Kodak's latest Apple, HTC lawsuits may increase value of patent portfolio

WASHINGTON - Eastman Kodak Co, seeking to sell or license a portfolio of more than 1,100 patents, sued Apple Inc and HTC Corp in an expansion of a legal strategy that may help boost the value of its inventions to fund a turnaround.

Two infringement lawsuits filed on Tuesday in federal court in Rochester, New York, accuse the smartphone makers of using Kodak technology for image transmission, including a way for users to share images directly from cameras, without permission.

Kodak also claims HTC is infringing an additional patent for a preview feature, which is at the center of a US International Trade Commission case against Apple and Research In Motion Ltd (RIM).

"They're trying to generate value for their patent portfolio," said Ron Epstein, chief executive officer of patent brokerage Epicenter IP Group LLC in Redwood City, California.

Kodak, which is predicted by analysts to report its fourth straight annual net loss, has put the Rochester-based company's digital-imaging patents up for sale to help fund changes to its business.

CEO Antonio Perez, who is now betting on digital printers for publishers, packagers, advertisers and households to lift Kodak, has said that the Apple-RIM trade commission case could generate $1 billion in new revenue from settlements.

Kodak, which didn't say how much the new Apple and HTC cases could be worth, also filed companion complaints at the trade commission on Tuesday in Washington, seeking to block imports of products including Apple's iPad and iPhone, and HTC's Flyer tablet and Wildfire S phone.

"This is an important part of ongoing operations to get them through the transition," said Erin-Michael Gill, chief intellectual property officer for MDB Capital Group LLC, a California-based investment bank. "A bad sign would be them sitting on their hands and waiting for these to sell."

Kodak said last year it hired Lazard Ltd to help it sell the patents and retained Jones Day among advisers helping on strategic options.

The Apple-RIM trade commission case filed in 2010, involving the single image-preview patent, has met with delays including the retirement of the judge handling the case, and a final decision isn't scheduled until September.

Moody's Investors Service on Jan 5 cut ratings on about $1 billion of Kodak debt with a negative outlook, citing "a heightened probability of a bankruptcy over the near-term" as liquidity deteriorates, making a patent sale more challenging.

Adding four new patents into the mix "helps, even without litigating any of the issues, to counteract the impression that there's only one good patent" in the portfolio, said Ron Laurie, managing director of Inflexion Point Strategy LLC in Palo Alto, California, which counsels companies on intellectual property purchases. Kodak "wanted to defuse that impression".

The four patents asserted against Apple and HTC have as co-inventor Kodak researcher Kenneth Parulski, who has more than 190 patents and is "recognized as a pioneer in numerous digital camera technologies", according to the complaints.

Kodak claims infringement by Apple's iPad 2, iPhone and iPod Touch, and by HTC's tablets and phones, including the Flyer, EVO View 4G, Jetstream, Vivid, Amaze 4g, Desire, Hero S, Rezound, Rhyme, Sensation 4G and Wildfire S.

"We've had numerous discussions with both companies in an attempt to resolve this issue, and we have not been able to reach a satisfactory agreement," Laura Quatela, Kodak's chief operating officer, said in a statement.

"Our primary interest is not to disrupt the availability of any product but to obtain fair compensation for the unauthorized use of our technology."

Bloomberg News