Tuesday, July 03, 2012
Court Approves Auction Of Kodak's Digital Imaging Patents
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Eastman Kodak Company on Monday obtained approval from the
Bankruptcy Court to conduct an auction to sell its Digital
Capture and Kodak Imaging Systems and Services (KISS)
Kodak's motion was contested by Apple, and FlashPoint
Technologies, Inc. which have asserted "ownership"
interests in a small number of the 1,100 patents in the
portfolios. The Bankruptcy Court, over Apple and
Flashpoint's objections, found that all of the patents in
the Digital Capture and KISS patent portfolios are property
of Kodak's estate. Accordingly, the Court granted Kodak the
right to sell these patents free and clear of Apple and
FlashPoint's claims at the auction, subject to the
applicable provisions of the U.S. Bankruptcy Code.
"We are gratified that the Court has enabled us to move
ahead with our patent auction in a timely manner and with
clarity on ownership for the winning buyer," said Timothy
Lynch, Kodak Vice President and Chief Intellectual Property
Koday said that interested buyers would be able to submit
bids on a confidential basis, subject to review by Kodak,
certain of its creditors and the Bankruptcy Court. The
auction is expected to be held in early August.
Kodak is selling the patents under section 363 of the U.S.
Bankruptcy Code which permits a sale free and clear of any
adverse claim or interest. The patents will be sold in a
fair, competitive process overseen by the Bankruptcy Court.
At closing, the winning bidder can obtain an order of the
Bankruptcy Court that protects it against any third-party
The Bankruptcy Court's ruling provides a path to separate
the auction process from continuing litigation about the
Apple and Flashpoint claims. Kodak believes these claims
are without merit, and is also seeking a determination on
summary judgment, expected to be heard in July, that the
claims are time-barred.
Lynch said: "The Apple and FlashPoint claims are baseless
and Kodak will still seek dismissal on summary judgment in
July. However, today's ruling provides a Court-approved
process allowing buyers to acquire the patents free and
clear of all ownership allegations, regardless of the
status of the dispute with Apple and Flashpoint at the time
Even if the dispute with Apple and FlashPoint has not been
fully resolved by the time of closing of the patent sale,
Kodak may still sell the patents free and clear of Apple
and FlashPoint's claims by establishing "adequate
protection" under the Bankruptcy Code for Apple and
Flashpoint at the time of sale. Kodak's adequate protection
could take many forms depending on the value of any
remaining alleged interests, the amount of the sale
proceeds, and other factors. Alternatively, the Bankruptcy
Court also authorized Kodak to sell the patents subject to
Apple and FlashPoint's claims, if mutually agreed between
Kodak and the winning bidder.