A group of major technology corporations that includes Apple Inc., Google Inc. and Research In Motion Ltd. (RIM) has entered an agreement to purchase patents from the famed – but now bankrupt – Eastman Kodak Co. for approximately $525 million, thereby obtaining the right to utilize the digital technology to capture and share photographs.
Eastman Kodak says the money from the sale will enable it to emerge in the first half of next year from bankruptcy protection, a category it was forced to enter due to its difficulty in adapting to the new wave of digital technology.
The group of corporations buying the patents is led by Intellectual Ventures Management LLC and RPX Corp., Kodak said in a statement. Google, Apple and RIM are among the 12 companies that will have the rights to license the patents through the purchase, according to a court filing. Under the terms of the deal, Intellectual Ventures will divide up the payment with the licensees.
The group includes such contemporary giants as Facebook Inc., Amazon.com Inc. and Microsoft Corp., the court filing shows, as well as Samsung Electronics Co., Adobe Systems Inc., Fujifilm Holdings Corp., Huawei Technologies Co., HTC Corp. and Shutterfly Inc. The auctioned Eastman Kodak patents — more than 1,100 related to the capture, manipulation and sharing of digital images — were previously estimated by the advisory firm 284 Partners LLC to be worth up to $2.6 billion.
“This is a fraction of our overall patent portfolio,” said Chris Veronda, a spokesman for Rochester, New York-based Kodak. “We retain ownership of about 9,600 other patents for our ongoing businesses.” Those patents primarily focus on commercial imaging and printing technologies.
The new agreement settles all patent-infringement lawsuits between Kodak and the 12 licensees, Veronda noted, encompassing lawsuits Kodak had pending against Apple, RIM, Fujifilm, HTC, Samsung and Shutterfly. In a filing last May, Kodak had stated that Apple alone owed it more than $1 billion in patent royalties.
Prior to uniting as one bidding group, Apple and Google had headed competing consortiums that were bidding for Kodak’s patents. The two groups joined together in August as the initial auction date became imminent. As a result of combining into one unit, each of the constituent companies only had to pay for the patents and protection it needed.
A ruling in May against Kodak by the U.S. International Trade Commission defeated the company’s attempts to receive a higher price for its patents. The decision, which concluded a two-year legal battle against Apple and RIM over a patent for previewing digital images on cameras, was upheld in July. It ended Kodak’s plans to go after royalty payments from Apple and RIM which it once estimated at greater than $1 billion.
In court documents, Kodak stated it had generated more than $3 billion in revenue by licensing some of the patents to outside users, including Samsung, LG Electronics Inc., Google’s Motorola Mobility unit and Nokia Oyj.
Chief Executive Officer Antonio Perez has been selling businesses to reduce the size of Kodak and fund its transition into commercial printing and packaging. The company is also selling its consumer-film, photo- kiosk and commercial-scanner businesses and closing down its consumer inkjet-printer unit.