The Lowballing of Kodak's Patent Portfolio

[Brian C. Miller]

IEEE Spectrum: The Lowballing of Kodak's Patent Portfolio

Interesting analysis of how Kodak's bid to sell its patents went pear-shaped.

 

[Pioneer]

Another interesting story of how Kodak managed to screw up. About the best that will come out of this entire mess will be a few lessons in future business management texts. Unfortunately when companies get as large as Kodak was their managers don't really believe that those lessons even apply to them any longer...but they do.

 

[Ken Nadvornick]

I'm envisioning the nerdy kid in the neighborhood, having been blindfolded, tied to a tree, and with his pants pulled down around his ankles, while the rest of the kids are off at the beach having a swell time.



Ken

 

[gleaf]

How interesting that the company that worked so hard to move away from a silver process for environmental reasons succeeded with digital. Then failed to see digital as the answer. Sort of the Swiss electronic watch ploy.

 

[fotch]

Top management at Kodak painted itself into a corner. Sad that it could happen.

 

[Sirius Glass]

<<sigh>> <<sniff >>

 

[Xmas]

don't sell your duck on a rainy day… they sold a decade too late.

just like the litigation with Polariod…

 

[ntenny]

Hmm, it seems to me like in many ways their expectations for the sale were reasonable. As one example, if you read that '218 patent, it's a very clear description of the way live-preview screens work on pretty much every digital camera; if it hadn't been unexpectedly ruled invalid, or even if they'd had the time and money to contest the ruling in a serious way, it would be a very strong patent on a crucial aspect of essentially everyone's camera businesses. And they were selling it at the time the smartphone wave was really breaking, when it seems like there should be a lot of new entrants needing licenses for digital camera patents.

Kodak's management certainly made plenty of mistakes, but I don't think the way they tried to unload this portfolio was really one of them. In hindsight they waited too long, but that's probably because they thought they could save the company in a form for whom the patents would be useful, and it took them too long to wake up to "oh crap, this isn't going to work, we need to sell some stuff to keep the lights on".

-NT

 

[AgX]

Hmm, it seems to me like in many ways their expectations for the sale were reasonable. As one example, if you read that '218 patent, it's a very clear description of the way live-preview screens work on pretty much every digital camera; if it hadn't been unexpectedly ruled invalid, or even if they'd had the time and money to contest the ruling in a serious way, it would be a very strong patent on a crucial aspect of essentially everyone's camera businesses. And they were selling it at the time the smartphone wave was really breaking, when it seems like there should be a lot of new entrants needing licenses for digital camera patents.

But it is nearing expiring date.

 

[fotch]

Not only was their timing off, they put all their eggs in one basket. And what about their back up plan? Apparently, they had none. What I find amazing is that having did so many things right for so long, they suddenly became stupid. Top management has all the blame.

 

[ntenny]

(the "218" patent)

But it is nearing expiring date.

Yeah, that's true, but the smartphone companies couldn't possibly have waited for it to expire while letting their competitors go to market with better camera features. Played right, I think it should have been good for a big one-time licensing windfall for the purchaser, except for that little problem of being deemed invalid. (And I haven't looked at that court decision, so I have no idea what a healthy company's prospects would have been for recovering from it.)

The really nice thing is that it would be a competitively-necessary license, but not a standardized or regulatory-required one; no one says you *have* to have a camera with live preview in your phone. That quite possibly means that they could have licensed it without being restricted to the usual "fair, reasonable, and non-discriminatory" terms: You want to make a competitive phone now and keep up with the market? You gotta play our game! It looks to me like a pretty big opportunity that was missed because of the collapse of that patent.

-NT

 

[Pioneer]

They had no more leverage. Their time was run out and everyone understood this was a desperation move on Kodak's part to rescue the company. Just stand back and wait. Kodak HAD to sell. No one else HAD to buy.

 

[Xmas]

Not only was their timing off, they put all their eggs in one basket. And what about their back up plan? Apparently, they had none. What I find amazing is that having did so many things right for so long, they suddenly became stupid. Top management has all the blame.

Around about 1980 they ignored a Polariod patent until the case went to Congress then they bought all the paper weight cameras back at retail...

so many things wrong...

 

[lxdude]

Around about 1980 they ignored a Polariod patent until the case went to Congress then they bought all the paper weight cameras back at retail...

so many things wrong...

Kodak used a different method which they believed did not violate Polaroid's patent.
Polaroid's initial complaint was in 1976, and the final award came in 1990.

BTW, "cases" do not go to Congress. They go to the courts- a separate branch of government.

 

[Xmas]

Kodak used a different method which they believed did not violate Polaroid's patent.
Polaroid's initial complaint was in 1976, and the final award came in 1990.

BTW, "cases" do not go to Congress. They go to the courts- a separate branch of government.

Well I thought they went to court by 80 or 81 and Kodak were buying back cameras in 86-87. But memory is fallible, I still had a stash of film in 87 so I kept the camera. Buying back cameras retail was expensive enough and the final damages for Polariod large.

They were found guilty of more than one violation of more than one patent, although all the Kodak chemistry was different.

I thought that one of the violations was automatic ejection of a print...

Kodak could have made film packs like Fuji. Indeed they had made lots of things for Polariod.

I think the Ja operate a photo patent pool instead of funding lawyers.

I know it was settled in the Fed's appeal court, I thought it made it to congress discussionsll as well?

 

[omaha]

They had no more leverage. Their time was run out and everyone understood this was a desperation move on Kodak's part to rescue the company. Just stand back and wait. Kodak HAD to sell. No one else HAD to buy.

That's the key.

A patent is, by definition, a wasting asset. In a lot of ways, its only as good as the financial strength behind it.

 

[kb3lms]

On the instant cameras, Kodak would refund the purchase price or you could get a top of the line regular Kodak 35mm camera as a replacement or one share of Kodak stock. So 25 years later, what was the best option?

The technology was not the same and the patent attorneys at EK were pretty good at vetting an application. IIRC, the infringement decision did not turn on the technical merits of the product. It was more about the idea of instant photography.

 

[Tom1956]

Kodak was (is) just a company caught between the squeeze of digital on one side, and the 2008 crash on the other. That's my take on it. As an offset printer I am in the same jam. It happens, Sometime with an "sh" on the front of that expression. If you want to assign reason or blame, about the only thing that could be said is that they were not looking deep enough into the crystal ball.

 

[Prof_Pixel]

The technology was not the same and the patent attorneys at EK were pretty good at vetting an application. IIRC, the infringement decision did not turn on the technical merits of the product. It was more about the idea of instant photography.

The technology was completely different (and still lives on in the Fuji Instax product). The case was decided by a female judge in Boston who had no understanding of the technology and decided the issue on the basis of a 'concept patent' approach - 'instant photography'.

(I worked on the Kodak Instant System from 1976 to 1983.)

A settlement had been worked out between Kodak and Polaroid management, but Eddie Land wouldn't accept it because he took it as a personal affront that Kodak dared to enter 'his business'.

 

[Sal Santamaura]

...The case was decided by a female judge in Boston who had no understanding of the technology...

And the judge's gender had exactly what to do with this?

 

[Prof_Pixel]

.. just part of the story. Make of it what you want.

 

[lxdude]

The technology was completely different (and still lives on in the Fuji Instax product). The case was decided by a female judge in Boston who had no understanding of the technology and decided the issue on the basis of a 'concept patent' approach - 'instant photography'.

Too bad for the Wright brothers they didn't try that with self powered, heavier than air flying machines. They could have gotten super rich off of Curtiss, Martin, Boeing, Lockheed, et al.

A settlement had been worked out between Kodak and Polaroid management, but Eddie Land wouldn't accept it because he took it as a personal affront that Kodak dared to enter 'his business'.

Where were all those anti-monopolists in the Justice Dept?