Google Inc. and Apple Inc have joined forces to attempt to buy more than $500 million Eastman Kodak Co. patents before the company hits bankruptcy.
People who wanted to remain unidentified have said that Apple and Google have partnered up to buy 1,100 imaging patents from Kodak. This is almost ironic as these two companies have been butting heads competing to dominate the smartphone market.
This partnership seems to be unlikely but this is not uncommon. These types of partnerships allow competitors to neutralize infringement litigation if they were to arise. Just last year Microsoft Corp., Apple, and Research in Motion Ltd. teamed up to buy over 6,000 patents for $4.6 billion from Nortel Networks Corp. This bought them out of bankruptcy Google was not the winner in that auction. They had originally offered $900 million at auction but lost to the for mentioned partnership.
The Nortel’s auction has taught the companies a valuable lesson. These companies can form a team to reduce the cost of purchasing these extremely well sought after patents while meeting business needs on both sides.
The group led by Apple that are pursuing the patents by Kodak include Microsoft and Intellectual Ventures Management LLC. Google’s partners in the acquisition of these patents include RPX Corp, a patent-aggregation firm, and the makers of Google’s Android phones which are from Asia. Separately these groups have offered $500 million for all of Kodak’s patents. Together, they are much more powerful and will allow the firms to offer a greater sum.
The Wall Street Journal has reported in the past that a company has offered $500+ million for Kodak’s digital patents.
Last month Kodak got $830 million exit financing money. This money is contingent on the sale of the digital patents being sold for at least $500 million.
Patents that are for sale relate to digital images and how they are shared, captured and manipulated. They are being sold to fund a turnaround by Kodak after looking for Chapter 11 protection in Early January. The company plans to shrink and focus much less on the photography aspect and more on packaging, printing, commercial, and enterprising services offered by Kodak.
Kodak has estimated its patents to be worth $2.21-$2.57 billion based on an estimate from a patent advisory firm. These statements were found in court documents. Overall, Kodak has generated $3 billion in revenue by licensing some of these patents to companies that include Google, Motorola Mobility unit, and Samsung Electronics Co.
“The portfolio is actually worth much less because it has been widely licensed” Said Ehrlickman of IPofferings.
In filing for bankruptcy, Kodak has listed $5.1 billion in assets and $6.75 billion in debt.
Spanning a history of 132 years, Kodak looks like it is seeing its very last days.