Posts Tagged: "patent auction"

Xerox (NYSE: XRX), a global leader in business processes and document management systems, has engaged intellectual property brokerage ICAP Patent Brokerage, the world’s largest intellectual property brokerage and patent auction firm, to auction 239 U.S. patents and associated foreign patents and pending patent application. The patents represent projects from Xerox’s five global research centers, including PARC, a Xerox Company. The patents and pending U.S. and foreign applications will be divided into 27 different lots and are spread across 26 distinct technological fields. Bidding will take place between July 24th and July 29th.

A variety of electronic cigarettes have hit the market in recent months, and lately it seems that I am seeing a lot of electronic cigarette commercials on TV. Last week ICAP Patent Brokerage announced that it would be selling a patent portfolio of heatless and smokeless cigarette technology that exclusively advances electronic cigarette science. The patent portfolio includes U.S. Patent No. 6,769,436 and related patents that are still pending. According to ICAP, the ‘436 patent has already been challenged in court and prevailed as valid. And if you look at the claims in the patent you can’t help but notice that they seem exceptionally broad.

The latest statistics show that the cumulative value of U.S. intellectual property is approximately $5.8 trillion (or 48.4% of GDP), and each year over half a million patent applications are filed, over a quarter million patents are issued, over 4000 patent infringement suits are filed and IP verdicts total over $4.6 billion with a median patent damage award of approximately $4 million. Against this backdrop, I now present an updated taxonomy containing 19 IP-related business models. The business models are in addition to the “traditional” operating companies and their “traditional” IP law firms. Further, while not pretending to be all-inclusive, a directory of players implementing one or more of these 19 IP business models is available for download at the end of this post.

The financing commitment Kodak received is composed of new term loans of $476 million, as well as term loans of $317 million issued in a dollar-for-dollar exchange for amounts outstanding under the company’s pre-petition second lien notes. The financing, however, is predicated on certain conditions and Kodak’s achievement of certain milestones. Perhaps the main pre-condition, and one that may be quite difficult for the company to meet, is that Kodak must successfully complete the sale of it’s digital imaging patent portfolio and the sale much fetch no less than $500 million.

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.

Even if the dispute with Apple and FlashPoint has not been fully resolved by the time of the final sale of the patent assets Kodak may still be able to proceed with the sale if they establish “adequate protection” under the Bankruptcy Code for Apple and Flashpoint at the time of sale. Kodak’s adequate protection could take many forms depending on the value of any remaining alleged interests, the amount of the sale proceeds, and other factors. Alternatively, the Bankruptcy Court also authorized Kodak to sell the patents subject to Apple and FlashPoint’s claims, if mutually agreed between Kodak and the winning bidder.

The time has now come for Kodak to attempt to shed its non-strategic patents with the sale of roughly 10% of the overall Kodak patent portfolio.  Without an acceptable initial bid already in place Kodak will roll the dice and angle for an auction that would take place in early August 2012, assuming more than one bidder emerges.