Kodak shopping patents around as losses mount and ITC ruling nears

Posted:
in General Discussion edited January 2014
Even as Kodak anxiously awaits a ruling from the International Trade Commission that could bring in more than a billion dollars in revenue from Apple and RIM, the photography company is counting on its patent portfolio to reverse a string of losses that have sent shares of its stock tumbling.



Eastman Kodak posted a loss of $179 million, or 67 cents per share, in the second quarter, down from a loss of $167 million in the year ago quarter, Reuters reports. Though the results were better than Wall Street had expected, investors continued to pressure the company on its strategy for turning itself around. Shares of Kodak are down more than 56 percent since the beginning of the year.



Kodak has said it hopes to transform into a "digital profitable and sustainable company by 2012." During an earnings call, Chief Executive Antonio Perez highlighted Kodak's efforts to capitalize on its patent portfolio as part of its company strategy.



"Given the heightened demand in the marketplace for premium intellectual property assets, we believe that the timing is right and that we have a great opportunity for these very valuable assets," he said.



The company continues to forecast $250 million to $350 million in revenue this year from intellectual property licensing, though. Kodak hopes to profit even further from its portfolio, as technology companies have displayed a growing willingness to spend billions on intellectual property that can provide competitive advantages and defensive strength.



Kodak is looking into "strategic alternatives" for its approximately 1,100 digital imaging patents, or roughly 10 percent of its total patent portfolio and may forgo annual licensing revenue in order to sell the patents for "a large amount of money" upfront.



"This action does not change our intellectual property litigation strategy at the International Trade Commission or in the district courts, and we remain confident that the patents being litigated will be found to be valid and infringed," Perez said.



Over the past two years, Kodak leveraged the ITC to reach settlements with Korean electronics makers Samsung and LG that brought in as much as $950 million for the beleaguered company. Emboldened by the victory, the 130-year-old Rochester, N.Y.-based company then set its sights on smartphone makers Apple and Research in Motion.



In January of last year, Kodak sued Apple, asserting the same patent it had used against Samsung and LG. Earlier this year, Perez said that a victory over the two companies could bring in more than $1 billion in royalty revenue.



However, Kodak has faced several setbacks in its case against Apple with the ITC. In January, a judge with the federal agency agreed with Apple and RIM that the patent was invalid because it was "an obvious variation of an earlier invention." The commission upheld parts of that decision last month, while also sending some claims back to an administrative law judge for a final decision in August.



Perez remains confident that the judge will reverse the original ruling and side with Kodak. "When we asked, and we did ask, litigation experts, our own team of course, our external legal firm of course, individuals of high caliber that used to work in the ITC, we did all of that research, and every one of those, without exceptions, without exception, understands that the opinion that was given by the Commission in the new construction is very, very favorable to the Kodak case," he said Tuesday.



The executive also indicated that the company has attracted significant interest as it has shopped its patents around. "My IP team didn't want me to tell you, but we got a lot of attention," Perez said.



Industry watchers have suggested that interest in patents is nearing unprecedented levels. After rumors emerged that Apple and Google were interested in purchasing InterDigital for its portfolio of 8,800 patents, caused the Pennsylvania-based company to shoot up in value by 50 percent.







The most high-profile patent purchase in recent weeks remains the Nortel patent auction, which surprised analysts when bidding maxed out at $4.5 billion. The auction reportedly say intensely fierce bidding, with Apple eventually teaming up with a consortium, which included Microsoft, Research in Motion and Sony, to beat out Google and Intel.



Apple's share of the trove, which included crucial patents related to the 4G Long-Term Evolution wireless networking technology, cost $2.6 billion.



Google general counsel Kent Walker called the deal the "biggest patents sale in the history of the world.? The Mountain View, Calif., Android maker was disappointed by the loss, but has said it is looking into "other opportunities" to build out its patent portfolio, which is dwarfed by some of its older, larger competitors.



Walker said on Monday that the current patent situation is "an arduous and expensive way" of reaching "mutual assured destruction," while admitting that Google no choice but to build up its patent portfolio.
«1

Comments

  • Reply 1 of 36
    anantksundaramanantksundaram Posts: 18,748member
    Sad state of affairs for a once-great company that could not adapt.



    This is what the future looks like for RIM and Nokia if they don't get it together soon.
  • Reply 2 of 36
    drowdrow Posts: 121member
    Thomas Jefferson would be SO FRAKING PROUD.
  • Reply 3 of 36
    robin huberrobin huber Posts: 3,202member
    Sounds like their new business plan might be to abandon making products and just become another patent holding company (read troll).
  • Reply 4 of 36
    nvidia2008nvidia2008 Posts: 9,262member
    Quote:
    Originally Posted by anantksundaram View Post


    Sad state of affairs for a once-great company that could not adapt.



    This is what the future looks like for RIM and Nokia if they don't get it together soon.



    It's strange. Though late to the game, they should have at least been able to get into smartphone camera tech or especially digital SLR camera tech. Digital film and 3D as well.



    Maybe they were crippled by the very thing they epitomised: preserving memories and hanging on to the past.



    But they have been producing digital cameras although nowhere near Nikon and Canon that transitioned very successfully.



    Patent shopping is only going to make everyone think they're really desperate and company morale could drop significantly.



    Not sure why their Cloud stuff hasn't taken off as well:

    http://www.kodakgallery.com/gallery/welcome.jsp



    Can someone explain what exactly happened to Kodak?
  • Reply 5 of 36
    SpamSandwichSpamSandwich Posts: 30,230member
    Quote:
    Originally Posted by Robin Huber View Post


    Sounds like their new business plan might be to abandon making products and just become another patent holding company (read troll).



    There is a difference here. Kodak developed these patents, they didn't buy them to milk other corporations but now that they are practically done as a going concern they may as well take advantage of what little they have left.
  • Reply 6 of 36
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by nvidia2008 View Post


    Can someone explain what exactly happened to Kodak?



    CCDs are a commodity business except at the serious pro-end I guess. Kodak were always reliant on Canon, Nikon, etc for optics, and it was far easier for those firms to commoditize Kodak than vice-versa.
  • Reply 7 of 36
    mdriftmeyermdriftmeyer Posts: 7,174member
    What a surprise. I recall stating they would soon be fencing their IP after the latest ruling concerning their case against Apple.
  • Reply 8 of 36
    desuserigndesuserign Posts: 1,316member
    Quote:
    Originally Posted by Robin Huber View Post


    Sounds like their new business plan might be to abandon making products and just become another patent holding company (read troll).



    Making what money you can by selling your patents isn't trolling. In fact, if they are a declining company, like Nortel, they have an obligation to their stockholders to get what they can for their stranded assets rather than let them go to waste.



    This fad of dismissing the rights of innovators to profit from their intellectual property, either from using their patents to protect their work, taking royalties for the use of their work, or outright selling or purchasing of patents, is ridiculous. It's the whole reason for patents to exist in the first place and it's one of the few tangible rewards for creating (or recognizing the value of) real innovations.
  • Reply 9 of 36
    nvidia2008nvidia2008 Posts: 9,262member
    Quote:
    Originally Posted by cloudgazer View Post


    CCDs are a commodity business except at the serious pro-end I guess. Kodak were always reliant on Canon, Nikon, etc for optics, and it was far easier for those firms to commoditize Kodak than vice-versa.



    That's the irony, isn't it. At the end of the day it's the optics that play a big role in higher-end digital cameras and that's where Nikon and Canon rake in the big bucks.



    Kodak could have pulled a Sony and bought Konica Minolta or similar to get the lens expertise. Heck, they could even have bought Sigma or other well-respected 3rd party lens makers. What is weird is Kodak would have some lens expertise anyway because of longstanding association with film equipment.



    As for CCDs and CMOS sensors, it is commoditised on the low-end but as you mention on the higher-end there's some space for more improvement. RED blitzed the digital film-making scene by investing in getting really chunky CMOS sensors and building an ecosystem around it, at revolutionary prices and enabling filmmakers to create some stunning digital cinematography (not this Michael Mann bullsh1t like Public Enemies -- shooting film noir style with camcorder-quality video. WTF! It felt like I was watching the "making of" throughout the whole movie!).



    Kodak could have done something like RED before RED. But it was invested in processing traditional film so maybe this could have caused internal conflicts.



    Could Kodak have done the above?
  • Reply 10 of 36
    nvidia2008nvidia2008 Posts: 9,262member
    Also, I'm not sure how far some of the below was implemented but one of Kodak's traditional motion picture film expertise are the different film stocks.



    Although growing up I was interested in video (edited family Video8 camcorder footage by recording to a standard VHS deck)... As I became more aware of film cinematography I got quite interested in the different film "looks" and especially the quality and nature of footage shot on film. When I first fooled around with "budget" NLE systems from the early 90's shooting on film or getting video to look like film was all the rage.



    Kodak had ample opportunity to tie in their film stock expertise to the digital realm. I know Magic Bullet and so on has a lot of presets to simulate different film stock but I'm sure Kodak could have collaborated or competed in the digital film realm by creating software, presets, plugins, what not.



    Why didn't they?
  • Reply 11 of 36
    bushman4bushman4 Posts: 797member
    Kodak is really putting itself on a ledge, if the ITC does not side with them they're screwed.

    It's sad to see such a prominent company slowly lose ground and crumble over the years.
  • Reply 12 of 36
    nceencee Posts: 836member
    Everyone has the chance to reinvent themselves, hell look at the one company everyone is suing now, because they not only reinvented themselves but they did and are continuing to do one hell of a (Steve) job at it.



    It's a bad case of "Keep up or Fall behind"
  • Reply 13 of 36
    matrix07matrix07 Posts: 1,993member
    Quote:
    Originally Posted by nvidia2008 View Post


    Kodak could have done something like RED before RED. But it was invested in processing traditional film so maybe this could have caused internal conflicts.



    Could Kodak have done the above?



    Kodak is a film company, not a camera company. How could they pull off something like RED?



    Quote:
    Originally Posted by nvidia2008 View Post




    Why didn't they?



    Because film is film and digital is digital. The digital post processing now is a million times more powerful than some Kodak look-alike presets can ever achieves. Those days (for film look) are gone.
  • Reply 14 of 36
    matrix07matrix07 Posts: 1,993member
    duplicated.
  • Reply 15 of 36
    MacProMacPro Posts: 17,776member
    Quote:
    Originally Posted by anantksundaram View Post


    Sad state of affairs for a once-great company that could not adapt.



    This is what the future looks like for RIM and Nokia if they don't get it together soon.



    This is Microsoft in another ten years too.
  • Reply 16 of 36
    MacProMacPro Posts: 17,776member
    I bet RIM anxiously awaits a ruling too!
  • Reply 17 of 36
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by nvidia2008 View Post


    Kodak could have pulled a Sony and bought Konica Minolta or similar to get the lens expertise. Heck, they could even have bought Sigma or other well-respected 3rd party lens makers. What is weird is Kodak would have some lens expertise anyway because of longstanding association with film equipment.



    I think Kodak imagined it could own the CCD in the same way as it had owned the film market, so it didn't want to buy a camera maker because then it would be competing with its customers.
  • Reply 18 of 36
    blastdoorblastdoor Posts: 1,884member
    Things were too easy at Kodak for too long and their collective brains atrophied. They were rolling in easy profits from their film business for decades and it turned them into mush. They should really sell off their patents to the highest bidder, pay off their bonds, sell the brand to anyone who might want it, give whatever is left back to their stockholders, and close up shop.



    Meanwhile... it's becoming a bit more clear what Apple might be planning to do with their cash. There are a lot of patents in the world and there is a big advantage to owning them.
  • Reply 19 of 36
    eswinsoneswinson Posts: 99member
    Quote:
    Originally Posted by matrix07 View Post


    Kodak is a film company, not a camera company. How could they pull off something like RED?



    RED is a boutique company that makes a really cool but expensive (though for their market space far less expensive than traditional film cameras) line of digital video cameras. Kodak probably spent more on legal fees for their patent lawsuits than RED has made in the last 3 years. Emulating RED is probably not a wise place for them to go. But, Kodak does have experience in the digital camera space. Despite being a film company Kodak made one of the first digital backs for SLRs and has made many models of consumer point and shoot digital cameras. No different than Fuji they could have done well in that space if they would have stayed competitive but instead they have seceded market share to Canon and others who use their high-end brand appeal to entice consumers to buy their branded gear.



    Kodak needs to quickly figure out how to take what it knows about film and apply it to the digital world. Maybe they can figure out a way to apply analog qualities to digital imaging allowing it to break the megapixel barrier and give you total dynamic range and resolution independence. Build a camera around that and you may have a whole new following.
  • Reply 20 of 36
    Quote:
    Originally Posted by nvidia2008 View Post


    Also, I'm not sure how far some of the below was implemented but one of Kodak's traditional motion picture film expertise are the different film stocks.



    Although growing up I was interested in video (edited family Video8 camcorder footage by recording to a standard VHS deck)... As I became more aware of film cinematography I got quite interested in the different film "looks" and especially the quality and nature of footage shot on film. When I first fooled around with "budget" NLE systems from the early 90's shooting on film or getting video to look like film was all the rage.



    Kodak had ample opportunity to tie in their film stock expertise to the digital realm. I know Magic Bullet and so on has a lot of presets to simulate different film stock but I'm sure Kodak could have collaborated or competed in the digital film realm by creating software, presets, plugins, what not.



    Why didn't they?



    Kodak had many options, regretfully there were internal conflicts, mostly between the film department and "everyone else". They saw film as king and didn't evolve, even as other departments were trying to develop new products including cameras, but the film departments squashed many of the ideas claiming other departments weren't "good enough" to take precedence over what kodak did best... film. They were afraid to divert money from film and now they have nothing to sell. Even tiffen makes digital "filters" these days.



    Although, doesn't Kodak also hold some rather juicy OLED patents as well? They should have done something cool like RED, because frankly RED is so dependent on their "cool" image they fail to innovate the way other larger companies with more money can. A new product from them is like waiting for paint to dry under the sea.
Sign In or Register to comment.