Eastman Kodak Co agreed to sell its digital imaging patents for about
$525 million, a key step to bringing the photography pioneer out of
bankruptcy in the first half of 2013.
The deal for the 1,100 patents allows Kodak to fulfill a condition for securing $830 million in financing.
The
patent deal was reached with a consortium led by Intellectual Ventures
and RPX Corp, and which includes some of the world's biggest technology
companies, which will license or acquire the patents.
Those
companies are Adobe Systems Inc, Amazon.com Inc, Apple Inc, Facebook
Inc, Fujifilm, Google Inc, Huawei Technologies Co Ltd, HTC Corp,
Microsoft Corp, Research In Motion Ltd, Samsung Electronics Co Ltd and
Shutterfly Inc, according to court documents.
Kodak still must
sell its personalized and document-imaging businesses as part of the
financing package, and also has to resolve its UK pension obligation.
Kodak said the patent deal puts it on a path to emerge from Chapter 11 in the first half of 2013.
"Our
progress has accelerated over the past several weeks as we prepare to
emerge as a strong, sustainable company," said Antonio Perez, chairman
and chief executive of the Rochester, New York-based company.
The
patent portfolio was expected to be a major asset for Kodak when it
filed for bankruptcy in January. An outside firm had estimated the
patents could be worth as much as $2.6 billion.
Kodak's patents
hit the market as intellectual property values have soared and
technology companies have plowed money into patent-related litigation.
For
example, last year Nortel Networks sold 6,000 wireless patents in a
bankruptcy auction for $4.5 billion and earlier this year Google spent
$12.5 billion for patent-rich Motorola Mobility.
But Kodak's
patent auction dragged on beyond the initial expectation that it would
be wrapped up in August. One patent specialist blamed those early,
overly optimistic valuations, which he said encouraged Kodak's team to
set their sights too high.
"Unfortunately (Kodak management) was
misled into thinking it was worth billions of dollars and it wasn't,"
said Alex Poltorak, chairman of General Patent Corp, a patent licensing
firm. "I think they sold them at a very good price."
He said after
Google acquired Motorola, the search engine company no longer needed
patents at any price, deflating the intellectual property market.
Kodak
traces its roots to the 19th century and invented the handheld camera.
But it has been unable to successfully shift to digital imaging.
It
will likely be a different company when it exits bankruptcy, out of the
consumer business and focused instead on providing products and
services to the commercial imaging market.
The patent sale is subject to approval by the U.S. Bankruptcy Court in Manhattan.
The
Kodak bankruptcy case is in Re: Eastman Kodak Co. et al, U.S.
Bankruptcy Court, Southern District of New York, No. 12-10202.
© Thomson Reuters 2012