The Hammer Falls Harder

• Author: Ronald K. Fierstein
• Profession: Lawyer on the team of litigators from the prestigious patent law firm of Fish & Neave
• Pages: 479-499

479

CHAPT ER 27

THE HAMMER

FALLS HARDER

In the weeks following the announcement of Judge Zobel’s decision,

industry analysts hailed it as a great victory for Polaroid, positioning it for

a dramatic turnaround, with yet another generation of improved instant

products in the pipeline and its finances in excellent condition.1 Buoyed

by the decision, Polaroid’s chief executive, William McCune, issued

an optimistic assessment of the company’s future. “We believe we can

change the direction of amateur photography. . . . We can stop its decline

and make it grow.”2 The enthusiasm was contagious. When the trading

volume of Polaroid’s stock rose to abnormally high levels about a month

after the decision, it seemed possible that someone was accumulating

shares and that the company might even be the target of a takeover bid, an

eventuality that never materialized.3

The immediate impact of the decision on Kodak was harder to judge.

Publicly, Kodak remained defiant and committed to the instant photogra-

phy market. But sales in the instant photography field appeared to have

peaked in 1978 when Polaroid and Kodak sold a combined annual total

of 8.2 million instant cameras. By 1984, that number had dropped to just

3.1 million.4 Moreover, in recent years, both companies had been on paths

to diversify from the amateur photography market: Kodak toward elec-

tronics and computerized information-retrieval systems and Polaroid into

commercial and industrial applications of its instant photography technol-

ogy. Peter Enderlin, a Smith Barney analyst, noted that the ruling would

have been more devastating to Kodak earlier in the game, when the com-

pany “had high hopes.”5 In reality, no one had any idea of the ultimate

economic consequences for Kodak—the dimension of damages, if any,

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A Triumph of Genius

480

that would ultimately be awarded in the case or whether the court would

enjoin Kodak and thus force it to leave the business.

It had taken Judge Zobel three years, one month, and thirteen days

to issue the decision; now she had to rule on Polaroid’s request that she

immediately enjoin Kodak from further continuing infringement of its

patents. This time her judgment was swift. Once again it came down on

a late Friday afternoon. It was October 11, 1985, just four days after the

final submissions from the parties and less than one month after her origi-

nal opinion was issued. Even while Kodak publicly protested its inno-

cence and vowed to appeal her decision, Judge Zobel defied convention

and, as described by Business Week, “didn’t show Kodak any mercy.”6

She issued a permanent injunction ordering Kodak to cease using Pola-

roid’s patented technology.7 More significantly, as Schwartz had so vigor-

ously urged her to do, she refused to stay the injunction pending Kodak’s

appeal of the liability decision and set the effective date of the injunction

for January 9, 1986, just twelve weeks later. This was time enough for

Kodak to appeal her refusal to stay the injunction but not nearly enough

time for the overall appeal on the merits of the case to run its course.

This was a monumental event. Herb Schwartz was out of the office,

and had to be tracked down, probably on his sailboat, to be told.8 Ironi-

cally, Kodak received word of the judge’s decision in a most unusual, and

awkward, manner. As the news began circulating, Frank Carr was not

able to get any information through Kodak’s local Boston counsel, so he

was forced to call the offices of his opponent, where one of Schwartz’s

young partners, Patricia Martone, confirmed the decision had been made

and told Carr that she had a copy.9 “Were we enjoined?” Carr asked her.

Martone read him the first paragraph: “Polaroid’s request for injunctive

relief is granted, and Kodak’s motion for a stay pending appeal is denied.”

Martone believed she could tell from Carr’s voice, as he thanked her and

said goodbye, that he was shaken by the news. After a long war, Carr and

Kodak had suffered a devastating defeat.

In making her decision, Zobel soundly rejected Kodak’s contention

that the equities of the situation tilted the balance in its favor. In support

of her brave and proactive ruling, Judge Zobel quoted a New York fed-

eral court’s observation that “public policy favors the innovator, not the

copier.”10 She admitted that Kodak’s arguments on the irreparable harm

that might result from an immediate injunction “are seductive.” She

acknowledged the hardship that would befall Kodak’s customers who

already owned sixteen million Kodak instant cameras, its thousands of

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