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A 15-year patent battle forced Kodak out of instant photography and ended with a $925M settlement. Here are the practical IP lessons: FTO, design-arounds, licensing, injunction risk, and disruption-proof strategy.
The quick story: Kodak entered, Polaroid sued, and the market moved on
In 1976, Kodak launched its EK-series instant cameras and film to compete with Polaroid’s instant photography business. Within months, Polaroid sued for patent infringement.
The fight ran for roughly fifteen years, spanning 1976 to 1991. Kodak kept selling during the case, betting it had designed around Polaroid’s patents. That bet did not pay off.
In October 1985, the court ruled for Polaroid, finding Kodak infringed multiple Polaroid patents. An injunction followed in January 1986, forcing Kodak to stop making and selling instant cameras and film.
By the time Kodak was forced out, it had sold about 16.5 million instant cameras. Kodak then had to implement refunds/exchanges – a customer and brand nightmare.
Then came the bill: in July 1991, Kodak paid $925 million to settle.
If that sounds like a “Polaroid wins, Kodak loses” story, it’s not that clean. Both companies ultimately got flattened by the shift to digital photography. The litigation mattered, but the market mattered more. If you are in need of legal assistance with a trademark registration, our Michigan trademark registration lawyer is here to help you.
The Real IP Lessons (What You Should Take-Away For Your Business)
This case is a masterclass in how IP risk becomes existential when you scale the wrong thing at the wrong time.
1) “We Designed Around It” Is Not a Strategy- It’s a Hypothesis
Kodak invested heavily, tried alternative chemistry and film structures, and believed it could compete without infringing. The court disagreed.
Modern takeaway: A “design-around” is only as good as:
(a) the claims you analyzed and (b) the non-infringement and invalidity positions you can defend under oath.
Action Step : Before you build factories, build a paper trail:
- Claim charts (your product vs. competitor claims)
- Written design rationale (why each element differs)
- Prototype testing records (showing how it actually works)
2) Injunction Risk Is the Silent Killer (and it Compounds Over Time)
Kodak could not “pause” while the case played out. It had products in the market, customers buying into the ecosystem, and operations running. When the injunction hit, it wasn’t just a legal loss. It was operational demolition.
Modern Takeaway: If your business depends on a consumable, a platform, or an ecosystem (film, blades, cartridges, subscriptions, proprietary refills), an injunction can instantly strand your customers and trigger cascading liability.
Action Step: Pressure-test your “injunction plan” early:
- Can you swap components?
- Can you source licensed alternatives?
- Can you migrate customers without litigation admissions?
3) Damages Are Painful – But Refunds, Recalls, and Reputation Can Be Worse
Kodak’s problem was not only writing a huge check. It was the practical fallout: customer refunds/exchanges, shuttered manufacturing, and a product line turned off by court order.
Modern Takeaway: Litigation exposure includes:
- Direct damages
- Disgorgement or royalties
- Operational unwind costs
- Customer remediation
- Retail/partner blowback
Action Step: Model your “worst week” scenario in dollars (not vibes). If you cannot survive it, you need a licensing or redesign pathway.
4) Sometimes Licensing Is Cheaper Than Being “Right”
After this era, the industry moved toward licensing and cross-licensing rather than brute-force “we’ll innovate around it” approaches.
Modern Takeaway: Licensing is not weakness. It is often the cleanest way to buy certainty so you can focus on shipping product and winning the market.
Action Step: Treat licensing like a business lever:
- License early to accelerate
- Cross-license to unblock roadmaps
- Use option structures (milestones, fields of use, volume tiers)
5) Winning the Case Can Still Lose the War (Disruption Does Not Care)
Polaroid won in court, reinforced its position, and still later filed for bankruptcy in 2001 as digital took over. Kodak filed for Chapter 11 in 2012 after failing to navigate the digital shift effectively.
Modern Takeaway: IP is a moat, not a time machine. A moat helps you extract value from today’s market. It does not guarantee you will adapt to tomorrow’s market.
Action Step: Pair IP protection with “disruption readiness”:
- Patent what’s next, not just what’s current
- Maintain optionality (continuations, divisionals, fast-follow filings)
- Invest in the adjacent tech that could replace you
- What this means for creators, founders, and product teams today
What This Means For Creators, Founders, And Product Teams Today
If you’re building anything in consumer tech (hardware, wearables, cameras, audio, apps), you should assume:
- Someone already has patents in the space
- “We’ll just tweak it” may still read on claims
- Scale multiplies risk
- Litigation steals attention at the exact moment you need focus
My Practical Recommendation: Treat IP like product infrastructure. Do the clearance work early, document your design decisions, and know your licensing and redesign options before you need them.
If you want help pressure-testing your risk before you scale, that’s exactly the kind of work my firm does:
- Patent landscape and clearance searches
- Written FTO opinions and claim charts
- Design-around counseling (with documentation that holds up)
- Licensing strategy support
Contact The Patent Baron PLLC today for legal assistance.
Source: https://www.latimes.com/archives/la-xpm-1991-07-16-fi-2502-story.html?utm_source=chatgpt.com
