Kodak: No Decision on Patent Sale, May Keep Patents

Eastman Kodak Company yesterday outlined the next steps toward what they are calling a successful emergence from the Chapter 11 bankruptcy reorganization.  Upon emergence from bankruptcy the company will primarily focus on commercial, packaging and functional printing solutions and enterprise services. As has been widely reported here and elsewhere, as a part of this new strategic vision Kodak has initiated sale processes for its Personalized Imaging and Document Imaging businesses.  However, Kodak is now signaling that they may not actually sell the patent portfolio that had been hoped to fetch billions of dollars.

Notwithstanding, Kodak believes that the sale of  the Personalized Imagining and Document Imaging businesses, as well as continued cost-reduction initiatives, curtailment of its legacy liabilities, and the monetization of the company’s digital imaging patent portfolio, will be significant milestones toward completing the company’s reorganization and emergence from Chapter 11 during 2013.

“As we move forward with the Chapter 11 process, we are focused on delivering the highest value to our creditors so that we can emerge as a sustainable, profitable company that continues to meet the needs of our customers,” said Antonio M. Perez, Chairman and Chief Executive Officer.

[Patent-Search]

Kodak is continuing discussions with parties interested in acquiring the patents offered for sale through the court approved auction procedure.  These patents relate to the company’s digital imaging patent portfolio. Kodak reiterated yesterday that it has made no decision to sell the portfolio and they may, in consultation with creditors, ultimately decide to retain the portfolio as an alternative source of recovery for creditors.  If this announcement is anything other than posturing to make suitors nervous it would almost certainly signal that Kodak is not getting the high offers they feel the portfolio deserves.

Those who have followed the Kodak patent sale efforts will recall that on June 11, 2012, Kodak Kodak filed a motion seeking approval of expedited bidding procedures for a bankruptcy auction of its Digital Capture and Kodak Imaging Systems and Services (KISS) Patent Portfolios, comprising more than 1,100 patents that are integral to the capture, manipulation, and sharing of digital images.  Kodak asked the Bankruptcy Court to approve the procedures because there was no stalking horse bid, which is an initial bid on a bankruptcy company’s assets from an interested buyer chosen by the bankrupt company.  This was the first signal that potential suitors for the Kodak patents were valuing the portfolio very differently than Kodak.  For more on this see Kodak Moves to Sell Patents in Bankruptcy Without Minimum Bid.

What Kodak will become if and when it emerges from Chapter 11 remains to be seen. In addition to the commercial, packaging and functional printing and enterprise services businesses, Kodak will continue to own and operate the Consumer Inkjet, Entertainment Imaging, Commercial Film and Specialty Chemicals businesses.

“We are reshaping Kodak. We continue to rebalance our company toward commercial, packaging and functional printing – in which we have the broadest portfolio solutions – and enterprise services. These businesses have substantial long-term growth prospects worldwide and are core to the future of Kodak. We are confident that our competitive advantages in materials science and deposition technologies, as well as our know-how in digital imaging, will enable us to capitalize on those opportunities and extend our leadership in key growth markets.”

The Personalized Imaging business consists of Retail Systems Solutions (RSS), Paper & Output Systems (P&OS) and Event Imaging Solutions (EIS). RSS is the worldwide leader in retail print solutions with a global footprint of 105,000 KODAK Picture Kiosks; P&OS includes the broadest portfolio of traditional photographic paper and still camera film products; and EIS provides souvenir photo products at theme parks and other venues. The Document Imaging business provides a leading and comprehensive portfolio of scanners, capture software and services to enterprise customers.

“Personalized Imaging and Document Imaging are valuable businesses that enjoy leading market positions as a result of superior products and service offerings. We remain steadfast in our commitment to our customers, and we will work to ensure that they continue to receive the exceptional levels of quality and service they have come to expect from Kodak. Customers remain the top priority of all our businesses – those we intend to sell and those that will remain part of Kodak,” Perez said.

Kodak says it will move forward as quickly as possible and has targeted completing these transactions in the first half of 2013.