Law360 - "ITC Ruling Could Be Nail In Kodak Patent Sale's Coffin"

The International Trade Commission delivered bad news to Kodak when it ruled that a key patent on camera preview features is invalid. Alexander Poltorak commented on how devastating that ruling could be for Kodak's desired patent sale. ("ITC Ruling Could Be Nail In Kodak Patent Sale's Coffin" Law360 - July 23, 2012)

Article excerpt: But even if Kodak succeeds at the appellate level, damage has already been done, with its hold over the patents now cast into doubt just as the company is seeking to obtain the biggest return possible on them. And, at bottom, Kodak might be dramatically overestimating the patents' worth, making its reliance on them all the more dangerous, according to General Patent Corp. CEO Alexander Poltorak.

“It's certainly not going to generate the cash that they were hoping for,” Poltorak told Law360 on Monday. “So far, they really failed to generate as much enthusiasm about these patents as they were hoping for."

Though the ruling only affects one of the 1,100 patents Kodak's seeking to unload and is unrelated to the company's other patents, it's the lucrative “crown jewel” patent, Poltorak said. The ITC ruling, if upheld, would deprive the debtor of $1 billion it sought for alleged infringement of the patent, not to mention the proceeds from the anticipated sale.

...Kodak's $2.6 billion expectations for the patent auction are little more than wishful thinking, according to Poltorak. He explained that the patents are highly encumbered thanks to the company's licensing and cross-licensing of them, and that Kodak's figure — which puts the patents at “a staggering $2.4 million per patent” rather than the average of between $100,000 and $250,000 per patent — is dangerously optimistic considering what the company's staking on it.

“Because of these encumbrances, these patents are not worth as much as Kodak thinks,” he said. “It doesn't leave them in a happy place.”

So, while Kodak is rightly fighting the ITC ruling in an effort to clarify the validity of its patents, the company should also be taking a closer look at its dependence on the portfolio's value, which might see it come out the loser in the end, Poltorak said.

“Kodak's auction is in big trouble regardless of the ITC case, and it has been in big trouble,” he said.

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