Patent loss puts Kodak assets at risk

Eastman Kodak Co. lost a ruling in a two-year legal fight against Apple Inc. and Research In Motion Ltd. over a patent for digital image-preview technology, a decision that stands to hurt the value of assets Kodak is selling.

RIM and Apple didn’t violate Kodak’s rights because the patent is invalid, U.S. International Trade Commission Judge Thomas Pender said in a notice posted on the agency’s website last week. Kodak said it will appeal the findings with the sixmember commission in Washington, which has the power to block imports of products that infringe U.S. patents.

Kodak, which filed for Chapter 11 bankruptcy protection in January, contends Apple already owes it more than $1 billion in damages for infringement of this and other digital-capture patents, according to a bankruptcy court filing this month. Kodak has said a victory in the case may force Research In Motion and Apple to pay for licensing and bolster the value of patent portfolios the company is seeking to sell.

The judge’s recommendation “represents a preliminary step in a process that we are confident will conclude in Kodak’s favor,” Timothy Lynch, Kodak’s chief intellectual property officer, said in a statement. “Kodak has invested billions of dollars to develop its pioneering digital imaging technology, and we intend to protect these valuable assets.”

Kodak’s two digital patent portfolios may be its most valuable assets. The patent in the ruling is part of a portfolio of more than 1,100 related to digital capture that Rochester, N.y.-based Kodak is selling. The other collection covers imaging systems and services.

Together, the technology is valued at $2.21 billion to $2.57 billion, based on an estimate by 284 Partners LLC, a patent advisory firm cited in a debtor’s motion it filed before a U.S. bankruptcy court in January.

The disputed patent, which Kodak claims is used in all modern cameras, covers a feature that previews low-resolution versions of a moving image while recording still images at a high resolution. Higher resolution requires more processing power and storage space. Samsung Electronics Co. and LG Electronics Inc. have already paid $964 million in settlements to Kodak for using the technology.

Pender said the aspect of the patent that was in the case covered an obvious variation of earlier inventions. He did say that, were it valid, BlackBerry devices and the Apple iphone 3G would infringe it, while the iphone 3GS and iphone 4 do not.