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

from the what-a-legacy dept

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 When you're old, decrepit and tied to an outdated technology/mode of business...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.

Filed Under: bankruptcy, innovation, patents
Companies: kodak