updated 09:00 pm EST, Mon December 10, 2012
$500M+ bid may assist Kodak in exiting bankruptcy
Rather than allow a potential bidding war to drive up the price, or having both parties walk away leaving Kodak without a way to secure needed financing, Apple and Google are said to have opted to team up on a joint, over-$500 million bid for 1,100 Kodak digital imaging patents. The consortium, which also includes several other companies (most notably Microsoft, though HTC and Samsung are rumored to be in as well), may accomplish multiple goals: helping Kodak, keeping the costs down, and (perhaps) heading off future litigation.
Kodak, the 132-year-old camera and film pioneer that is now in bankruptcy due to bad management when digital imaging took over the photography field, had originally estimated its patent portfolio at around $2.5 billion, but saw a distinct lack of interest from potential buyers at that price. The ending of its first auction with no sale exacerbated its ongoing financial problems, pushing it into bankruptcy. Ironically, Kodak accused Apple and other companies of conspiring to force the price of the patent package lower, but sources say bids by the previous two smaller consortiums didn't even approach $400 million, and started at less than half that price.
In order for Kodak to fulfill its agreement on nearly $800 million in loans, the patent portfolio must sell for at least $500 million. By teaming up and offering a price more than twice what they would have individually paid, Apple and Google (and the other associated companies) may be striking a deal to help Kodak out of bankruptcy, as well as hitting on a "grand bargain" that would see the purchased patents excluded from any future litigation between the member of the consortium.
In another ironic twist, Kodak has used these same patents in court cases against a number of the companies in the coalition, most prominently Apple (but also against BlackBerry maker RIM and HTC). Apple sued Kodak seeking to prevent the sale of some of the patents, claiming that it actually owned or at least co-owned a number of the patents co-developed with Kodak when the two companies collaborated on the QuickTake digital camera in the 90s. Apple was ultimately unsuccessful at its claim of ownership in terms of preventing the patents' auction, but an appeal is ongoing -- though Apple may be able to reclaim the patents through the consortium buyout.
Kodak's plan for its future is not entirely clear, but the company hopes to emerge from bankruptcy sometime in 2013 and re-enter the market focusing on commercial imaging rather than consumer products, which it has now mostly ceded to mostly digital-oriented rivals. Though film technology has long been superseded in many areas by digital, there remain a number of uses for traditional film, and there is still an enormous amount of HD-quality film that needs restoration and commercial release -- a 1970 four-episode Doctor Who story, shot entirely on 16mm film due to an industrial action, has been remastered and will become the oldest story in the show's 49-year history to come out on Blu-Ray early next year (the series did not fully embrace HD video until 2009).