No Patent Sale Without Chapter 11
Eastman Kodak Co. filed for Chapter 11 bankruptcy January this year amid liquidity problems and in an effort to monetize assets in order to keep its business afloat. This bankruptcy filing gives Kodak the leeway to find a suitable buyer for its 1,100 patents relating to imaging, and it seems the auction block has attracted big names in the technology industry, including Apple, Google and Microsoft -- major players in the smartphone world.
Sources report that Apple has teamed up with Microsoft and Intellectual Ventures Management LLC to form a bidding group. On the other side of the fence sits bitter rival Google, along with RPX Corp. and three major Android smartphone manufacturers: Samsung, LG and HTC.
The team-ups are quite indicative of how these businesses are dealing with each other outside of this patent bidding war. Apple is clearly squaring off against Android, which it considers a rip-off of the iPhone and iPad.
Kodak's patent sale hits just at the right time, given the need for mobile companies to beef up their intellectual property portfolios. Imaging has become an essential feature in both smartphones and feature-phones, alike.
Apple and Samsung are actually engaged in a worldwide patent dispute spanning ten countries in four continents, with both sides claiming to have been infringed upon. Apple says Samsung's Galaxy Tab copied the design of the iPad. Meanwhile, Samsung says Apple used its 3G technologies without permission or without paying license fees.
Kodak's patent sale is actually grouped into two lots. The first portfolio relates to the capture and processing of images on smartphones and tablets. The other half involves storing and analyzing images captured on these devices.
No Small Change ...
Kodak values the patents at US$ 2.6 billion and the auction could fetch Kodak anywhere between US$ 2 and 3 billion. However, these imaging technologies do not comprise the core functionality of mobile devices, and so there is doubt as to whether they're that valuable.
It can be noted that Kodak has recently lost against Apple and Blackberry-maker RIM in a patent lawsuit relating to how digital cameras preview images. The International Trade Commission has recently invalidated the Kodak patent, which is a precedent that might work against the company.
This prevents Kodak from setting a floor price on its intellectual property offerings, although bidding could well reach into figures ideal to Kodak. Recently, Nortel Networks put up its patent portfolio for grabs and was able to fetch US$ 4.5 billion from a consortium led by Apple and Microsoft.
The Kodak patent auction is set for August 8. Whether the patents eventually go to Apple or Google, this demonstrates once again how intellectual property plays a big part in the mobile industry, whether for actually building products or simply earning from licensing and litigation.