technology that competed with 

DEMOD's. Intellisense focused on Micro Electro Mechanical 

Systems ("MEMS”) devices which have applications in the areas of 

wireless sensors, radio frequency devices RFID and other areas 

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where microwire is considered a competing technology. Without 

disclosing this conflict of interest and others, and while 

operating ATRI, Corning proceeded to actively interfere with 

DEMOD's business and other proprietary interests. Corning's

failure to disclose its conflicting commercial interests to

DEMOD was a breach of the common law, contractual and fiduciary 

obligations Corning owed to DEMOD.

26. Corning and Alfred had further undisclosed interests 

which conflicted with their obligations to DEMOD. Infotonics 

Technology Center, Inc. The Center for Excellence in Photonics 

("Infotonics”) in Canandaigua, New York was also a non-profit 

formed by Corning with other partners based on the ARTI model, 

and included Alfred as an "academic partner.” While DEMOD was at 

the CCIC and unbeknownst to DEMOD, Infotonics was carrying out 

work to develop commercial and military applications for remote 

micro-sensors for stress, vibration, humidity and micro-energy 

harvesting devices. Neither Alfred nor Corning disclosed this 

conflict of interest to DEMOD at any time. As determined by DOE,

DEMOD's technology performed all these functions well and 

therefore competed with the technology being developed at 

Infotonics..

27. The CCIC was declared in its own publication from

2001, which was written by Charles Gargano, to be the model for 

the formation of Infotonics, which was also funded with state 

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and federal government money to operate as a center where startups and entrepreneurs would find a support system. On June 25, 

2008, Sam Casella, the Director of Government Relations for 

Infotonics, stated publicly that Infotonics was being operated 

in violation of the laws governing not-for-profit corporations 

and that the way Infotonics was being operated "flies in the 

face with the State of New York.”(sic) Subsequently, Infotonics 

merged with another state funded facility in Albany after

Infotonics created less than 100 jobs out of the 5000 promised.

28. Through its substantial political and commercial

influence, Corning advocated and ensured that DEMOD received no 

funding that was available for investment in technologies like 

DEMOD's. It did so to protect its conflicting interests, such as 

the work performed at Infotonics.

29. Robert Ecklin served on the RF with Dr. James Hayward, 

the CEO of ADNAS, defendant herein. Mr. Ecklin and Dr. Hayward, 

acting on behalf of Corning and ADNAS respectively, ensured that 

DEMOD received no grants or similar financial assistance from 

the RF or similar New York State entities such as the ESDC, but 

that ADNAS did. Corning and Ecklin also provided ADNAS and 

Hayward proprietary information concerning the characteristics 

and specifications of DEMOD's microwire and its methods for

encoding and detecting the microwire.

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30. Mr. Ecklin, while acting on behalf of Corning,

publicly made false statements and derogatory comments

concerning DEMOD's technology, stating that it was insignificant 

and not deserving of investment at a meeting of government 

representatives attended by, among others, then State 

Representative George Winner, James Guccinski of NAVSEA Crane, 

A.J. Colletti of the New York State Office of Disaster 

Preparedness and Response, Dr. William LaCourse of Alfred, and 

Bill Heaney of then Governor Pataki' s office. At this meeting, 

Ecklin further stated that DEMOD did not own the intellectual 

property rights concerning microwire which it had claimed to.

31. 28. Corning stated to others that to DEMOD's 

microwire technology actually belonged Corning and was

insignificant. One person who heard such a statement in 2006 was 

Shawn Hogan who heard Tom Trantor, the head of government 

relations for Corning, state to him that DEMOD did not own its 

technology and had stolen it from Corning. DEMOD also heard from 

NYSTAR representatives in 2007 that there seemed to be a dispute 

between Corning and DEMOD concerning the ownership of microwire.

32. 29. At no time did Corning have any ownership 

interest in microwire.

33. 30. DEMOD also learned in early 2006 from Robert 

Iszard, the local executive of the ESDC, that a Corning

representative had stated to him and others that DEMOD did not 

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own its technology and that DEMOD did not have the capability to 

produce microwire.

34.31. Once Mr. Iszard witnessed DEMOD's manufacturing

process and was apprised of DEMOD's patents, he stated that he 

was surprised to learn these things and advised DEMOD to contact 

another executive with the ESDC, Fred DiMaggio.

35. 32. Mr. DiMaggio was the ESDC executive responsible 

for homeland security projects.

36. 33. Corning interfered in DEMOD's negotiation with 

In-Q-Tel Corporation. Corning Board member John Seeley Brown was 

also a Board member of In-Q-Tel. Mr. Brown, while acting in his 

capacity as board member of Corning, directed that In-Q-Tel 

cease all negotiations with DEMOD despite interest from other 

In-Q-Tel representatives. DEMOD was warmly introduced to In-QTel by employees or former employees of the Central Intelligence 

Agency. As a result of Corning's interference, In-Q-Tel denied 

any funding to DEMOD without any formal evaluation. 

Subsequently, in late 2010 after Brown retired from his position 

at In-Q-Tel, In-Q-Tel inquired whether DEMOD would be interested 

in exploring the same opportunities that existed in the first

attempted negotiation that Corning interfered with.

34. As described more fully below, Corning, Alfred and ATRI 

acted independently and in concert to breach their contracts 

with Demodulation and to commit fraud other wrongs against 

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Demodulation. One means used to commit these breaches and other 

wrongs was Alfred’s and Corning’s domination and control of 

ATRI.

35. The domination and control of ATRI by Corning and Alfred 

included:

a. the right of the President of Alfred University appoint 

memebers to the ATRI Board of Directors; 

b. Corning’s treatment of ATRI as its “outside research 

department” as stated under oath by ATRI President and 

Corning Executive Vice President (concurrently) Robert 

Ecklin;

c. the use of $5,000,000 of ATRI funds to build “clean 

space” for Corning’s wholly owned photonics subsidiary 

business without even seeking payment from Corning and 

which expenditure cause ATRI to become insolvent;

d. Alfred’s act of providing space at the CCIC to DEMOD 

without the need to get separate approval from ATRI; 

e. Ecklin’s failure to fulfill any obligations of the 

President of ATRI imposed by ATRI’s bylaws which 

included the “general charge and supervision of the 

business and affairs of [ATRI]. Ecklin considered 

himself no more than a “master of ceremonies;” 

f. Corning’s use of ATRI facilities and assets to develop 

strengthened glass for use in mobile display devices;

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g. Alfred’s forgiveness of a loan to ATRI;

h. ATRI’s failure to observe corporate formalities such as 

actual requiring its corporate offices to fulfill the 

obligations imposed on them by the by-laws of the 

corporation and by permitting Demod to become an 

incubator tenant without a formal written contract. 

36. Demodulation remained at the CCIC until February of 2008 

when it discovered records indicating that Alfred had obtained 

research funding from New York state based on Alfred’s 

representation that Demodulation has committed funds to the 

research project, which was not true. 

37. Demodulation has since learned that Alfred President Charles 

Edmondson arranged for a “bogus grant” to Alfred from a New York 

state agency in 2005 which Demodulation knew nothing about until 

after this lawsuit was first filed. Demodulation has also 

learned after the initial filing of this lawsuit that:

a. The grants Alfred was seeking for Demod were unlawfully 

and fraudulently controlled by then Governor George 

Pataki and his operative, Jeff Lovell. These grants were 

by law to be awarded based on their technical merit

after review by experts. Alfred never disclosed this 

fact to Demod until discovery in this case;

b. Alfred refused to support to Demod’s efforts to obtain 

funds because they conflicted with other initiatives 

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Alfred was trying to fund such as Alfred’s “BIOS” 

program and its joint venture with West Virginia 

University but Alfred never disclosed these conflicts to 

Demod. 

c. Alfred knew as early as 2002 that Demod’s efforts to 

obtain funding from New York state agencies would be 

futile because they conflicted with Alfred’s other 

funding requests to those agencies. Alfred never 

disclosed this to Demod but rather, Alfred decided to 

let Demod “play out the string”. 

37. After being referred by Alfred in furtherance of its

contract with DEMOD, DEMOD met with the Empire State Development 

Corporation ("ESDC") to seek funding. DEMOD provided 

confidential intellectual property and trade secrets to ESDC in 

order to discuss its technology and applications. One of the 

applications discussed and disclosed was DEMOD's then patentpending combination of DNA technology with microwire. Charles 

Gargano was, at the time, the Chairman of ESDC and a shareholder 

in ADNAS. DEMOD did not know of Gargano's interest in ADNAS at 

the time it applied for ESDC assistance and disclosed its

proprietary information to it. The actions alleged herein to 

have been taken by Mr. Gargano are alleged to have been taken in 

his capacity as an agent of ADNAS and in furtherance of those 

interests.

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38. Demod has also learned after this lawsuit was filed and 

through discovery that Corning breached its confidentiality 

agreement with Demod by engaging in a joint development project 

in 2004, which may be continuing, with four other companies to 

develop an RFID application for microwire. This project was 

being managed by the same Corning executive that was the 

“sponsor” of the confidentiality agreement between Corning and 

Demod. Information necessary for this application was disclosed 

by Demodulation to Corning in 2002. 

38. Corning acted to blackball DEMOD and actually did so

because they were working in competing areas or with competing 

companies. DEMOD was advised by Erland Kailbourne this had 

occurred and that DEMOD should move from New York State since it 

could expect no funding or support from the state or private 

investment firms as long as Corning was opposed to DEMOD.

39. As DEMOD was being suppressed, ADNAS received

government funding from the RF, was relocated to the government 

funded Long Island High Technology Incubator ("LIHTI”) formed a 

working relationship with Brookhaven National Laboratory, hired 

Dr. Yacov Shamash, and thereafter secured military or other 

government contracts for its products. Those products, both 

those utilizing microwire and those that did not, competed with 

microwire in one or more applications including but not limited 

to articles tracking, surveillance and authentication.

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40. Also at about the same time, ADNAS announced that it

had formed a business relationship with ACS to acquire ACS'

microwire product and combine it with DNA technology for anticounterfeiting and other applications.

41. DEMOD inquired of ADNAS' CEO, Peter Brocklesby, why

ADNAS had chosen ACS instead of DEMOD. Mr. Brocklesby replied by

e-mail in September of 2005 that ADNAS had never heard of DEMOD, 

that ACS was "recommended" to ADNAS by an "individual from New 

York," and that ADNAS would conduct an investigation concerning 

the intellectual property at issue and get back to DEMOD.

42. Brocklesby thereafter stated in an e-mail in September

2005 that ADNAS decided to cancel its business arrangement with 

ACS and to refrain from using microwire altogether. However, 

ADNAS continued to use microwire from ACS in its products. It 

did so by acquiring ACS' microwire through an intermediary,

International Imaging Materials, Inc. ("IIMAK").

43. ADNAS also continued its direct relationship with ACS.

ADNAS made a presentation to the Far East Empire Group, SDN BHD 

("Far East"), a Malaysian Corporation, sometime after May of 

2006. Far East was incorporated in May of 2006 so the 

presentation could not have taken place before that. Far East 

was acting as a consultant for the Malaysian government and the 

presentation focused on security features for passports and 

visas. In this presentation,

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ADNAS stated that it jointly produced with ACS "DNA Embedded 

Amorphous Micro Wire security products."

44. Soon after he made the statements described above, Mr.

Brocklesby, formerly employed by the Central Intelligence

Agency's proprietary Air America and the defense contractor

E-Systems, was replaced by Dr. James Hayward as CEO of ADNAS. 

Dr. Hayward served on the Board of RF and served as a consultant 

to ADNAS before becoming its CEO. Prior to becoming CEO, and 

while acting as a consultant for ADNAS, Hayward, and ADNAS 

unlawfully arranged to have ADNAS receive approximately $240,000 

in grants from RF, to have ADNAS installed at LIHTI, and to have 

ADNAS acquire ACS' microwire.

45. DEMOD filed formal complaints with the SUNY General

Counsel, the New York Inspector General's office, the New York 

State Comptroller's Office, the Attorney General of the State of 

New York, federal authorities at the Department of Justice and 

the New York Commission on Investigations.

46. In December of 2010, Gregory Stasiuk, Chief of

Intelligence for the New York State Attorney General,

recommended that a formal investigation be launched into the 

allegations made by DEMOD. The present status of that

investigation is unknown to DEMOD. At the time, Ellen Biben was 

Mr. Stasiuk's supervisor. Ms. Biben had previously claimed that 

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the Attorney General's Office did not have jurisdiction over 

DEMOD's allegations.

47. 39. As a direct and proximate result of the actions 

and inactions of the defendants as alleged herein, DEMOD

suffered damages. By way of example and not limitation, Family 

Dollar corporation stated to DEMOD that it was losing 

$400,000,000 per year as a result of theft and other loss of 

product. Family Dollar stated that if DEMOD received the funding 

it was seeking through its relationship with Alfred in the 

approximate amount of $2,000,000, it would enter into a contract 

with DEMOD to supply Family Dollar with an articles tracking 

system. Due to the actions alleged below including the 

allegations that the defendants conspired to suppress DEMOD by 

withholding available funding and taking other actions, DEMOD 

was not able to execute the contract with Family Dollar.

48.40. As a further direct and proximate result of the

defendants' actions and inactions, DEMOD suffered out of pocket 

losses such as the cost of locating some of its operations at 

the CCIC and the loss of the company's capital which was wasted 

in pursuing a business relationship with these defendants while 

they were actively conspiring against DEMOD.

49. 41. DEMOD was further injured in that, without 

capital investment, it was unable to continue to pay the 

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applicable fees to maintain some of its patents. DEMOD seeks 

reinstatement of any such patents as relief in this case.

COUNT ONE

(NEW JERSEY CIVIL RICO - N.J.S.A. 2C:4l-2(c))

50. 42. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

51. 43. Pursuant to N.J.S.A. 2C:4l-2(c): It shall be 

unlawful for any person employed by or associated with any

enterprise engaged in or activities of which affect trade or 

commerce to conduct or participate, directly or indirectly, in 

the conduct of the enterprise's affairs through a pattern of 

racketeering activity or collection of unlawful debt."

52. 44. Defendants, Corning, Alfred, ADNAS and ATRI 

together constitute an enterprise within the meaning of N.J.S.A.

2C: 41-1 (c) (“ADNAS Enterprise"). Further, Corning, Alfred and 

ATRI constitute a separate enterprise through their interest in 

the CCIC (“CCIC Enterprise"), as alleged more specifically 

below.

53. 45. These defendants engage in trade or commerce, or 

in activities which affect trade or commerce.

54. 46. Corning, Alfred and ATRI were associated with the

CCIC, and conducted or participated, directly or indirectly, in 

the conduct of the affairs of the CCIC enterprise through a 

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pattern of racketeering activity in violation of N.J.S.A. 2C:41-

2(c). Corning, Alfred, ATRI and ADNAS participated, directly or 

indirectly, in the conduct of the affairs of the ADNAS 

Enterprise through a pattern of racketeering activity in 

violation of N. J. S. A.2C: 41-2 (c).

47. The operation of the CCIC Enterprise was conducted through a 

high degree of planning amongst these defendants. Specifically: 

a.Corning and Alfred agreed to and did form a partnership 

to found ATRI as a vehicle to lobby for and acquire at 

least $10,000,000 in funds from the New York State 

legislature to capitalize ATRI;

b. Corning and Alfred agreed that ATRI would be operated 

by a board of directors consisting solely of Corning or 

Alfred personnel and it has in fact been so operated;

c. After ATRI was formed and at the direction of Corning 

and Alfred, ATRI executives including ATRI President and 

Corning executive Robert Ecklin, abdicted their role to 

operate ATRI as an independent corporation and instead 

took direction from Corning and Alfred to operate ATRI 

as Corning’s “outside research department”;

d. Alfred possessed and exercised the right to dispose of 

the assets of ATRI without ATRI’s approval;

48. Accordingly, the enterprise was structured in such a 

way that decisions regarding the operation of ATRI were actually 

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made by Corning and Alfred rather than ATRI and ATRI consented 

to this structure. These decisions included which businesses 

would become tenants at the CCIC, which tenants would receive 

financial benefits from ATRI and which tenants ATRI would spend 

its cash to benefit. 

49. As a result of this hierarchy, Alfred and Corning 

dictated that ATRI approve the expenditure of $5,000,000 of the 

funds it received from New York State to build a clean space at 

the CCIC facilities for Corning to operate its photonics 

business.

5055. A pattern of racketeering activity includes two 

or more incidents of racketeering conduct that have "either the 

same or similar purposes, results, participants or victims or 

methods of commission or are otherwise interrelated by 

distinguishing characteristics and are not isolated incidents." 

N.J.S.A. 2C: 41-1 (d)(1) These defendants engaged in such a 

pattern of activity.

5156. These defendants participated in the crimes 

described below, which had the same or similar purpose, results,

participants, or victims or methods of commission and were

otherwise interrelated by distinguishing characteristics and 

were not isolated incidents. The overall pattern was to use for 

their own benefit the money given to ATRI by New York State, 

which was conditioned upon ATRI’s administration of those funds 

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for the benefit of start-up businesses like DEMOD, rather than 

for its intended purpose. unlawfully capture and control 

emerging technologies like DEMOD's and the funding of those 

technologies for their own direct or indirect benefit.

52. The CCIC Enterprise is ongoing. Specifically, ATRI 

claims to own a “wholly owned subsidiary” called Nanomaterials 

Innovation Center, LLC (“NMIC”), a for-profit company. In 

September of 2008, ATRI received a $1,000,000 grant from New 

York State for the establishment of a “nanomaterials lab” at the 

existing CCIC facility. Rather than creating a lab within the 

CCIC, ATRI has used and continues to use this grant money to 

fund the operations of NMIC.

53. NMIC is a manufacturer of “nanopowders” for sale to 

industry and has executed contracts to supply nanopowders to at 

least two companies; Sigma Aldrich and EMD-Merck.

5457. The crimes perpetrated by these defendants in

furtherance of the pattern of racketeering activity and the

conspiracy include:

a. N.J.S.A. 2C:20-4, Theft by deception. (i) By 

purposefully creating and reinforcing false impressions as 

to law, value, intention or other state of mind through 

written and verbal statements and by preventing DEMOD from 

acquiring information which would affect its judgment of

transactions and by failing to correct a false impression 

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which these defendants created or reinforced or knew to be 

influencing DEMOD while these defendants stood in a 

fiduciary or confidential relationship with DEMOD, these 

Defendants committed theft by deception; (ii) In addition 

to the allegations above, and by way of specific example 

and not limitation, Corning, Alfred and ATRI created the

false impression that they were operating the CCIC as a 

legitimate business incubator and conduit of government 

research funds while in fact they were operating the CCIC 

for their own benefit or the benefit of persons and 

entities employed by these defendants or corporations 

related to these defendants or other members of the 

enterprise; (iii) DEMOD relied upon the false impressions 

created and reinforced by these defendants when it became a 

tenant at the CCIC, stored its property there, and 

disclosed its trade secrets to these defendants including 

but not limited to trade secrets concerning a combination 

of microwire and DNA technology; (iv) In addition, in order 

to induce DEMOD to contract and disclose its trade secrets, 

Alfred created the false impression that it would assist 

DEMOD in obtaining state, federal and private funds for the 

joint development of DEMOD's technology; (v) However, 

Alfred never disclosed that it was not able to perform 

these obligations due to conflicting obligations to third 

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parties that it never disclosed to DEMOD; (vi) In addition, 

Corning and Alfred never disclosed their conflicting 

interests to DEMOD, including Corning's interaction and

relationship with GMT/AMT for the purposes of developing an 

RFID application for microwire with Texas Instruments and 

othersACS and Elbit, Corning's interest in Corning 

Intellisense, and the work being done by Corning at

Infotonics Technology Center, Inc.; (vii) These defendants 

knew that DEMOD did not consider them competitors but never 

corrected that impression; (viii) As a result of the 

violations of this law, the Defendants obtained DEMOD's 

trade secrets and then used those trade secrets to benefit

themselves by obtaining government grants and other things 

of value, as described herein. These defendants obtained at 

least $10,000,000 from the State of New York to capitalize 

ATRI by creating the false impression that they intended to 

use the money benefit of independent start-up companies 

when in fact they intended to use the money for their own 

benefit; (ix) DEMOD relied upon the false impressions 

created and maintained by these defendants and as a result 

of the violations of this law, defendant’s obtained DEMOD’s 

trade secrets and then used those trade secrets to benefit 

themselves.

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b. McKinney's Penal Law § 175.30 and § 175.35 – Offering a 

False Instrument for Filing. (i) Defendants Corning, Alfred 

and ATRI violated this statute in order to benefit the 

enterprise in connection with Contract C00007l with the New 

York State Office of Science Technology & Academic Research 

("NYSTAR”).(ii) Alfred and Corning knowingly filed or 

offered for filing with NYSTAR written instruments that 

contained false statements or false information; (iii) By 

way of example and not limitation, Alfred and Corning made 

a representation in Contract C00007l that Corning had

committed $200,000 in cash and at least $760,370 in

equipment and other support to further the work described 

in the NYSTAR Contract which was the establishment of the 

Alfred University Advanced Research Center ("ARC”) at the 

CCIC; (iv) The Contract also required that regular 

certified progress reports be submitted to NYSTAR 

concerning the expenditures of NYSTAR and matching funds 

described in the Contract; (v) NYSTAR committed $850,000 in 

grant money pursuant to the Contract based in part on the 

representation that Corning had committed the assets 

described above; (vi) On an undated 2002-2003 Reporting 

Form filed with NYSTAR, Alfred and Corning represented that 

Corning had completed a contribution of equipment worth 

$724,482 by December 31, 2002 ; (vii) This representation 

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was knowingly false as Corning did not contribute equipment 

with anything remotely close to that value by that date; 

(viii) The only equipment ever donated by Corning was 

equipment which Corning had declared to be without value 

for tax purposes and which was never removed from the boxes 

in which it arrived; (ix) Alfred knowingly made further

misrepresentations to NYSTAR on documents filed with

NYSTAR; (x) Alfred reported on another undated 2002-2003 

reporting form that grant money from the $850,000 NYSTAR 

grant was being spent to assist DEMOD to "setup a 

manufacturing facility in association with the ARC"; (xi) 

This representation was false as DEMOD independently 

established its manufacturing process without any 

assistance from any of these defendants and never had any 

agreement with the ARC; (xii) DEMOD was never aware of the 

misrepresentations to NYSTAR described herein or that any 

NYSTAR money had been allocated to it until after it 

investigated an e-mail exchange with NYSTAR on January 8, 

2008; (xiii) In that e-mail exchange between DEMOD and 

NYSTAR, a NYSTAR employee, Kathy Wise, informed DEMOD that

NYSTAR's records showed numerous misrepresentation made by 

Corning and Alfred in documents filed with NYSTAR; (xiv) 

For example, the records showed that these defendants 

falsely represented to NYSTAR in 2007 that DEMOD and 

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Corning were the "two chief local companies participating 

in the ARC" and that an entity called the Center for 

Advanced Technology ("CAT" or sometimes referred to by 

Alfred and NYSTAR as theCenter for Advanced Ceramics 

Technology ("CACT")) operated by Alfred had received 

$500,000 in cash from DEMOD to develop "glass fibers with 

codeable amorphous metal interiors"; (xv) DEMOD never 

contributed that cash and these defendants made that 

representation in order to obtain government funds from 

NYSTAR, which they did.

c. 18 U.S.C. § 1831 Economic Espionage. (i) Demod disclosed 

its trade secrets to Corning; (ii) The trade secrets 

disclosed included but were not limited to those concerning 

a means of removing the glass coating from the microwire 

and DEMOD's idea for combining microwire with DNA 

technology; (iii) At the time this disclosure was made, Mr. 

Ecklin was a member of the RF as was Dr. Hayward, the CEO 

of ADNAS; (iv) At about the same time and continuing 

thereafter, RF provided grants to ADNAS to develop 

different product applications; (v) Corning and/or ADNAS 

disclosed the trade secrets to ACS, an Israeli company; 

(vi) This disclosure was made so that ADNAS could determine 

if the ACS product could be combined with ADNAS' DNA

technology in the same way that DEMOD's microwire could; 

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(vii) ADNAS and ACS subsequently entered into a contract 

whereby ADNAS and ACS agreed to marry their two 

technologies; (viii) This agreement was widely publicized 

at a time when DEMOD was attempting to obtain financial 

assistance and investment.

d. New York Penal Law § 200.25. Receiving Reward for

Official Misconduct. (i) Dr. Hayward was on the Board of 

the RF and an agent or employee of ADNAS when the RF agreed 

to provide approximately $240,000 in grant money to ADNAS; 

(ii) Dr. Hayward arranged for this grant and as a result, 

he was rewarded by ADNAS in the form of cash and stock; 

(iii) Facts relevant to this particular allegation of 

criminal conduct are described more fully below.

e. New York Penal Law § 195.20 Defrauding the Government. 

(i) While holding the position of public servant by virtue 

of his membership on the Board of RF and while acting as an 

employee or agent of ADNAS, Hayward engaged in a scheme to 

defraud New York state and possibly the United States if 

the RF grant money given to ADNAS included any federal 

funds) by using the RF grant money for his own private 

business purposes through ADNAS; (ii) The grant money was 

used to fund ADNAS and Hayward was compensated by ADNAS for

obtaining the grant money.

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f. 18 U.S.C. § 1341, 1343, 1346 - Mail and Wire Fraud. (i) 

On April 17, 2006, ADNAS filed with the United States 

Securities and Exchange Commission Amendment No. 7 to Form 

S8-2 as required by the Securities Act of 1933 ("Amendment 

7"); (ii) Therein, ADNAS stated that it had entered into a 

contract with RF in February of 2006 to receive grants from 

RF in the approximate total of $160,000 to support ADNAS'

proprietary research; (iii) On November 13, 2006, ADNAS 

filed with the United States Securities and Exchange 

Commission Amendment No. 8 to Form 88-2 as required by the 

Securities Act of 1933 ("Amendment 8"); (iv) Therein, ADNAS

stated that it had entered into a contract with the RF in 

February 2005 toreceive grants from RF in the approximate 

total of $240,000 and that approximately $160,000 of that 

total had already been provided; (v) At the time ADNAS

entered into this contract with RF, Dr. Hayward was on the 

Board of RF and was either a paid consultant for ADNAS or 

an executive with ADNAS; (vi) The date indicated in 

Amendment 7 as the date of the contract between ADNAS and 

RF was a misrepresentation designed to obscure the fact 

that Dr. Hayward and ADNAS arranged the grants from RF in 

exchange for making Dr. Hayward the CEO of ADNAS and its 

single largest shareholder; (vii) The grant to ADNAS from 

RF was illegal based on Hayward's position with ADNAS at 

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the time, as alleged above; (viii) ADNAS and Hayward thus

used the mail or wires in furtherance of the scheme by

reaching an agreement to compensate Hayward as a kickback 

for ADNAS' receipt of grant money from the RF and 

relocation to the LIHTI; (ix) In order to cover up this 

scheme, ADNAS and Hayward transmitted via the mail or wires 

Amendments 7 and 8 described above.

g. (i) ADNAS further committed wire fraud when ADNAS stated 

in an e-mail in July 2005 that it had chosen to do business 

with ACS because, in part, it had never heard of DEMOD; 

(ii) This statement was false when it was made as ADNAS had 

already claimed to have determined that ACS was the only 

source of microwire in the world; (iii) Any rudimentary 

investigation would have directed ADNAS to DEMOD; (iv) 

Further, ADNAS was made aware of DEMOD and its microwire 

before the e-mail was sent through its participation in a

textile markings program operated by the Department of

Commerce through cooperation with Oak Ridge National

Laboratory.

h. (i) ADNAS further committed wire fraud when it sent 

emails in 2005 to DEMOD on September 6th and a few days

later stating that it had decided to terminate its

agreement with ACS and refrain from using any microwire in 

its products whatsoever; (ii) These statements were false 

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as the agreement was never terminated as evidenced by the 

presentation made by ADNAS and ACS to Far East.

ci. 18 U.S.C. § 1341, 1343 - Mail and Wire Fraud. (i) By

filing the documents described in paragraph 4854(b) through 

the mail or wires, and by using the mail or wires as 

otherwise alleged herein, Corning, Alfred and ATRI 

knowingly furthered their scheme to suppress DEMOD and 

defraud the State of New York; (ii) The misrepresentations 

in those filed documents were made for the purpose of 

obtaining money or property, which they did;. (iii)By using 

the mail or wires including internet advertising to 

communicate false information concerning the disposition of 

ATRI’s assets and the number of new jobs created by startup businesses at the CCIC, Alfred, Corning and ATRI 

committed mail or wire fraud. 

j. New York Penal Law § 100.00 et seq. Criminal

Solicitation. (i) The Chairman of Board of Trustees of 

Alfred, Peter Cuneo, arranged a meeting between DEMOD CEO 

James 0' Keefe and Mr. Pat Butler of the Washington Post; 

(ii) At this meeting, Mr. Butler, who is a former Trustee 

of Alfred, stated that he played golf regularly with Donald 

Rumsfeld and would be willing to discuss DEMOD's technology 

with him for possible government applications; (iii) After 

the meeting, Mr. 0' Keefe met with Mr. Cuneo and informed

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him of Mr. Butler's statements; (iv) At this meeting, Mr. 

Cuneo requested a $50,000 fee be paid to Mr. Butler as 

consideration for his advocating DEMOD's technology to Mr. 

Rumsfeld; (v) DEMOD refused this solicitation which was an 

illegal attempt to lobby the United States Department of 

Defense.

k. New York Penal Law § 155.05 - Larceny. (i) Corning

committed larceny when it obtained DEMOD's trade secrets 

and microwire samples with the intent to appropriate them 

for itself; (ii) Specifically, Corning obtained the 

property by the false promises contained in the nondisclosure agreement with DEMOD and the promise it made to 

promote DEMOD's technology to the state when it never 

intended to fulfill those promises.

5855. DEMOD was directly and proximately injured in its

business by these defendants' violation of this statuteconduct 

described above. The damages sustained by DEMOD are generally 

described above. But for the fact that these defendants operated 

the CCIC as racketeering enterprise to further their own

interest and suppress DEMOD's, DEMOD would have obtained 

commercial contracts for its products including but not limited 

to its electronic articles surveillance and authentication 

system. But for the conspiracy, DEMOD would have reached a deal

with ADNASand if DEMOD had known about the racketeering 

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enterprise described herein, it would not have located its 

operations at the CCIC. Further, these defendants’ operations of 

the enterprise described herein deprived DEMOD of at least 

$5,000,000 at ATRI assets that would have been used to assist 

DEMOD had the money not been spent to build a laboratory for 

Corning.

COUNT TWO

(NEW JERSEY CIVIL RICO - N.J.S.A. 2C:41-2(d))

5956. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

6057. The defendants named in Count 1 agreed with each other

that they would commit all or some of the racketeering acts

identified therein with knowledge of the unlawful objective of

using the CCIC to obtain funds from New York State for their own 

benefit and to cover-up the actual use of funds 

providedpreventing DEMOD from bringing its product to the market

and with the intent to accomplish that objective.

58. By way of example and not limitation, Robert Ecklin 

knew that the information concerning the revenue and jobs 

created by the CCIC that was being transmitted by the wires was 

false but agreed with Alfred and ATRI to no correct the 

falsehoods and to allow them to be continuously transmitted by 

wire over the internet.

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6159. DEMOD was directly and proximately injured in its

business by these defendants' violation of this statute, as

described hereinabove.

COUNT THREE

(FEDERAL CIVIL RICO - §1962(c) AGAINST CORNING and ALFRED)

6260. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

6361. Corning and Alfred are "persons" who operated an

"enterprise," the CCIC, through a pattern of racketeering

activity.

6462. Corning and Alfred participated directly in the

founding operation and management of the CCIC and continue to do 

so.

6563. Corning and Alfred conducted the affairs of the

enterprise through a pattern of racketeering activity as

described above and committed the predicate acts of mail and 

wire fraud as set forth above.

6664. This pattern is ongoing, as explained above concerning 

the NMIC, and as the enterprise presently is broadcasting by way 

of the internet that DEMOD is a "graduate" of its program which 

is a further act of wire fraud.

67. The CCIC defines a "graduate" as a company that "becomes 

commercially viable and moves on to their own facility." DEMOD 

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has not done either of those things and these defendants know it 

but continue to broadcast this false information by the wires.

6865. The statement being broadcast on the internet is false

and is meant to make it appear as though the CCIC is

accomplishing its mandate to spur the growth of early stage

technology companies. This statement constitutes another act of 

racketeering activity as it is a violation of 18

U.S.C. § 1341, 1343.

6966. In fact, the CCIC was and is used by Corning and

Alfred as an “outside research facility” to facilitate the 

development of companies or business units formed by themselves 

or their employees such as Corning's photonics technology

projectbusiness, Santanoni Glass, Saxon Glass Technologies, 

Raymond Family Business Institute, CerCor Separations, CS&S 

Thermomechanical Laboratory, Corning Microarray Technologies and 

Corning Optical Networking Devices.

7067. Thus, while the CCIC is advertised to the public by

these defendants as a business incubator for start-up companies, 

it has been and continues to be used to subsidize the commercial 

interests of these defendants.

7168. Corning's and Alfred's racketeering activity at the

CCIC has been repeated by them the Infotonics facility, as

described above.

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7269. CCIC had an existence and purpose separate and apart

from these defendants' use of CCIC as an enterprise.

Specifically, the CCIC is an actual physical facility that

houses has hosted at least one tenants unrelated to the 

enterprise.

7370. DEMOD was directly and proximately injured in its

business by these defendants' violation of this statute as

described hereinabove.

COUNT FOUR

(State and Federal Anti-Trust, N.J.S.A. 56:9-3 and 15 U.S.C.§ 1

Against all Defendants)

74. Plaintiff repeats and re-alleges the foregoing paragraphs 

as if fully set forth at length herein.

75. The Defendants contracted, combined or conspired together 

to ensure that ADNAS purchase microwire from ACS.

76. The Defendants contracted, combined or conspired together 

to ensure that DEMOD received no funding in New York but that 

ADNAS did.

77. At the time, ADNAS and ACS were competitors of DEMOD.

78. The combination and conspiracy between the defendants

produced adverse, anti-competitive effects within the market for 

microwire in the United States.

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79. The combination and conspiracy affected interstate

commerce. As a result of the conspiracy, ADNAS moved from

California to New York and a New Jersey company, DEMOD, was

discriminated against in favor of a New York company, which

ADNAS became.

80. The object of the combination and conspiracy and the

conduct undertaken pursuant to the combination and conspiracy 

unreasonably restrained trade. The object was to make ACS the 

sole supplier of microwire to ADNAS and to the marketplace in 

general and to ensure that ADNAS' competing track and trace and 

authentication technology was free from competition by DEMOD.

81. DEMOD was injured as a proximate result of the combination 

and conspiracy.

82. The available evidence, some of which is described in this 

complaint, tends to prove that the defendants had a conscious 

commitment to the common scheme of restraining DEMOD's business 

and supporting the business of ADNAS and ACS. This evidence 

includes but is not limited to:

a. the fact that Mr. Brocklesby was separated from ADNAS

shortly after he misrepresented to DEMOD that he had

never heard of DEMOD and had elected to do business with 

ACS on the direction of a person from New York.

b. At that time, Dr. Hayward on behalf of ADNAS, had

already completed the acquisition of funds from the RF

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and had substantially completed the negotiation of the

agreement to move ADNAS from California to New York.

c. Also at that time, Hayward was a member of the Board of 

Directors of the RF along with Mr. Ecklin. Mr. Ecklin 

owed fiduciary and other legal obligations to DEMOD at 

the time by virtue of his roles at ATRI and Corning.

d. Also at the time, the Empire State Development

Corporation ("ESDC") denied DEMOD's request for a grant 

while its director, Charles Gargano, held stock in 

ADNAS.

e. Gargano and ESDC also administered the "Gen*NY*sis"

grant of approximately $3,000,000 to Alfred to establish 

a biomaterials program to be run by Dr. Alan Goldstein. 

Alfred never allocated these funds for the development 

of a biomaterials program and instead allocated the 

grant to a different program without any objection from 

Mr. Gargano or ESDC. Dr. Goldstein was working with 

DEMOD at the time and had the grant been allocated to 

biomaterials as required, Dr. Goldstein would have 

pursued research into the biomaterials applications of 

microwire, including but not limited to the combination 

of microwire and DNA replication technology.

f. The other evidence mentioned herein.

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83. As a result of the combination and conspiracy, ACS became 

the only company providing microwire for use in products sold in 

the United States. At the time, DEMOD had the right and ability 

to produce microwire that would have performed as well or better 

than the microwire acquired from ACS.

84. In addition to producing actual and probable 

anticompetitive effects in New York and the United States, the

conspiracy among the defendants alleged herein was per se

illegal in that the defendants conspired, among themselves and 

with others, to boycott DEMOD and drive it from the market.

85. DEMOD suffered an anti-trust injury in that as a result of 

the actions complained of, it was driven from the market leaving 

ACS as the only manufacturer of a glass coated amorphous metal 

microwire in the world. The damages suffered by DEMOD are 

described above.

COUNT FIVEFOUR

(BREACH OF CONTRACT AGAINST ALFRED)

8671. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

8772. DEMOD entered into a written agreement with Alfred as 

described above.to advance and promote DEMOD's microwire 

technology. Robert Bitting accepted the Agreement on behalf of 

ALFRED on or about May 9, 2002 and the parties executed the 

written agreement in or about July of 2002. Pursuant to the

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agreement, ALFRED agreed to pursue state and federal grants to 

advance DEMOD's microwire technology with the ultimate goal of 

enabling DEMOD to offer products for sale. DEMOD agreed to give 

ALFRED a one percent (1%) royalty on sales and to allow ALFRED 

to perform certain research on the microwire. The agreement also 

contained terms requiring ALFRED to keep strictly confidential 

all information disclosed in the course of the relationship.

8873. DEMOD and ALFRED maintained and ratified their

contractual relationship at all times from the acceptance of the 

agreement detailed above, through the written modification of 

the agreement which took place on or about May 10, 2005 when 

Charles Edmonson, on behalf of Alfred, accepted terms proposed 

by DEMOD.

8974. By engaging in the acts alleged above, and by failing

to pursue state, federal and other funding for DEMOD, and by in 

fact assuring that DEMOD did not receive any such funding, 

Alfred breached the contract.

9075. Many opportunities existed for Alfred to seek or 

support funding for work with DEMOD, but Alfred failed to do so.

By way of example, Alfred refused to support a congressional 

appropriations request made by DEMOD because it conflicted with 

other undisclosed interests of ALFRED, which were not disclosed 

to DEMOD.

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9176. Further, as described above, ALFRED misdirected $3-$5

million dollars from its Biomaterials Center or “BIOS” program 

which was to be under the direction of Dr. Alan Goldstein. This 

money would have been used, in part, to develop DEMOD's

technology. This misdirection of funds was a breach of the

contract between ALFRED and DEMOD in addition to constituting 

the fraudulent use of dedicated state and federal money.

92. ALFRED further breached the agreement by disclosing to 

CORNING and others information required to be kept confidential 

per the agreement.

77. ALFRED further breached the agreement by failing to 

disclose that it had certain interest that conflicted with its 

obligations to DEMOD.

78. ALFRED further breached the agreement by failing to 

advise DEMOD that its efforts to attract investment from New 

York State agencies were futile and by letting DEMOD “play out 

the string” with those agencies. 

79. ALFRED further breached the agreement by applying for 

one or more “bogus grants” in DEMOD’s name and without DEMOD’s 

knowledge.

80. ALFRED further breached this agreement by directing 

Professor William LaCourse to not submit a Phase II SBIR 

proposal concerning an application for microwire after Phase I 

has been successfully received and performed.

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9381. DEMOD was damaged by Alfred's breach of contract as

described above and in that DEMOD was relying upon Alfred's good 

faith performance to seek funding from government and other 

entities to create a manufacturing facility and prototypes. Due 

to the lack of funding and Alfred's dissemination of 

confidential information, DEMOD was prevented from establishing 

its business as a going concern towards which DEMOD had expended 

millions of dollars of funds.

9482. The actions alleged herein against Alfred prevented

DEMOD from recognizing the fruits of it contract with Alfred and 

therefore constitute a breach of the covenant of good faith and 

fair dealing inherent in every contract.

9583. DEMOD has suffered natural and foreseeable damages as

a result of Alfred's breach of contract and the covenant of good 

faith and fair dealing, as described above. Had Alfred fulfilled 

its contract, DEMOD would be a profitable going concern rather 

than the near total loss that it is. Further, had Alfred not 

breached its contract, monies expended by DEMOD to fulfill its 

contract with Alfred and to develop microwire into a commercial 

success would not have been spent without return.

COUNT SIXFIVE

(Alfred and Corning's Liability for Claims Against ATRI/Piercing

the Corporate Veil)

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9684. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

97. Corning and Alfred were and remain the only two partners 

and owners of ATRI. Corning and Alfred were and are responsible 

for the operation of ATRI.

85. ATRI was co-founded by Corning and Alfred pursuant to 

a partnership agreement between them. Thus, from the very 

inception of ATRI, it was never an independent corporation but 

was an instrumentality of Alfred and Corning. 

9886. Corning and Alfred exercised pervasive complete 

dominion and control over ATRI from its inception as described 

above including the allegations of paragraph 35. Employees of 

both Corning and Alfred simultaneously served as the management 

of ATRI. There was substantial intermingling of activity at ATRI 

as most of the space at the CCIC was occupied by companies owned 

by the defendants or their employees or related corporate 

entities.

87. Corning and Alfred used their domination and control 

of ATRI to perpetrate a fraud or wrong upon Demodulation. 

Specifically, these defendants arranged for and permitted DEMOD 

to locate its business at ATRI and to keep its business at ATRI 

so they could monitor and control DEMOD while they were both 

working on projects to produce competing technology. As they 

were doing this, they knew DEMOD’s attempts to secure investment 

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or grants from the State of New York would be futile but never 

informed DEMOD of this fact. For example, while DEMOD was at 

ATRI under the belief that ATRI was a legitimate, independent

business incubator, Corning was working with AMT, Texas 

Instruments, Dow Corning, and Matrices to develop a microwire 

RFID application in violation of Corning confidentiality 

agreement with DEMOD. 

99. ATRI was used by these Defendants to perpetrate the acts 

described herein and to damage DEMOD as described herein.

10088. Should ATRI be found liable for any damages asserted

herein, Alfred and Corning are jointly and severally liable for 

those damages.

COUNT SEVENSIX

(BREACH OF CONTRACT AGAINST ATRI)

10189. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

10290. DEMOD entered a verbal contract with ATRI pursuant to 

which DEMOD occupied space and conducted some of its business

operations at the CCIC. Pursuant to this contract, ATRI and 

DEMOD agreed that DEMOD would receive all the benefits offered 

by CCIC to start-up businesses. ATRI breached the contract by 

failing to provide these benefits and services to DEMOD.

91. ATRI breached the contract by taking the actions and 

committing the wrongs alleged above.

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92. ATRI further breached the contract by consenting to 

its domination and control by Corning and Alfred, as described 

above.

93. ATRI breached the contract by failing to treat its 

tenants equally. For example, ATRI spent at least $5,000,000 to 

benefit Corning but spent nothing to benefit DEMOD. 

94. ATRI lured DEMOD into the CCIC by making 

misrepresentations of fact. For example, ATRI advertised that it 

had created thousands of jobs and billions of dollars in revenue 

when it knew that was not true. DEMOD relied upon these 

representations in deciding to locate its operations at the 

CCIC.

95. ATRI received consideration from DEMOD in that DEMOD’s 

tenancy permitted ATRI to fulfill its charter and obligations to 

the State of New York to locate and incubate emerging start-up 

companies. 

96. In addition, DEMOD and ATRI entered into a written 

non-disclosure agreement. DEMOD disclosed confidential 

information to ATRI pursuant to this agreement including 

technological information concerning RFID and business plans. 

ATRI breached this agreement by disclosing this information to 

third parties.

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103. The CCIC was a New York state funded initiative to

encourage and support private companies working in the field of 

ceramics.

104. ATRI breached the contract by failing to provide the

promised benefits and services to DEMOD and by taking the

actions described herein. Contrary to its duties under the

contract, ATRI disseminated false information about DEMOD and 

ensured that DEMOD did not receive any available funding.

105. ATRI lured DEMOD into the CCIC under false pretenses

for the purpose of extracting information from DEMOD.

10697. The actions alleged herein against ATRI prevented

DEMOD from recognizing the fruits of it contract with ATRI and 

therefore constitute a breach of the covenant of good faith and 

fair dealing inherent in every contract.

10798. DEMOD was damaged by ATRI's breach of contract as

described hereinabove. Had ATRI not breached its contract, DEMOD 

would have been a commercial success.

COUNT EIGHTSEVEN

(BREACH OF CONTRACT AGAINST CORNING)

10899. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

109100. DEMOD entered one or more contracts with Corning

requiring CORNING to keep confidential all information

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concerning DEMOD and its technology.described in paragraph 22 

above.

110101. CORNING breached the contract by sharing DEMOD's

information with others, including but not limited to 

ACS.jointly developing a microwire RFID application with AMT, 

Texas Instruments, Dow Corning and Matrices. The technological 

basis for this application was first disclosed to Corning by 

DEMOD pursuant to the confidentiality agreement between Corning 

and DEMOD. This joint development project was managed in whole 

or in part by Mark Taylor of Corning, the same person who was 

responsible for Corning’s confidentiality agreement with DEMOD. 

In the course of this joint development project, Corning 

disclosed DEMOD’s confidential information to the other 

companies involved in the joint development project.

102. DEMOD first learned of the joint development project 

referred to in the previous paragraph in the summer of 2013. 

Between January 2005 and the present, Corning took affirmative 

steps to prevent DEMOD from learning of this breach including 

assurances from Vincent Hatton in January and February of 2005 

that no such joint development project was underway and 

assurances from Robert Ecklin in the summer of 2004 that Corning 

had no interest in developing microwire technology.

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111. Corning further breached the contract by attempting 

toreverse engineer DEMOD's trade secrets and sharing the results 

of that reverse engineering with others, including ACS.

112. CORNING further breached the contract by actively

undermining DEMOD by spreading false information about DEMOD, 

its technology and other intellectual property. By way of 

specific example and not limitation, Corning, through its 

employees or other agents including Robert Ecklin and Tom 

Trantor, stated that Corning was the true owner of DEMOD's 

technology and that DEMOD had stolen the technology from 

Corning.

113. According to information provided to DEMOD by Erland

Kailbourne, Corning used its political and commercial influence 

to ensure that DEMOD's technology would not find funding, an 

interested partner, lender or customer in New York State. DEMOD 

also learned in meetings with other New York State grant making 

bodies that they would not consider a grant to DEMOD without the 

approval of Corning because it was their understanding that 

Corning was not supportive of DEMOD. Such bodies included the 

ESDC, NYSTAR and the New York State Energy Research and 

Development Authority ("NYSERDA").

114103. The actions alleged herein against Corning prevented

DEMOD from recognizing the fruits of it contract with Corning 

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and therefore constitute a breach of the covenant of good faith 

and fair dealing inherent in every contract.

115104. DEMOD was damaged by Corning's breach of contract as

alleged hereinabove and in that it was prevented from bringing 

its technology to market and becoming a commercial success.the 

confidential information revealed by Corning to AMT, Texas 

Instruments, Dow Corning and Matrices has been used by one or 

more of them to generate revenue that rightfully belongs to 

DEMOD.

COUNT NINE

(TRADE LIBEL AGAINST CORNING)

116. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

117. ECKLIN was on the board of RF while at the same time

serving as Executive Vice President of Corning and the Director 

of the CCIC. In all those positions, Ecklin was acting in 

furtherance of his duties to his employer, Corning.

118. While serving in this capacity, Ecklin made the

statements described above.

119. Similarly, Tom Trantor was acting in his capacity as

Corning's government relations executive when he made the

statements described above.

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120. DEMOD learned in 2006 from Mr. Iszard of the

statements made by Corning representatives to the ESDC, as

described above.

121. Based on the comments that DEMOD heard from ESDC,

NYSTAR and NYSERDA, Corning must have made further statements to 

harm DEMOD's ability to develop its business.

122. DEMOD was damaged by these statements, as described

above, in that its ownership of its technology was called into 

doubt making those that heard the statements unwilling to do 

business with or financially support DEMOD.

COUNT TENEIGHT

(MISAPPROPRIATION OF TRADE SECRETS AGAINST CORNING, ALFRED,

ADNAS and ATRI)

123105. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

124106. These defendants each misappropriated Plaintiff's

trade secrets, conspired to misappropriate them, or knowingly 

received misappropriated trade secrets and gave them to others,

including ACS, not entitled to receive them. These trade secrets 

were then used by ACS and ADNAS in their business.For example, 

Alfred used DEMOD’s trade secrets to apply for a federal grant 

and Corning used them to jointly develop with AMT, Texas 

Instrument, Matrices and Dow Corning a microwire RFID 

application.

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125107. DEMOD was damaged thereby, as described above.

COUNT ELEVENNINE

(UNFAIR COMPETITION/TORTIOUS INTERFERENCE WITH PROSPECTIVE

BUSINESS RELATIONS AGAINST CORNING, ALFRED and ATRI)

126108. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

127109. These Defendants each took actions or conspired to

take actions to prevent DEMOD from doing business with or

getting grants or loans from third parties. By way of example 

and not limitation, these defendants assured that DEMOD did not 

do business with ADNAS.

110. By way of further example, Corning and Alfred assured 

that DEMOD did not receive support from Amo Houghton’s Task 

Force on the Future. Mr Houghton was a former congressman and 

the former Chairman and CEO of Corning and formed the Task Force 

on the Future to coordinate and foster economic development in 

southwestern New York.

128111. As a result of these actions, DEMOD was not able to

realize its reasonable expectations of economic advantage, as 

described above, which expectation was in fact recognized in 

writing by Alfred to have been in the range of $250,000,000 to 

$2,000,000,000 annually.

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COUNT TWELVETEN

(NEW YORK GENERAL BUSINESS LAW §§ 349 and 350 AGAINST ATRI)

129112. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

130113. ATRI engaged and continues to engage in deceptive 

acts and practices described above in the conduct of the 

business of the CCIC which were and are directed towards 

consumers of business incubation services.

131114. At the time DEMOD contracted with ATRI to set up 

part of its operations there and continuing through the present,

CCIC marketed itself and offered its services to the general 

public. ATRI has attempted to attract small family businesses to 

the CCIC and other small start up technology ventures.

132. DEMOD was directly injured by these deceptive 

acts and practices, including but not limited to the false

statements in the documents filed with NYSTAR described herein 

and the false advertising described herein.

115. DEMOD was directly injured by these deceptive acts and 

practices. These deceptive acts and practices induced DEMOD to 

locate its business at the CCIC thereby inducing DEMOD to forego 

other legitimate opportunities to locate its business elsewhere. 

116. The public at large has been injured by these 

deceptive acts and practices in that state and federal tax 

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revenue was provided to ATRI by the government of the State of 

New York for the express purpose that it be used and held in 

trust for the benefit in start-up businesses intended to benefit 

the public and start-up businesses by creating revenue and jobs. 

Rather than using the funds for this purpose, ATRI used at least 

$5,000,000 of these funds to benefit Corning, then an existing 

public corporation for at least one hundred years, by building 

it a laboratory and clean space to operate it photonics 

business.

133117. Had DEMOD known that the CCIC was operated as a 

sham to promote the interests of its ownersCorning and Alfred

rather than emerging businesses, it would not have become 

associated with the CCIC in any way and would not have suffered 

the damages asserted hereinabove.

COUNT THIRTEEN

(42 U.S.C. § 1983 AGAINST ATRI)

134. Plaintiff repeats and re-a11eges the foregoing

paragraphs as if fully set forth at length herein.

135. The State of New York significantly involved itself

with ATRI. It provided the initial funding of $10,000,000 to 

operate and create the CCIC and it passed special legislation 

cancelling ATRI's responsibility to pay back some portion of 

that initial funding, believed by DEMOD to be approximately 

$5,000,000.

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136. While acting under the color of state law, policy or

custom, ATRI acted to deprive DEMOD of rights guaranteed to it 

by the United States Constitution including but not limited to 

the substantive due process right of property ownership and the 

right to engage in commercial activity.

137. The actions of this Defendant also violated the

Commerce Clause in that those actions amounted to a control over 

interstate commerce and the discriminatory treatment of DEMOD, a 

New Jersey company, in favor of New York companies such as 

Corning and ADNAS.

138. The actions of this defendant were consistent with a

policy or custom observed by this defendant.

139. DEMOD suffered damages as alleged hereinabove.

COUNT FOURTEEN

(35 U.S.C. § 271 - PATENT INFRINGMENT AGAINST ADNAS)

140. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

141. Demodulation holds or held several patents. The

patents at issue are: US 6,270,591 B2 - Amorphous and

Nanocrystalline Glass-Covered Wires; US 5,557,085 – Method and 

Device for Electronic Identification; US 5,576,693 - Method and 

Device for Remote Sensing of Objects; US 6,018,297 - Method and 

Device for Coding Electronic Labels; US 6,137,411 - Article 

Surveillance System; US 6,225,905 - Sensor for Remote Detection 

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of Objects; US 6,232,879 - Sensor and Method for Remote 

Detection of Objects; US 6,417,771 - Sensor, a Method and a 

System for Remote Detection of Objects; US 7,075,439 - Marker 

for Remote Detection of Articles; US 7,071,417 B2 - Optically 

Encoded Glass-Coated Microwire; US 7,233,249 - Multi-Bit Encoded

Glass-Coated Microwire and Articles Composed Thereof; US

7,354,645 - Engineered Glasses for Metallic Glass-Coated Wire; 

US 7,368,166 - Polymerase Chain Reaction Using Metallic GlassCoated Microwire.

142. During the period when these patents were held by

Demodulation, and within the six year period preceding the

initiation of this lawsuit, including through the present for 

some of the patents, this defendant infringed one or more of 

DEMOD's patents by producing, selling, marketing and using 

products that either literally infringed DEMOD's patents or did 

so through the doctrine of equivalents.

143. DEMOD gave ADNAS written notice of infringement. In

response, ADNAS claimed it was going to cease and desist in the 

infringement. However, this representation was false as ADNAS 

continued to infringe after that date as evidenced by the 

presentation to Far East.

144. DEMOD suffered damages as a result of this

infringement as it was entitled to the revenue derived by ADNAS 

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as a result of its sale of infringing products and as described 

above.

COUNT FIFTEENELEVEN

(FRAUD AGAINST ALFRED, CORNING AND ATRI)

145118. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

146119. These defendants knowingly made material

misrepresentations or omissions of fact with the intent to cause 

DEMOD to rely upon them and upon which DEMOD actually relied. 

These misrepresentations included:defraud DEMOD.

a. Corning’s written statements by Vincent Hatton to DEMOD 

in January and February of 2005 that Corning was not 

involved in any activity that would constitute a breach 

of the confidentiality agreement between Corning and 

DEMOD. At the time, Corning knew it was involved in a 

joint development project for a microwire RFID 

application with AMT, Texas Instrument, Dow Corning and 

Matrices which project was being managed by Mark Taylor, 

the same Corning employee responsible for the nondisclosure agreement with DEMOD. These written 

statements also contained the knowing misrepresentation 

that Hatton had spoken to Mark Taylor, Dr. Borelli and 

others to determine whether any breach of the 

confidentiality agreement had occurred when in fact no 

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such conversations took place. DEMOD first learned in 

the summer of 2013 that these statements were knowingly 

false. 

b. Robert Ecklin’s statement to DEMOD in the summer of 2004 

that Corning had no interest in developing any 

applications for microwire technology when in fact it 

was at that very time involved in a joint development 

project for a microwire RFID application with AMT, Texas 

Instruments, Dow Corning and Matrices. At the time, 

Ecklin was an executive with Corning and the President 

of ATRI and made this statement on behalf of both 

corporations. DEMOD first learned in the summer of 2013 

that this statement was knowingly false. 

c. Alfred’s repeated statements by Robert Bitting, Mike 

Hyde, Dave Szerbacki and others to DEMOD that Alfred was 

pursuing grants and other funding from New York State 

agencies for the benefit of DEMOD when in fact it was 

not doing so because it knew those efforts would be 

futile. Alfred decided to let DEMOD “play out the 

string” in pursing this funding and did not disclose 

that those efforts were futile under circumstances where 

it had an obligation to do so because Alfred knew DEMOD 

was relying upon Alfred’s assistance and advice to 

obtain such funding. 

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147120. DEMOD relied on those misrepresentations to its

detriment thereby incurring and suffering damages described

hereinabove.

COUNT SIXTEEN

(UNJUST ENRICHMENT AGAINST ALFRED)

148. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

149. Alfred promised to seek funding to be used to develop

DEMOD's business. Alfred, or one or more entities under its 

responsibility and control, obtained funding based on the 

representation that it would be used for work with

DEMOD.

150. Alfred never made that funding available to DEMOD and

instead retained it for its own purposes.

151. The circumstances are such that it would be unfair and

inequitable to permit Alfred to retain the funding.

COUNT SEVENTEENTWELVE

(BREACH OF FIDUCIARY DUTY AGAINST ATRI)

152121. Plaintiff repeats and re-alleges the foregoing

paragraphs as if fully set forth at length herein.

153122. ATRI owed fiduciary duties to DEMOD in the ATRI 

obtained at least $10,000,000 in funds from the New York State 

government on the condition that those funds be used for the 

benefit of independent start-up companies like DEMOD. In this 

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respect, ATRI accepted the obligation to act as a trustee over 

those funds.

123. ATRI acknowledged its fiduciary obligations to its 

tenants by advertising that its charter was to provide 

assistance to start-up companies without charge.

124. ATRI acknowledged its fiduciary obligations to DEMOD 

by accepting DEMOD into the CCIC without charge and by telling 

DEMOD that its mission was to assist start-up companies like 

DEMOD because it had received government funds to do so.

154125. ATRI breached those fiduciary duties which proximately

caused DEMOD to suffer the damages alleged hereinabove.

Specifically, ATRI breached its fiduciary duty to DEMOD by:

a. Failing to provide “intellectual property management,” 

“investment/strategic partner linkages,” “links to 

higher education institutions,” “international trade 

assistance,” “general legal services,” and “technology 

commercialization” and other services;

b. Failing to advise DEMOD that ATRI was actually operated 

at the direction of Corning and Alfred, who had formed a 

partnership to establish, capitalize and operate ATRI 

for their own benefit;

c. Failing to advise DEMOD that Corning was involved in a 

joint development project for a microwire RFID 

application with AMT, Texas Instruments, Dow Corning and 

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Matrices utilizing DEMOD’s ideas which was in direct 

illegal competition with DEMOD;

d. Spending at least $5,000,000 on one of its tenants, 

Corning’s photonics business, leaving insufficient other 

tenants such as DEMOD.

COUNT EIGHTEEN

(BREACH OF CONTRACT IMPLIED IN FACT AND/OR LAW AGINST ATRI)

126. Plaintiff repeats and re-alleges the foregoing 

paragraphs as if fully set forth at length herein. 

127. Through their actions and inactions, ATRI and DEMOD 

indicated and intention to be bound to a contract between them. 

The essential consideration between them was that DEMOD agreed 

to become a tenant at the CCIC and ATRI agreed to provide DEMOD 

the services offered to CCIC tenants. ATRI received a benefit in 

that DEMOD’s tenancy permitted ATRI to fulfill its charter to 

incubate ceramics companies.

128. ATRI breached this contract by failing to provide the 

services offered to CCIC tenants.

WHEREFORE, Plaintiff demands judgment against each Defendant 

individually, jointly, severally and/or collectively as follows:

(a) Compensatory Damages;

(b) Consequential and incidental damages;

(c) Punitive Damages;

(d) Attorneys ' fees and costs of suit; and

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(e) Interest;

(f) Treble damages;

(g) An injunction prohibiting ADNAS from further

infringement;

(hg) An order reinstating any patents which have expired 

due to the non-payment of applicable fees;

(fh) Awarding such other and further relief as the Court 

may deem equitable, proper and just.

JURY DEMAND

Plaintiff hereby demands trial by a jury on all issues.

BY: 

Benjamin D. Light, Esq.

Dated: 

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