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Famous Patent Wars: 1950-2000

Famous Patent Wars-1950-2000.jpg 

With the twentieth century marching on and technology becoming ever more ubiquitous for consumers and businesses, it’s not surprising that well-funded and lengthy litigation battles arose. In the third installment of our Famous Patent War series (Part One: 1850-1900 and Part Two: 1900-1950), we look at three notable disputes related to the invention or evolution of industrial lasers, instant photography and disposable diapers.

 

Laser Patent War (1960-1987)

It’s no secret that ignorance of the patent system has cost inventors and would-be inventors fortunes in unrealized rewards for their creativity. In the case of the laser, it cost Gordon Gould decades of frustration. Official recognition of Gould as one of the laser’s principal inventors is a three-decade tale of ignorance, confidence, determination and endurance.

In 1954, Gould enrolled in the graduate physics program at Columbia University with a plan to study optical and microwave spectroscopy. Columbia had a then-burgeoning reputation in the field; professor Charles H. Townes had published a seminal paper on the maser technology to amplify microwaves in 1951. (He later shared the 1964 Nobel Physics Prize for this pioneering work). Amplification of visible light was the next optical engineering milestone.

Three years after arriving in New York, Gould devised a theoretical solution to achieve it. In November 1957, he described in a notebook his concept of concentrating light using two mirrors in a gas-filled chamber. “Some rough calculations on the feasibility of a LASER: Light Amplification by Stimulated Emission of Radiation” contained both textual explanations and sketches. Fortunately, he had the book notarized at a local candy store. Unfortunately, he failed to patent his idea because two others did three months later. Bell Labs Researcher Arthur Schawlow was one of the applicants. The other was Professor Townes.

In December 1958, Townes and Schawlow published the first scientific paper describing a laser. Their application for a laser patent was then granted in March 1960. (Gould had applied for his patent in 1959). Gould’s delay in applying was explained by an assumption that he needed to build a prototype first. Realising the commercial potential, he quit Columbia before completing his PhD and joined Technical Research Group (TRG), a private company willing to invest in his ideas.

TRG received partial funding from the US military which required background checks for all employees working on the laser project. Gould was denied the clearance due to previous contact with American communists in the 1940s. His inability to work directly on the project undoubtedly delayed TRG's engineering progress.

While development work slowly advanced, Gould and TRG struggled to convince the USPTO to duly recognize Gould’s pioneering work. They were not successful. More successful were industrial giants like Bell Labs, Hughes Research Labs and Westinghouse. Having also recognized the technology’s potential, they were well-funded members of the nascent laser industry. They made advancements in their R&D labs and patented their discoveries. Gould ultimately left TRG in 1967, founded a technology startup, then ended up in academia. His legal fight continued, as did his own laser research.

A Change in Legal Strategy

What ultimately changed his fortunes was a mid-70s refinement in legal strategy. His 1959 application had been a “kitchen sink” approach. In it, he disclosed over a dozen interrelated inventions covering fundamental laser technology. The updated strategy was much narrower in scope; instead of trying to patent the whole thing, Gould’s counsel decided to file for an indispensable component that every laser system needed. It was a eureka moment.

Gould’s invention of an optically pumped laser amplifier was formally recognized with U.S. Patent 4,053,845. The laser industry fought back, refusing to pay royalties and seeking to invalidate his patent. The industry was further disconcerted in 1979 when Gould was awarded U.S. Patent 4,161,436, which covered a variety of laser applications in specific industries.

With the laser industry against him, a hostile USPTO openly seeking to deny him his invention rights, and little money, Gould was forced to relinquish a large share of the ownership of his patent rights. The only way to continue what had clearly become a moral crusade was to sell off most of his ownership rights in his existing and future patents. Gould secured financial backing and co-founded Patlex in 1979 to manage the prosecution and litigation of his IP.

The pivotal moment finally arrived in 1985 when a Federal Court ordered the USPTO to grant U.S. Patent 4,704,583 for collisionally pumped laser amplifiers. From then on, Gould’s future and Patlex’s focus changed to infringement litigation and licensing negotiations. The first decisive infringement suit was won in 1987. During the next decade, Patlex licensed its technology to pretty much everyone who mattered in the industry.

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(Image: Gordon Gould holding the patent for his collisionally pumped laser amplifier)

The irony of Gould’s three decade-wait to secure formal recognition and patent protection is that by the time he did, the commercial value of his IP portfolio had soared. Licensing opportunities were much greater in the late-1980s than in the early-60s. Between 1960 and 1965, the value would have been 100% of very little. By the time Patlex’s licensing program was humming during the Bill Clinton presidency, Gould owned 20% of millions in royalties.

The tedious frustration and waiting - the ..583 patent was granted more than 13 years after its Aug, 16, 1974 priority date - made him a far wealthier inventor. When Gould died in 2005, he had been granted 48 patents and received long-overdue recognition for his pioneering work in the invention and commercialization of the laser. If you visit the National Inventors Hall of Fame in Alexandria, VA, you will find his name among the celebrated visionaries.

Additional Reading:

Lerner David LLC: Significant Cases — Gould Laser Patents

Electronic DesignGordon Gould: The Long Battle For The Laser Patent

New York TimesGordon Gould, 85, Figure in Invention of the Laser, Dies

  

Instant Photography Patent War (1976-1990)

Is it really a patent war if there are only two adversaries and one lawsuit? One could argue it is if the case’s notable facts include 14 years of legal fees, the largest patent-infringement award to date and not inconsiderable inconvenience to more than 16 million customers no longer able to use the loser’s products.

This is the shorthand summary of Polaroid v. Kodak, a landmark case that finally ended in 1990 when U.S. District Judge A. David Mazzone ordered Eastman Kodak Co. to pay Polaroid $909 million in damages. Like the genesis of both Microsoft and Facebook, this story begins with a Harvard dropout.

Edwin Land was not unlike other inventors like Thomas Edison, Alexander Graham Bell and Lonnie Johnson who combined (or still combine in Johnson’s case) enormous curiosity, intellectual discipline and energy. While solving a succession of engineering challenges, Land - like the others - developed an experienced familiarity and lifelong relationship with the USPTO. “Inventor: Edwin H. Land” and “Assignee: Polaroid Corporation” appear on hundreds of patents. By the time he passed away at the age of 82 in 1991, Land’s restless life of invention had translated into 535 patents, and a place near the top of the list of America’s most prolific inventors, behind only Thomas Edison and one other.

In 1927, an 18 year-old Land entered Harvard to study chemistry and physics. Within months, he dropped out to scratch a scientific itch - removing glare from bright lights through polarization. After a year, Land figured out how to use a magnetic field and tiny crystals to control the random variations of light. He called his invention of embedding crystals in plastic flexible sheets polaroid. The first polarization patent was awarded to him in 1993 when he was just 24.

While polarization technology was ultimately adapted to other applications, such as sunglasses, camera filters and 3D motion pictures, the underlying principles also enabled Land to invent instant photography. It was the source of his widespread fame when Polaroid cameras became global cultural icons in the 1970s and 1980s.

A Challenging Chemistry Conundrum

The concept of instant photography was simple, reduce all the components and processes of a conventional physical darkroom into a handheld camera. The reality, however, of creating instant pictures using incredibly precise chemistry was exceptionally challenging.

Two decades of research and trial-and-error experience with crystals, dyes, and polymers resulted in instant photography’s debutante moment. The first public demonstration took place at a meeting of the Optical Society of America in New York City in February 1947. It was a smash. A year later, the first cameras and films went on sale. Inventory of the Model 95 camera, capable of only sepia-tone images, sold out in a day. 

Instant photography was a global hit. For the next 25 years, Polaroid progressively improved its products while carefully developing a very large patent portfolio. During this time, Polaroid also enjoyed a close relationship with Eastman Kodak. In fact, Kodak manufactured Polaroid color film between 1963-1969. The fraternal warmth ended however in 1968 when Land demonstrated a new film prototype to Kodak’s management team. The portent to Kodak’s billion-dollar film business was obvious.

Amazing Consumers and the Media

When the Polaroid SX-70 was released in 1972, Time called it “a stunning technological achievement.” LIFE put Land on the cover of its Oct. 27, 1972 issue, celebrating it as “a daring challenge to Kodak for supremacy in the $4 billion-a-year U.S. photo industry.”

Edwin Land-LIFE Magazine Cover.jpg

By the time of the SX-70’s release, Kodak was well into development of its own instant camera model. While the R&D teams worked in the labs, Kodak’s IP counsel carefully analyzed Polaroid’s portfolio. Between 1968 and 1976, Kodak’s patent team produced written analyses of over 200 Polaroid patents.

At first, Kodak engineers were careful to avoid potential patent infringement because they knew the lines of demarcation. Yet, after too many engineering failures, Kodak leadership resigned itself to inevitability. An internal memo written at the time provided guidance to the engineering team. They should "not be constrained by what an individual feels is a potential patent infringement."

Friends No More: Suing Your BFF

Unsurprisingly, the foreseeable happened. Within weeks of Kodak’s April 1976 release of its first instant camera, Polaroid sued. What followed was a contentious decade of briefs and arguments. As lawyers discussed patent claims, and the court case transited the dockets of four federal judges, Kodak’s engineers and product managers continued to improve the product line. New models, such as the Kodak Colorburst 250 (1979) and Kodamatic 940 (1983), were purchased by happy instant photographers.

Hppiness for 16 million owners of Kodak instant cameras ended, however, in 1985 when Polaroid won its case. Kodak was found to have infringed seven of ten patents. Polaroid’s legal vindication prohibited Kodak from manufacturing film packages for its customers. Eight hundred Kodak employees were laid off, millions of cameras became instantly useless and future products and revenue from hundreds of millions in R&D investment died. It took another five years for the courts to decide Kodak’s financial penalty.

While $900-plus million was - and remains - a huge amount of money, it was far less than the $5.7 billion in lost profit and interest that Polaroid had asked the court in early 1988 to award. Mazzone’s judgement was based on a calculation that Kodak’s actions had cost Polaroid approx. $250 million in unrealised profits.

Polaroid's triumphal joy was ephemeral. Legal costs and the company’s focus on winning distracted the company from threats such as the rise of one-hour photo processing and consumer video technologies. From peak employment of 21,000 in 1978 and peak revenue of $3 billion, Polaroid filed for Chapter 11 bankruptcy protection in October 2001. Kodak survived another decade before it, too, went bankrupt.

Additional Reading:

LIFE: The Oct. 27, 1972 LIFE magazine article is accessible via Google Books. 

LA Times: Polaroid Wins $909 Million From Kodak 

BloombergKodak Files for Bankruptcy as Digital Era Spells End for Film

Harvard GazetteThe Story of Edwin Land

Website for "At the Intersection of Science and Art", an exhibition drawn from material in the Polaroid corporate archives that were donated to the Baker Library at the Harvard Business School.

Shopping:

Yes, you can still buy an SX-70 camera. Cultural cycles mean that things that were hip once will become hip once more. See the product selection at Polaroid Originals and you surprise someone with a Christmas, Hanukkah or Kwanzaa gift. 

  

Disposable Diapers Patent War (1985-1992)

Unlike many patent wars, the resolution of the Diaper Wars was positive for both litigants. It was perhaps an unlikely outcome following years of litigation that began in 1985 when Proctor & Gamble (P&G) sued Kimberly-Clark Corp.

Few organizations are as skilled and ruthless at creating and defending Consumer Packaged Goods (CPG) categories and brands as P&G. CPG category leadership often equates to billion-dollar brands so P&G typically provides its R&D, product management and marketing staff with ample resources to achieve dominance. The bigger the opportunity, the more corporate horsepower P&G competitors face.

Kimberly-Clark became one of the competitors when it entered the disposable diaper market in 1978. In its first year, the Huggies brand captured 10% of the market. By the time P&G unleashed its patent litigators in April 1985, Huggies’ market share had increased to 35%. The allegation was infringement of one of the patents protecting the heat-shrinkable material used in Pampers, by far the leading diaper brand whose dominiance was deacdes in the making. 

A Giant Step for Harried Mothers Everywhere

Until the 1970s, washing cloth diapers was an unpleasant and odorous daily chore for most mothers. Although diaper patents had been granted in Europe as early as 1948, P&G’s 1956 decision to invest R&D resources to develop a high-quality, affordable disposable diaper was the catalyst. It would have a lasting effect on parenting.

The Pampers product and brand were carefully and expensively iterated before and after the 1961 introduction. Pampers’ first U.S. patent was granted in 1964. National distribution was achieved in 1969. When Huggies were introduced, Pampers’ American market share exceeded 70%.

At the same time, Kimberly-Clark Corp. was a forest products company with paper and wood pulp expertise. While it’s widely known now for brands such as Cottonelle, Depend, Kleenex, Scott and VIVA, its expansion into consumer products was entirely new. Despite the company’s lack of CPG branding experience, Huggies were a huge success.

Within several years, it was abundantly clear that P&G finally had serious competition in the category. Squeezed by premium-priced Huggies on one side and more affordable store brands on the other, Pampers' market share gradually shrunk. Estimated at 55% in 1980, Pamper’s U.S. market share, was approximate to Huggie’s when the Diapers Wars began.

Kimberly-Clark countered a year later with an antitrust case, arguing that P&G was trying to monopolize the diaper market. A second P&G suit followed in 1987 as well as appeals of findings in favor of Kimberly-Clark. (A jury ruled that Procter & Gamble did not in fact have sole rights to the elastic waistband patent).

Note to Patent Attorneys Everwhere: Don't Mislead the USPTO

In 1989, a Federal Court Judge concluded in the first suit that a P&G lawyer had purposefully deceived a USPTO examiner when prosecuting the patent that Kimberly-Clark was alleged to have infringed. The ruling caused Kimberly-Clark to amend its antitrust counterclaims and file a counterclaim charging malicious prosecution.

While the two companies battled in court over the second suit, other manufacturers had introduced upstart brands using the leading brands’ technology. In 1992, Kimberly-Clark and P&G decided to end litigation. (Terms of the agreement were not disclosed). Having ended their fight, they turned their attention to smaller competitors such as Paragon Trade Brands. A week after P&G won an infringement suit against it, Paragon declared bankruptcy in January 1998.

Although wars usually end with clear winners and losers, the Diaper Wars benefitted both litigants. Twenty five years later, they continue to dominate the North American diaper market with approximately 77% of total sales. Huggies is the top seller in the category, while Pampers has become P&G’s largest brand. In 2012 it became the first P&G to generate more than $10 billion in annual global sales. 

Additional Reading:

Motley FoolWhat the Pampers Brand Means to Procter & Gamble Co.

Fast CompanyWhat P&G Learned From The Diaper Wars

BloombergProcter & Gamble's High-Tech Quest for the Perfect Diaper


In the next Famous Patent Wars chapter, we'll dissect more contemporary patent disputes. Steve Jobs' bruising smartphone IP battle with Samsung and the lenghty medical stents patent war are obvious inclusions. We'll also look at lesser known fights for control of e-cigarette and Internet of Things inventions.

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