Josh OngKodak said in a statement that the auction is expected to take place in August,AFP reported on Tuesday. According to the companies, buyers will be able to purchase the patents "free and clear of all ownership allegations" from either Apple or Flashpoint Technology.
"The Apple and FlashPoint claims are baseless and Kodak will still seek dismissal on summary judgment in July," said Kodak Chief Intellectual Property Officer Timothy Lynch.
According to the report, the patent sale will include 700 patents for "image capture, processing and transmission technologies for digital cameras and other devices" and 400 over patents related to "tools for image analysis, manipulation, tagging, and network-based services."
The photography pioneer filed for bankruptcy protection in January, billing it as a necessary step toward completing its "transformation" into the digital era.
Kodak had hoped to drum up cash from Apple with patent litigation, but it failed to gain the upper hand against the iPhone maker, despite the fact that it had successfully asserted one of its digital imaging patents against other handset makers.
The company then desperately tried to sell off its patents, but it was unable to find a buyer. By its own admission, offloading the patents was one of Kodak's primary goals in filing for bankruptcy.
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16 Comments
Can somebody please tell me how a legal representative can give the go ahead for the sale of an item when the ownership of said item is still in contention?
And when was 'bankruptcy' considered part of a standard business advancement strategy?
Sheesh.
[quote name="GTR" url="/t/151062/kodak-patent-sale-to-move-forward-in-spite-of-apple-ownership-claims#post_2139059"]Can somebody please tell me how a legal representative can give the go ahead for the sale of an item when the ownership of said item is still in contention? And when was 'bankruptcy' considered part of a standard business advancement strategy? Sheesh. [/quote] Kodak currently has all the rights to sell whatever they please. On no grounds can anyone at the moment stop that procedure even if there is a 'contention' as you say.
Can somebody please tell me how a legal representative can give the go ahead for the sale of an item when the ownership of said item is still in contention?
And when was 'bankruptcy' considered part of a standard business advancement strategy?
Sheesh.
Paradoxical as it may sound, bankruptcy can move a company forward. When a company is saddled with debt it cannot pay and with terms that it cannot honor, bankruptcy is a mechanism for resolving how the creditors will be compensated (or not) and how the ownership of the company will be redefined. Once this is done, then the company can move forward, and sometimes even thrive again. Without the legal sandbox of bankruptcy, it is difficult if not impossible to placate the creditors and shareholders (not that bankruptcy will necessarily placate them but it forces a resolution).
Case in point - If I am not mistaken, Kodak couldn't conduct this fire sale of patents if it had not declared bankruptcy.
[quote name="ClemyNX" url="/t/151062/kodak-patent-sale-to-move-forward-in-spite-of-apple-ownership-claims#post_2139076"] Kodak currently has all the rights to sell whatever they please. On no grounds can anyone at the moment stop that procedure even if there is a 'contention' as you say.[/quote] That is very misleading. Apple can (and almost certainly will) appeal this decision. Bankruptcy courts have a lot of leeway, but they can NOT sell something that is someone else's property. This article covers but one tiny skirmish in the battle. Apple still has time to put a stop to the sale. Now, that's not to say whether Apple's claim has any validity or whether an appeals court will side with Apple. But if Apple really does own the patents, Apple should be able to convince the appeals court to stop the sale. However, Apple claims to have 'an interest' in the patents - which suggests that they're not the sole owners. If they are co-owners, the bankruptcy court can easily sell Kodak's interest in the patents (unless Apple has an agreement with Kodak offering right of first refusal) without affecting Apple's interest. This article (as well as other articles on the subject) are not particularly clear on the matter - and I really don't care enough to look for the actual court filings.
[quote name="ankleskater" url="/t/151062/kodak-patent-sale-to-move-forward-in-spite-of-apple-ownership-claims#post_2139083"] Case in point - If I am not mistaken, Kodak couldn't conduct this fire sale of patents if it had not declared bankruptcy. [/quote] That's not true. If the patents are not owned by Kodak, then Kodak can't sell them even via bankruptcy court. The court can not allow Kodak to sell someone else's property (if it did, I'd file for bankruptcy and claim I own 10 acres of Manhattan and sell for a few billion dollars). OTOH, anything that is Kodak's property can legitimately be sold with or without bankruptcy court. That includes partial interest. If Kodak and Apple each have part interest in the patents, Kodak can sell their interests. There are a couple of exceptions: 1. If they have a technology sharing agreement which gives Apple right of first refusal for the patents, then Apple has the right to buy them under the terms of the agreement, with or without bankruptcy. 2. If the technology sharing agreement says that Kodak can not sell the patents without Apple's permission, then Kodak could not do so in the normal course of business, but a bankruptcy court could order the sale. This is one of the few cases where a bankruptcy court could do something that Kodak couldn't do normally. 3. If some of the debt is secured by the patents, then Kodak would not be able to sell them in the normal course of business without approval from the creditor and a lien waiver. In bankruptcy, they could be sold, but it's not that simple. Secured debt takes precedence over unsecured debt, so if the creditors crafted their debt agreements properly, the creditors who have a lien on the patents should have priority - just as they would if Kodak hadn't filed for bankruptcy. Of course, if Kodak wanted to have a fire sale of patents without going through bankruptcy, they'd have a few hurdles to clear. Such a major sale would have to be cleared by the board, and possibly by the shareholders. Any creditors with significant debt could object, although unsecured creditors would be unlikely to be able to block it.