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Judge Approves Kodak Patent Sale

Posted Monday, January 14, 2013 by Mike Cicero

Last week, bankruptcy court judge Allan L. Gropper approved the Eastman Kodak Company’s tentative patent sale which may help Kodak climb out of bankruptcy and redefine itself in the commercial packaging and printing business (For more see Patent Sale to Lift Kodak from Bankruptcy). The sale is to a group of companies led by Bellevue, WA based intellectual property firm Intellectual Ventures and comprises roughly 1,100 patents being sold for $527 million. Intellectual Ventures and its constituents plan to liberally license the patents’ technologies to a wide array of imaging device manufactures. Besides Apple and Google, some other companies involved in the deal include Adobe, Research In Motion, Samsung, Fujifilm, Facebook, Huawei, Microsoft, and Shutterfly.

The sale price of $527 million just barely exceeds the $500 million mark Kodak needed to raise through the patent sale in order to secure an $830 million loan package previously negotiated. Kodak will attempt to pull itself from bankruptcy sometime in the first half of 2013 and securing these funds will be crucial in doing so. According to a Kodak spokesperson, “w]ith the Court’s approval of the sale of our digital imaging patent portfolio, we have achieved one of Kodak’s key restructuring objectives, while positioning our Commercial Imaging business for further growth and success, and enabling Kodak to repay a substantial amount of its initial lending.”

As I mentioned in Patent Sale to Lift Kodak from Bankruptcy, the final sale price was but a fraction of the patent portfolio’s estimated value of $2.6 billion. Undoubtedly, Kodak hoped for a higher final sale price (even Judge Gropper referred to the price as “disappointing”) but after having been in bankruptcy for an entire year (See Kodak) and considering the limited pool of potential buyers for the patents it seems that Kodak may have had no real option other than to accept the offer.

If Kodak emerges from bankruptcy it is expected to redefine its business away from consumer imaging products and focus more on commercial printing and packaging. Hopefully Kodak will be successful in doing so and will continue to innovate and develop products, such as the digital camera (which Kodak invented), that create jobs and improve our economic environment.

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