Cerdent Case

Cerdent signed a license agreement with Big Ten University(BTU) because Lenard Huff, a Ph.D. student at BTU, developed an innovative ceramic dental product. Cerdent funded continued research of Huff’s invention and cooperated with BTU to commercialize the invention. But, BTU didn’t get patent even though Huff’s invention was innovative due to untimely filing patent application. All patent rights for the Huff invention in non-U.S. countries had been lost, and only one patent right among four distinct inventions was accepted in U.S. Cerdent decided not to introduce the invention and sued BTU for $27M. Huff’s invention seems major innovation. Though the principal advantage of ceramic dental restorations was aesthetic, the market share of ceramic dental product was low due to the disadvantages including weakness and abrasiveness. Huff’s invention solved these problems and showed reliability. Despite major invention, if it was introduced to the market without patent protection, it would be threat to Cerdent, not opportunity. First of all, it would damage the competitive advantage of Cerdent. For some time, Cerdent has led the market with great products under the protection of patent. Therefore, Cerdent focused on the innovation of products rather than sales and marketing. The products without protection of patent are likely to be copied, which damages competitive advantages of Cerdent. In the long term, Cerdent will be

surpassed by companies with core competence of marketing and sales. With regard to short term, sales will severely reduce. More than 70 percent of Cerdent’s sales come from the outside of the U.S. Global competitors will easily imitate innovative products of Cerdent with U.S. patent since they will be able to easily understand the principles of innovative products. They will sell copies products in their local market, which will severely reduce overseas sales of Cerdent. Another reason Huff gave up the innovation is the success of Mark I. Since Huff...