Camera giant Eastman Kodak Comp. (EK) saw the writing on the wall
decades ago, when digital imaging was first being talked about. Long a
visionary in the field of photography, Kodak invented the first true digital
camera in 1975 and moved aggressively to bring the technology to market.
Even as it has continued to innovate, though, in recent years Kodak has
fallen on hard times as more lithe Asian competitors have outsold it in the
digital camera market. With the advent of smartphones and shrinking
digital camera sales, Kodak is in danger of sinking into obscurity.
I. Kodak's Search for Cash
In an attempt to stay relevant, the pioneer has increasingly turned to
licensing its intellectual property -- and litigating against those unwilling
to play ball. In February 2010, it filed suit against Canada's Research
in Motion (TSE:RIM) and
Cupertino, California's Apple, Inc. (AAPL), alleging they stole its IP
involving image previews on a digital screen.
The case was estimated to be worth $1B USD, plus could allow South Korea's
Samsung Electronics (SEO 005930)
and LG Electronics (SEO:066570) to back
out of $1B+ USD in licensing fees if Kodak loses.
In January, a judge ruled that Kodak's patent that the case hinged upon was
invalid for reason of obviousness. The blow was softened
in March when a larger judicial panel voted to review the decision.
II. Awaited Ruling Goes Against Camera Giant
The larger panel at the U.S. International Trade Commission ruled this
week that while there were some examples of infringement that were upheld in
Kodak's claims, that its most important patent was indeed invalid as per the
While Kodak is permitted to continue its lawsuit(s) with regards to the upheld
claims (image previews without a flash), the decision is viewed as a major loss
for the company, as it almost certainly eliminates the billion-dollar payday
that company executives were anticipating.
Kodak representatives tried to look on the bright side. Laura Quatela,
Kodak's chief intellectual property officer commented, "[We were]
gratified that the commission has decided to modify in our favor the judge's
initial recommendation. As we have said from the start, we remain extremely
confident this case will ultimately conclude in Kodak's favor."
The loss plunged Kodak stock by as much as 16 percent during trading (the stock
is current down over 14 percent).
Kodak still has a bit of hope to staying relevant. The multi-billion
dollar company has four growing sectors -- consumer inkjet printers,
high-speed commercial inkjet presses, workflow software and packaging -- which
it says could double in revenue by next year, accounting for $2B USD, or
roughly 25 percent of the company's earnings. In that regard it hopes to
reinvent itself similar to
computer pioneer International Business Machines Corp. (IBM).
III. Microsoft, Apple, and Other Pick Up Key Portfolio
In related news Apple, Research in Motion, Sony Corp. (TYO:6758), Microsoft Corp. (MSFT), EMC Corp. (EMC), and Swedish
telecommunications giant Ericsson (ERIC) have joined forces to acquire Nortel
Networks Corp. treasure trove of intellectual property for a cool $4.5B USD.
The portfolio contains over 6,000 patents, in fields including wireless,
wireless 4G, data networking, optical, voice, internet, service provider,
semiconductors, internet search, social networking, and more.
The collection should prove a powerful mutual defensive (or offensive, perhaps)
tool for the buyers. For the seller it's a huge payday, which sent share
prices of the company's pink sheet penny stock (OTC:NRTLQ) soaring 68
percent. The Canadian company has been trying to offload its assets and
restructure since it filed for bankruptcy in 2009.