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Kodak Planning To File For Bankruptcy In Order To Sell Off Its Patents

from the what-a-legacy dept

Wed, Jan 4th 2012 8:06pm — Mike Masnick

We've noted that Kodak, as its business prospects have continued to dim, has become much more aggressive in suing over patents. This is a traditional path for failing legacy businesses. When you're young, you innovate. When you're old, decrepit and tied to an outdated technology/mode of business... you litigate (and legislate). However, with the valuation of patent portfolios rocketing up over the last year (see Nortel & Motorola for examples), there have been rumors for a long time that the best thing Kodak could do for its investors (if not the general public or the economy) is to give up the ghost and sell off its patents to the highest bidder. And, that appears to be the plan. Lots of reports are claiming that the company is about to declare bankruptcy to make it possible to sell those patents. Apparently some potential buyers were worried about how there might be problems buying the patents without a bankruptcy:

Some potential bidders for the patents are wary of proceeding because a purchase may amount to a so-called fraudulent transfer if Kodak is insolvent, said the people, who asked not to be named because the talks are private. Kodak confirmed that it hired Jones Day to advise it on considering options and said it doesn�t plan to seek bankruptcy protection.

While that article quotes someone at Kodak saying no decision has been made, other reports suggests that it's only a matter of when, not "if." I have no doubt that Kodak's patents will sell for quite a bit. Having seen what happened with Nortel, it wouldn't be surprising to see a similar insane bidding war, in which various tech companies feel compelled to waste a ton of money that could have gone towards actually innovating and developing cool new products, to buy these patents to lump into a portfolio either to protect against other patent suits, or to use aggressively against other companies. I fail to see how any of this helps innovation in any way. It seems to reward failure.

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Filed Under: bankruptcy, innovation, patents
Companies: kodak

30 Comments

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Anonymous Coward, 4 Jan 2012 @ 8:29pm

Kodak,one more company destroyed by piracy.
Kodak is an example of one more company decimated by piracy. If freetards didn't steal photos, you would have to pay for film and to take your own photos. But Big Piracy, along with Big Search and Big Hardware have destroyed a great American company!
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- Kain, 4 Jan 2012 @ 8:37pm
  
  Re: Kodak,one more company destroyed by piracy.
  You can't blame piracy when Kodak clearly did not innovate quickly enough or get into digital in a bigger way. Piracy is a problem but it didn't kill Kodak. RIP.
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- Suja, 4 Jan 2012 @ 8:44pm
  
  Re: Kodak,one more company destroyed by piracy.
  sarcasm? i cant tell
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- Aerilus, 4 Jan 2012 @ 8:47pm
  
  Re: Kodak,one more company destroyed by piracy.
  I am going to vote sarcasm
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- techinabox (profile), 4 Jan 2012 @ 9:38pm
  
  Re: Kodak,one more company destroyed by piracy.
  Lies! Clearly Kodak is falling to a cabal of NAND flash manufactures out to replace honest film with blasphemous bits and bytes.
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- Anonymous Coward, 4 Jan 2012 @ 10:45pm
  
  Re: Kodak,one more company destroyed by piracy.
  No, No, NO, NO!!!!
  
  Kodak and camera manufacturers thrive off of piracy. People use them to record movies in theaters and they use them to steal protected works. THAT'S STEALING AND BECAUSE OF THAT CAMERA MANUFACTURERS ARE GUILTY AND SHOULD BE DECLARED ROGUE AND FORCED OUT OF BUSINESS!!!! If it weren't for piracy, they couldn't exist anyways. Pirates!!!
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  - Anonymous Coward, 5 Jan 2012 @ 6:05am
    
    Re: Re: Kodak,one more company destroyed by piracy.
    It's more than just theaters. Just about everything photographers have ever taken photos were made by somebody else, and thus they commit copyright infringement. Taking photos of buildings or the NYC skyline? Copyright infringement unless you got permission from every architect and every owner of every building in the shot. Taking photos of people? Copyright infringement unless you got permission from every clothing manufacturer who made the clothes they wear. Taking photos inside your home? Copyright infringement unless you get permission from every producer of every piece of furniture in the house.
    
    /sarc
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- bikey, 5 Jan 2012 @ 2:32am
  
  Re: Kodak,one more company destroyed by piracy.
  Oh please. Stealing photos? Paying for film? If it were such a 'great company' it would innovate like everyone else.
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- pr, 5 Jan 2012 @ 7:30am
  
  Re: Kodak,one more company destroyed by piracy.
  It's the freetards, mostly. They post a picture of the Grand Canyon on the interwebs, then I don't have to go to the Grand Canyon and take my own Kodachromes.
  
  Google and Wikipedia should be taxed to support Kodak, General Motors, and American Airlines, all of whom suffer from this disturbing state of affairs.
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Anonymous Coward, 4 Jan 2012 @ 8:29pm

Kodak,one more company destroyed by piracy.
Kodak is an example of one more company decimated by piracy. If freetards didn't steal photos, you would have to pay for film and to take your own photos. But Big Piracy, along with Big Search and Big Hardware have destroyed a great American company!
[ link to this | view in chronology ]
Anonymous Coward, 4 Jan 2012 @ 8:45pm

The problem with patents is that they block everybody else entering that market, the sad part is that there will be no new Kodak to take its place it will be gone forever from that market, while in other places people who are encouraged to experiment will come up with new products and new things creating another company.
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Nick (profile), 4 Jan 2012 @ 10:23pm

To sell an idea
I still can't wrap my head around how an original idea can be sold. If you bought it, you didn't create it. If you didn't create it, you shouldn't be given the rights and protections awarded to creators.

I think if you originator dies or abandons a work, it should become public domain. Make IP nontransferable!
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Anonymous Coward, 4 Jan 2012 @ 10:42pm

When a company declares bankruptcy all of its IP should enter the public domain and be void. IP doesn't help companies innovate by giving them the thought "hey, if I go bankrupt, I'll be in a better position to pay off my creditors".
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Anonymous Coward, 4 Jan 2012 @ 10:59pm

film still an important niche market
Kodak is still among the top industry experts when it comes to analog film technology. There's no low cost digital substitute for a quality microfilm with a 300 year shelf life. It'll be a shame if they go under. I hope they can make it through this. There's still money to be made in their arena.
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- Anonymous Coward, 4 Jan 2012 @ 11:16pm
  
  Re: film still an important niche market
  100 year DVD - http://delkin.com/i-5937148-archival-gold-dvd-r-single-100-year-disc-in-jewel-case.html
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Anonymous Coward, 4 Jan 2012 @ 11:05pm

Same pattern:
1) Notice that your business is failing.
2) Harass successful businesses with your patent portfolio.
3) Now that you have shown that your patents can be used to harass other businesses, put your patents for sale.
4) Profit at the cost of making everything worse for everyone else.
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Anonymous Coward, 5 Jan 2012 @ 2:07am

Why is someone that has never been an innovator opining about innovation like he's an expert or something?
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- abc gum, 5 Jan 2012 @ 5:13am
  
  Re:
  "Why is someone that has never been an innovator opining about innovation like he's an expert or something?"
  
  Why is someone that has never been a Doctor of Nutritional Medicine opining about his diet like he's an expert or something?
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John Doe, 5 Jan 2012 @ 4:17am

If the patents didn't save Kodak?
If the patents didn't save Kodak, how do they have any value?
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- abc gum, 5 Jan 2012 @ 5:18am
  
  Re: If the patents didn't save Kodak?
  "If the patents didn't save Kodak, how do they have any value?"
  
  They have value similar to cigarettes in prison. One does not really need them to sustain life, but they can be used to buy a bitch.
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Steph, 5 Jan 2012 @ 6:15am

Does everything HAVE to further innovation?
"I fail to see how any of this helps innovation in any way."

Not everything has to further innovation, even in the tech sector. Can't it just be about pure business strategy, on both ends? Kodak sells the only thing that's valuable in their company anymore. The buyer(s) get a patent or set of patents that they can use to innovate with if they choose, or use to defend against trolls if they choose.

I like you Mike, but it doesn't always *have* to be about making the world a better place. Sometimes, it can just be about making the world a different place.

Cheers,

Steph
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- abc gum, 5 Jan 2012 @ 6:40am
  
  Re: Does everything HAVE to further innovation?
  "The buyer(s) get a patent or set of patents that they can use to innovate with if they choose, or use to defend against trolls if they choose"
  
  If one could use said patents to innovate as you suggest, why is it that Kodak is/was unable to do this themselves? fwiw, the "lack of talent" argument will not hold water.
  
  A patent portfolio is not similar to real life infrastructure like buildings or office furniture which can easily be sold and put to good use elsewhere. It is only a business strategy because of the artificial market.
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- Anonymous Coward, 5 Jan 2012 @ 10:51am
  
  Re: Does everything HAVE to further innovation?
  "I like you Mike, but it doesn't always *have* to be about making the world a better place."
  
  "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."
  
  Sorry, but I'm going to go with the U.S. Constitution on this one. It does have to be about promoting progress or "making the world a better place." Using the strictest reading of the constitution you shouldn't be able to buy or sell "IP rights". Besides if the IP passed into the public domain then the "buyer" could use the information in the patents to innovate and save a bunch of money, so the only reason to purchase the patents is to troll or defend against trolling. Do you really consider that a "business strategy" worthy of preservation?
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JL Rivers, 5 Jan 2012 @ 6:40am

Bankruptcy and Patents
This article implies that in order to sell its patents, Kodak needs to have filed for bankruptcy protection first. Is that how it works? Can a company sell a patent without being in bankruptcy? If they are not using the patent that is, of course.
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- Anonymous Coward, 5 Jan 2012 @ 8:51am
  
  Re: Bankruptcy and Patents
  No, a company which is insolvent cannot sell assets freely. Insolvency, not bankruptcy is the important thing. Insolvency is being unable to pay debts when they fall due. Bankruptcy is a legal step which can be taken before or after insolvency occurs.
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A Conservative Teacher, 5 Jan 2012 @ 7:55am

Kodak follows GM
This is a shame, especially coming so soon after the bankruptcy and death of General Motors Corporation, which died this past December (it is survived by General Motors Company). I wrote about this in my post RIP General Motors Corporation and American Capitalism, found at http://aconservativeteacher.blogspot.com/2011/12/rip-general-motors-corporation-and.html
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Gene Cavanaugh (profile), 5 Jan 2012 @ 12:35pm

Kodak and patents
Again, "pegging" on an extreme position.

Large entity patents, which have become synonymous with patent abuse, IMHO, are indeed a problem. In fact, I totally agree with you that they inhibit innovation and harm the economy.

However, it is a ridiculous stretch to say "all patents are bad" as a consequence. That is like saying "if you are lost in the ocean, you will drown, so water is bad".
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- Chosen Reject (profile), 5 Jan 2012 @ 5:40pm
  
  Re: Kodak and patents
  I'll agree that saying "this patent case is bad so all patents are bad" is horrible logic. However, that's not the logic being used here. The logic is closer to "all patents are bad and here's yet another example of that".
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Bankruptcy Lawyers, 10 Jan 2012 @ 9:37pm

Does Kodak really have to declare bankruptcy just to sell it's patent?
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Filing for bankruptcy, 5 May 2012 @ 1:09pm

Filing for bankruptcy
A Bankruptcy wipes out all a person's eligible debts usually within nine months. In the vast majority of cases the debtor has no assets that he or she would lose. Bankruptcy gives a person a relatively quick "fresh start".

Bankruptcy in Canada should only be a last resort. Common reasons for Canadian bankruptcy are job loss, excessive student loan debt, or medical expenses. We understand that problems like these are sometimes unavoidable. however, if bankruptcy is the right solution for you, your bankruptcy trustee will guide you through the process.
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