Bankruptcy Court Lets Kodak Sell Disputed Digital Imaging Patent
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Bankruptcy Court Lets Kodak Sell Disputed Digital Imaging Patent

August 3, 2012


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In a key ruling this week for Eastman Kodak Co., a bankruptcy judge ruled that the company will be allowed to sell a valuable digital imaging patent, despite protests from Apple Inc., according to a report from Reuters.

Sources say that Judge Allan Gropper told Apple officials they had waited too long to bring an infringement claim against Kodak, which was welcome news for the struggling camera company.

In addition to green-lighting the sale of the digital imaging patent, Judge Gropper also allowed Kodak to sell a second patent that was also disputed by Apple, although the fate of many of the more than 1,100 patents that Kodak hopes to sell remains uncertain.

When companies file for bankruptcy, courts typically try to determine the nature and extent of the companies’ most valued assets. For a camera company such as Kodak, the most valuable assets are likely intellectual property rights for the vast range of technologies that have been developed in Kodak labs over the past century.

In the world of advanced technology, however, the high value of patents leads to endless legal battles about who actually owns each patent. This is why attorneys for Apple have flocked to Kodak’s bankruptcy case.

One of the key patents currently in dispute includes a design for technology that allows camera owners to preview photographs on LCD screens. Apple claims that it helped Kodak develop this tool in the 1990s.

And while the bankruptcy judge is allowing Kodak to sell this patent, several other patents remain in dispute. The sale of some of these Kodak patents was denied last month the U.S. International Trade Commission earlier, which could limit Kodak’s earnings in a bankruptcy auction.

Sources say that Kodak plans to hold a bankruptcy sale in mid-August for hundreds of different patents, but the removal of even a small number of these patents could lower the total revenue by millions of dollars.

This, in turn, could limit Kodak’s ability to repay its primary creditors, who expect the liquidation auction to help repay at least some of Kodak’s debt. So in the coming days, both Kodak and its creditors will actively root for Apple to lose its patent challenges.

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