When Kodak filed for bankruptcy earlier this year, the company made it clear that selling off its digital imaging patents was a key part of its strategy. The company had hoped to raise as much as $2.5 billion from selling off its war chest, which is why rumors of a partnership between Google and Apple, have the erstwhile film giant backpedaling. At present, bidding is reportedly around the $500 million mark. That's considerably higher than the opening price the auction kicked off with, but a fraction of the cash Kodak hoped to earn.
The company is now saying that it may not sell certain intellectual assets, while Google, Samsung, and Apple have reportedly joined forces to explicitly avoid the kind of bidding war that Kodak obviously hoped to create. Teaming up could bring government regulators knocking to ensure that the firms didn't collude to depress the value of the IP, but it also avoids costly litigation later on. Jointly-purchased patents would create an island of stability in the fractious relationship between the three companies and could help create a cooperative environment rather than the vicious legal battles we've seen to date.
The iconic Kodak building in Rochester, NY
"If they commit to licensing on reasonable rates, there's likely no antitrust problem," said Michael Carrier, a patent-law expert at Rutgers University, Camden. "But if the companies divvy up the patents with no intention of letting others use the patents, you've potentially got trouble." Other bidders reportedly interested in the patent chest include Samsung, LG, and HTC. Digital imaging is a key component of modern phones, but Kodak's previous licensing agreements earned it $3 billion before this sale. Companies that have already licensed the technology at reasonable terms are unlikely to be as interested in paying a premium, particularly when Kodak's lawsuits
have largely come to naught.
Whether or not Kodak can afford to sell the patents at a fraction of its initial price is another question altogether. The company's bid to launch lawsuits against alleged infringers did not go well this year; it launched lawsuits against Samsung, Apple, and RIM but lost the latter two in June. Kodak wants to create further business around its printer market segment but was counting on a major cash influx to jump-start the reorganized business. The company has pushed back the auction's end date twice thus far, but won't be able to do so indefinitely. Kodak still has ~$1.3B in cash on hand, but has a $660M bankruptcy payment coming due in the next few weeks.