Apple, Google May Combine Efforts to Acquire Kodak Patents for Over $500M

Apple and Google may want to work together to acquire Kodak’s patent portfolio for over $500 million – as the company struggles with bankruptcy.

Google and Apple were after some of Kodak’s 1,100 imaging patents earlier this year. As recently as this summer, Apple and Google were separately going after the patents. The Apple group included Microsoft (News - Alert) and Intellectual Ventures Management. The Google group included RPX Corp and Asian makers of Android OS phones, Samsung, LG and HTC.

In a related matter, Apple, Microsoft and Research in Motion (News - Alert) purchased Nortel Networks’ portfolio, which includes over 6,000 patents, for $4.5 billion in 2011. Google lost out on the patents with a $900 million bid. After Google lost out, it later paid $12.5 billion for Motorola (News - Alert) Mobility – which was viewed by many analysts as excessive, despite the company’s patents.


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"Apple and Google learned a lesson from … Nortel’s auction,” Richard Ehrlickman, former vice president of Intellectual Property at IBM (News - Alert) and president of IP Offerings, told Bloomberg News. “They have decided to come together in this process to reduce the cost of purchasing the Kodak patents, while meeting their business needs.”

By joining together on the Kodak patents, “Apple and Google ensure that Kodak can’t drive up the price of its patents sale by playing the companies off each other,” according to VentureBeat.

The Kodak patents may be worth between $2.21 billion and $2.57 billion, according to one estimate reported by Bloomberg (News - Alert).  “The portfolio is actually worth much less because it has been widely licensed,” Ehrlickman added.

In September, Eastman Kodak announced it was indefinitely postponing its planned auction of its imaging patent portfolios. Now, the Apple-Google combined effort marks a new phase in the likely sale.

“What may end up uniting them for the purposes of this auction and possible future auctions is that they hate the notion of vastly overpaying for patent portfolios of, at best, average value only due to the auction dynamics that the Apple-Android patent war brings about,” according to an explanation by the Foss Patents blog of the recent move.

Several stakeholders are watching the developments unfold carefully – to get an idea about future developments and possible antitrust issues.

“If there continue to be Nortel-like auctions and Motorola-like overvaluations every year, then these companies will continue to spend more, year after year, on patent acquisitions than on new innovation,” Foss Patents said.

“That's not in the interest of those companies, their shareholders, and especially not good for customers. It would be a world in which the losers of the past would impose a massive tax on today's winners by playing them off against each other. Seen in that light, an Apple-Google alliance, however problematic it is from an antitrust point of view, makes a lot of business sense for those companies and whoever else may join the group in order to avoid this problem.”