Apple, Google in group buying Kodak patents for $525 million

A group including Apple Inc., Google Inc. and Research In Motion Ltd. agreed to buy patents from bankrupt Eastman Kodak Co. for about $525 million, gaining digital-imaging technology to capture and share pictures.

The group is led by Intellectual Ventures and RPX Corp., Kodak said in a statement today. Google, Apple and RIM are among the 12 patent licensees participating in the deal, according to a court filing. Under the terms, Intellectual Ventures will make a portion of the payment, with the rest coming from the licensees.

Facebook Inc., Amazon.com Inc. and Microsoft Corp. also are part of the group, the court filing shows, along with Samsung Electronics Co., Adobe Systems Inc., Fujifilm Holdings Corp., Huawei Technologies Co., HTC Corp. and Shutterfly Inc. The auctioned patents were previously estimated to be worth as much as $2.6 billion.

“This is a fraction of our overall patent portfolio,” said Chris Veronda, a spokesman for Rochester, New York-based Kodak. “We retain ownership of about 9,600 other patents for our ongoing businesses.”

Partnerships are common in patent sales because they allow competitors to neutralize potential infringement litigation. A group including Apple, Microsoft and RIM bought Nortel Networks Corp.’s more than 6,000 patents for $4.5 billion out of bankruptcy last year. Google lost the auction for those patents after making an initial offer of $900 million.

Go Komodo

Kodak needed to sell the patents for at least $500 million under a November agreement -- codenamed Komodo -- to obtain $830 million in financing to exit bankruptcy in the first half of 2013. That funding also requires progress in the sale of two business units and resolution of U.K. pension obligations. The patent sale had to be agreed upon by Jan. 31 and must close by Feb. 28, regulatory filings related to the financing show.

Kodak had said the patents may be worth $2.21 billion to $2.57 billion, based on an estimate by advisory firm 284 Partners LLC. In court documents, Kodak said it generated more than $3 billion in revenue by licensing some of the patents to outside users, including Samsung, LG Electronics Inc., Google’s Motorola Mobility unit and Nokia Oyj.

Chief Executive Officer Antonio Perez has been selling businesses to shrink the company and fund its shift into commercial printing and packaging after seeking Chapter 11 protection in January. The company is also selling its consumer- film, photo-kiosk and commercial-scanner businesses and shuttering its consumer inkjet-printer unit.

Kodak filed for bankruptcy after years of burning through cash while the rise of digital photography eroded its film business. The company has announced almost 4,000 job cuts this year and spent $3.4 billion on restructuring before bankruptcy, including payouts to fire 47,000 employees since 2003.

The 132-year-old imaging company listed $5.1 billion in assets and $6.75 billion in debt in its bankruptcy filing.

The bankruptcy case is In re Eastman Kodak Co., 12-10202, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Bloomberg News

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