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Apple, Google Join Forces to Buy Kodak's Digital Imaging Patents

The intellectual property of one technology generation is becoming part of the next. According to news reports, Apple and Google will jointly buy Eastman Kodak’s patents for more than US$ 500 million.

The pending sale will reportedly cover more than 1100 patents, according to Bloomberg News and others, which cite people familiar with the situation. The patents involve capture, manipulation and sharing of digital images. While Google and Apple are fierce competitors on many fronts, this joint effort allows each to neutralize potential legal action over these protected areas, and keeps the patents out of the hands of others. The companies involved have declined comment.

Originally, Two Groups

Apple and Kodak had recently been battling in court over Kodak's intellectual property, because Kodak claimed Apple had asserted claims involving 10 of Kodak’s patents.

Apple and Google had originally led two groups competing for the patents. Apple’s consortium had included Microsoft and Intellectual Ventures Management LLC, and Google had several Android phone manufacturers in Asia and patent aggregator RPX Corp. Separately, each group offered less than US$ 500 million.

Apple has had experience in joining with competitors to obtain intellectual property. In 2011, for instance, it worked with Microsoft and Research in Motion to buy over 6000 patents for US$ 4.5 billion from Nortel Networks, which helped that company emerge from bankruptcy. Google tried and failed on a separate bid for that property.

Kodak: Digital Pioneer

The Kodak patents are the treasure trove of the 131-year-old company, a legendary name that once virtually owned the film business but was swept away in the age of digital video and photography. In January, Kodak filed for bankruptcy. It reportedly has a commitment for more than US$ 800 million in financing to help it emerge from bankruptcy, if it sells the patents for at least half a billion dollars.

Kodak had initially estimated the patents as being worth as much as US$ 2.6 billion. During the summer, as Apple and Google were moving toward joining efforts, the Wall Street Journal reported that the price range for the patents was in the neighborhood of US$ 250 million.

In an irony that will likely make its way into many business courses, Kodak had actually invented the first digital camera, in 1975, but then decided not to pursue it for consumer or professional markets. It concentrated on high-end, digital imaging, protecting its position in selling film cameras to families and businesses. In 2001, it did release a popular line of EasyShare digital cameras, but, by then, the market was full of competitors.

 
 
 
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