Kodak Extends Patent Auction Deadline

Posted by at 10:29 am on August 14, 2012

Eastman Kodak announced the extension of its patent auction today, saying it would not disclose a victor because it was still in negotiations with prospective bidders. Kodak has declined to comment on the matter in more detail, citing confidentiality agreements in place. The company said it is expecting to submit regulatory filings later today, revealing more information about its business, including financial projections and a report on its path to solvency.

The auction began after bankruptcy court Judge Allan Gropper ruled that Apple didn’t own patents in the portfolios that Kodak deemed to be not central to its reorganization or part of its core business plan. The Judge ruled that Apple waited too long to assert any claims of ownership. Apple says Kodak has misappropriated shared technology over the 20 years since the two companies collaborated on the early and influential QuickTake digital camera and related software. Apple has said that its subsidiary FlashPoint Technology is the rightful owner of the eight remaining patents.

Kodak has accused Apple, which has tried repeatedly to stop or delay the auction, of trying to sabotage the sale or lower the price so that it can buy the patents itself. Apple maintains that it is unlawful to auction the patents before ownership of the handful in question has been determined. The company may in fact be preparing to bid on the patents itself, given its strong relationship with photography over the decades—ironically hastening the death of mismanaged imaging companies like Kodak that failed to embrace the digital photography revolution quickly enough.

At least two major groups are expected to have bid on Kodak’s patent auction. Microsoft, Apple, and notorious “patent troll” Intellectual Ventures are allegedly lining up on one side. Google is said to be headlining a group with Samsung, HTC, LG, and non-practicing entity RPX.

When Kodak was queried about the bid process by the Wall Street Journal, a spokesman maintained that “this is a confidential naked auction and therefore we will have no comment.” A naked auction requires no minimum bid for entry. Kodak’s Vice President and Chief Intellectual Property Officer Timothy M. Lynch said that “the bidding procedures are designed to allow bidders to give us their best offers without fear of showing their cards to competitors.”

The more valuable lot is expected to be the digital-capture portfolio related to capturing and processing images on cameras, smartphones and tablets. Also for sale is the Kodak imaging systems and services portfolio that includes patents for storing and analyzing images. Kodak has claimed the patents could be worth up to $2.6 billion, but reports put current bids between $150 million and $250 million. Kodak’s patent pool is often seen as a potential weapon in the electronics industry. At a minimum it may be useful for defending against future lawsuits; it could alternately be made into an offensive tool, a means of deterring competition or forcing royalty payments from other businesses.

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