A federal judge yesterday ordered Eastman Kodak Co. to pay $909.5 million to Polaroid Corp. for violating seven Polaroid patents on instant photography.
The amount -- $454.2 million in compensatory damages and $455.3 million in interest charges -- is believed to be the largest patent infringement award in U.S. history. It is more than four times the then-record $207 million that Smith International Inc. was ordered to pay Hughes Tool Co. in 1986 for copying drill-bit technology.
However, both Polaroid and Kodak officials said yesterday that they were disappointed with the amount of the judgment handed down by U.S. District Court Judge A. David Mazzone in Boston.
Kodak, which had argued that $187 million would have been sufficient to settle the 14-year-old case, said that the penalty was too high.
Polaroid, which contended that it was due $12 billion in compensatory and other damages, said the award was too low. The amount Polaroid sought would have dwarfed Kodak's $529 million profit in 1989. Polaroid earned $145 million last year.
The question of whether Kodak had violated Polaroid's patents was not at issue in yesterday's ruling. A federal court found Kodak guilty of that violation in 1985, and ordered Kodak to exit the instant photography business.
Kodak appealed that ruling unsuccessfully. The company pulled out of the instant-camera business in 1986, leaving 16.5 million owners of Kodak cameras without a source of film. Kodak offered refunds but that effort, too, was hampered by legal difficulties.
Yesterday's ruling was based on whether Kodak's patent violation was intentional. Judge Mazzone said it was not. Had he ruled that the violation was willfull, Kodak could have been subject to triple damages.
Mazzone's ruling thus gave Kodak officials a partial victory, for which they expressed gratitude. "We are pleased that Judge Mazzone ruled that the patent infringement was not willful," said Kay R. Whitmore, Eastman Kodak's chairman, president and chief executive officer.
"It has always been our firm policy to respect the valid patent rights of others. The avoidance of any patent infringement was uppermost in our minds in the design of our instant cameras and film," Whitmore said.
Kodak officials had not decided yesterday whether to appeal Mazzone's ruling. But, should the penalty stand, Whitmore said it would be paid from Kodak's earnings.
"This award will have no material financial impact on the company," Whitmore said. However, he said that, "Based on our understanding of the facts and applicable law, we can say that the award is substantially more than the amount to which we believe Polaroid is entitled."
MacAllister Booth, president and chief executive officer of Polaroid, disagreed, hinting that further litigation is possible in what long ago ceased to be an open-and-shut case.
"Considering the significance of the injury to the company and its shareholders, we will review the decision and all relevant factors to determine what steps the company will take," Booth said.
Polaroid's stockholders will demand such a review, Booth said. Accordingly, Polaroid's board of directors has been looking at "a number of options for using the recovery" of losses from Kodak's patent infringement "to enhance value to our shareholders."
"The board will review these options in light of this award, but will not announce how we plan to apply the proceeds ... until there is a final resolution of this litigation," Booth said.