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Shutterfly sues Kodak to stop app duplicating sold tech

updated 10:10 am EDT, Sat March 23, 2013

Kodak agreed to not offer same services as Shutterfly in 2012

Photo host Shutterfly has filed a suit to stop a new Kodak app that allows users to construct and order photo albums made from pictures the user has stored on Facebook. Shutterfly filed a complaint with the US Bankruptcy Court New York that the "My Kodak Moments App" violates a deal Kodak signed to not set up a duplicate business, and that the technology Kodak is using is the same as the one Shutterfly purchased from the fallen giant.

In March of 2102, Kodak signed a deal with Shutterfly, moving 75 million users and their photos to the newer service. The price behind the deal wasn't disclosed, but did remark that it involved a "stalking horse" bid, where a company agrees to make a minimum bid to keep the price at a guaranteed level if someone else makes an offer. The deal left open the possibility for someone else to secure the deal if they were willing to pay a premium, but got no offers for the service.

Kodak filed for bankruptcy and started selling off segments of itself in 2012. To escape from the financial pit, the company is planning on focusing on the strongest segment it has left -- digital printing. At the end of 2012, the company announced it would sell its print-film business and several other related businesses to raise additional funds. The endangered imaging giant made the move public in the last days of its patent portfolio auction. Kodak's businesses up for sale include heavy-duty commercial scanners with embedded optical character recognition for form processing, a business that takes photos of theme park visitors, and kiosks that print digital photos.

Jusge Allan Gropper, the judge overseeing the Kodak bankruptcy proceedings, approved the $525 million patent sale. The completed sale will allow the company to continue with a plan to obtain an additional $830 million in financing on top of the patent proceeds.

Despite continuing dismal financial results, Kodak told investors in its annual report that it is intending to emerge from bankruptcy in the summer of 2013, a bit later than expected. The company posted a $402 million loss for the quarter, and lost $1.38 billion dollars in the 2012 fiscal year. The massive losses are nearly double that from 2011.



By Electronista Staff
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