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Polaroid Wins $909 Million From Kodak : Photography: The firms have been involved in a patent-infringement suit for years. Analysts had expected the award to be much larger.

October 13, 1990|From Times Staff and Wire Reports

In a huge award that nonetheless disappointed some observers, Polaroid Corp. won $909 million Friday in a long-running instant photography patent-infringement suit against rival Eastman Kodak Co.

U.S. District Judge A. David Mazzone in Boston, delivering a judgment topped only by the $10.3 billion awarded to Pennzoil Co. in a dispute against Texaco Inc. over an oil company takeover, ruled that Polaroid had lost profits of nearly $250 million because of Kodak's illegal actions.

But the $909-million award, which also reflects interest and royalties, was far short of the $2.5 billion that some Wall Street analysts had expected, or the $5.7 billion in lost profit and interest that Polaroid had demanded in court papers it filed in February, 1988.

"Clearly this is a negative award for Polaroid," said B. Alex Henderson, an analyst at Prudential Bache Securities in New York. "People were expecting a number much larger than that, and I would expect Polaroid (stock) to be off anything from $3 to $5 Monday morning."

On Friday, Kodak shares were up sharply in after-hours trading following Judge Mazzone's lower-than-expected award. In New York Stock Exchange trading, Kodak closed at $34.625, up 25 cents for the day, but rose to $38 in some off-market trading.

Polaroid shares were unchanged from the NYSE close at $29.25, down 25 cents for the day.

Polaroid declined to say whether it would appeal the ruling, announcing it "will review the decision and all relevant factors to determine what steps the company will take."

Kodak's chairman and chief executive officer, Kay R. Whitmore, said, "While we feel the court award is substantially more than the amount to which Polaroid is entitled, we view the court's decision as a confirmation of our good faith in entering the instant photography business."

The patent-infringement case began 14 years ago when Cambridge, Mass.-based Polaroid alleged that it had suffered losses of nearly $4 billion when Rochester-based Kodak infringed on Polaroid's instant-photography patents.

Polaroid's instant camera, which develops photographs on the spot in 60 seconds, was a technological marvel that captivated America when it first appeared on store shelves after Thanksgiving in 1948.

Polaroid alleged that Kodak illegally incorporated the technology in instant photography products it sold from 1976 until early 1986.

Polaroid sought trebled damages of $12 billion, claiming it suffered severely at Kodak's hands through loss of market share and unfair price competition.

But Kodak said it had only cost Polaroid $343 million and termed Polaroid's claim "excessive."

Many experts believe that the dispute took a creative and financial toll on Polaroid, which was one of the earliest postwar high-tech pioneers in the U.S. and whose founder, Edwin H. Land, holds more patents than any inventor except Thomas Edison.

Land's much-ballyhooed follow-up to the instant still camera--Polavision instant movies--was a flop in 1977. The $700 camera cost too much, could not record sound and only exposed 2 1/2 minutes of film per cartridge. Consumers opted for a competing invention: the videotape recorder.

Polaroid suffered another blow a few years later when the Japanese began marketing automated, fuss-free 35-m.m. cameras in the United States. That development, together with the advent of one-hour photo shops, rendered instant still cameras virtually obsolete.

The company's instant camera sales--and profit--plunged.

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