Polaroid Chief Says Firm Tried to Build Own Niche
Polaroid Corp. took pains to avoid competition with Eastman Kodak Co., the Polaroid chairman testified Tuesday in the opening testimony in a trial over the amount of damages Kodak should pay for infringing on its rival’s instant-photography technology.
In U.S. District Court, Polaroid Chairman William J. McCune Jr. began to outline the steps that led to head-to-head competition with Kodak.
Polaroid, based in Cambridge, Mass., is seeking $12 billion in damages from Kodak for infringing on instant photography patents. An earlier court decision found that infringement occurred.
Rochester, N.Y.-based Kodak says it should pay $177 million, equal to 5% royalties on the instant cameras and film Kodak sold from 1976 until 1985.
McCune said Polaroid and Kodak had a productive working relationship for decades. But it soured in the late 1960s, he said, when Polaroid was working on its revolutionary SX-70 camera.
Kodak, which for years had manufactured film for Polaroid, was asked to produce the new, complex negative that Polaroid had developed for the instant color camera. But Kodak demanded a license from Polaroid, McCune testified, which would have allowed Kodak to develop its own instant photography.
“There was considerable reluctance to undertake the project unless we gave them license,” McCune said under questioning by Polaroid attorney Herbert Schwartz. “A stumbling block was always that we couldn’t see how giving Kodak a license to make products competitive with ours would allow us to stay in business.”
Polaroid ultimately built its own film manufacturing facilities in Massachusetts.
Instant photography, McCune said, “is all our bread and butter and that’s everything we’ve got.”
McCune’s testimony before Judge A. David Mazzone ranged widely from the origins of instant photography after World War II to the introduction of the SX-70 camera in 1972.
The story began during the war, McCune said, when Polaroid founder Edwin Land was in Santa Fe on a family trip. “He took photographs of his daughter and she asked why she couldn’t see (them) right away,” McCune said. “He wondered, too.”
By 1963, with manufacturing help from Kodak, Polaroid developed the first color instant photography.
“The business grew rapidly in that period,” McCune said. Revenue of $129 million in 1963 jumped to $571 million in 1972. Polaroid’s profits after taxes increased from $25 million to $75 million in that time.
With the introduction of the SX-70, McCune said, Polaroid hoped for a dramatic increase in its business.
“We viewed it as a revolutionary step and thought it was going to dramatically increase the business of the company and increase the life of the business,” McCune said.
