Polaroid Corp. v. Eastman Kodak Co. - Oppedahl Patent Law Firm LLC

Intellectual Property Library ISSN 1526-8535
clearly. To be sure, patent owners have not been held to the type of absolute proofs
Kodak desires. See, e.g., King Instrument Corp. v. Otari Corp., 767 F.2d 853, 864 [ 226
USPQ 402 ] (Fed. Cir. 1985), cert. denied, 475 U.S. 1016 (1986) (lost profits awarded
where the patentee did not manufacture a product equivalent to the infringing product at
all during the infringement period). The cases make it clear that the patentee's proof on
all issues is that of a reasonable probability. E.g., Aro Mfg. Co. v. Convertible Top
Replacement Co., 377 U.S. 476, 507 [ 141 USPQ 681 ] (1964); A. Stucki Co. v.
Worthington Indus., Inc., 849 F.2d 593, 597-98 [ 7 USPQ2d 1066 ] (Fed. Cir. 1988);
Yarway Corp., 775 F.2d at 275. Polaroid's standard, if that is in fact what it is urging,
renders the manufacturing capability requirement meaningless. Any patentee can
concoct a scenario to achieve the necessary result.
In reality, the legal standard has substance and meaning. Courts have refused to award
lost profits when, for example, the use of an alternative facility to meet demand would
have required the patent owner to curtail production of another more profitable product.
Deere & Co. v. International Harvester Co., 218 U.S.P.Q. 403, 407 (C.D. Ill. 1982),
aff'd in part and rev'd in part, 710 F.2d 1551 [ 218 USPQ 481 ] (Fed. Cir. 1983). In
Deere, the district court found no evidence that the patentee would have made the
decision to curtail the more profitable product although they could have done so. Id. at
407. In Water Technologies, the Federal Circuit found no manufacturing capability and
refused to award lost profits in part because the patentee had no facilities to manufacture
the product commercially. 850 F.2d at 673. Under Polaroid's theory, the patentee in
Water Technologies could have met its burden by showing, even under the most
improbable scenario, that it could have built a production facility. The law is not so
easily satisfied.
While it may have been physically possible to match Kodak's volume if Polaroid began
to greatly expand its manufacturing capacity from the moment the infringement began,
Polaroid has not proven its ability to do so. What is physically possible does, however,
serve as a starting point for determining what reasonably could or would have occurred.
In this analysis, Polaroid is entitled to every benefit of the doubt. Del Mar Avionics, 836
F.2d at 1327; Lam, 718 F.2d at 1065. Polaroid need only show that it is more likely than
not that it would have added the necessary manufacturing capacity. The Court must
assume that Polaroid would have labored to meet the demand to the best of its ability.
Of course, the question of Polaroid's ability to expand manufacturing capacity in a timely
manner involves not only the company's theoretical technical and physical potential, but
also its forecasting and decision-making skills. The task is not to determine what any
corporation with Polaroid's assets could have achieved, but rather to find what Polaroid,
with its unique corporate personality, would have done in a world without Kodak. In this
sense, what Polaroid could and would have done may be the same thing. Mr. Zaffino,
Kodak's camera manufacturing expert, put it this way:
In my analysis I have determined what Polaroid realistically and reasonably could have
done given all the resources at their disposal and given all the things they did well and
things they didn't do so well.
And in my mind, with that understanding, I see no difference between what Polaroid
reasonably and realistically could have done and what they would have done.
(Tr 8903). With these principles in mind, I now turn to the facts.
Factual Findings and Conclusions
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