Kodak anticipates ruling on patent infringements
ROCHESTER, N.Y. — Innovation turned Eastman Kodak Co. into one of the world’s most recognizable brands. Imitation by its rivals might help keep the picture-taking pioneer from fading into history.
The 131-year-old company, which popularized photography beginning with the Brownie box camera in 1900, is looking for a lucrative patent infringement triumph this week over iPhone behemoth Apple Inc. and BlackBerry maker Research in Motion Ltd.
A hoped-for Kodak moment before a trade dispute arbiter would ease at least temporarily the intensifying pressure on the maker of cameras, film and printers. Kodak, slow to phase out its 20th-century cash cow of celluloid film, is trying to redefine itself as a 21st-century powerhouse in digital imaging.
Mining its rich array of inventions has become indispensable in Kodak’s push to reverse four years of losses and return to profitability in 2012. Kodak has a promising array of new inkjet printing, packaging and software businesses, but it needs to tap other sources of revenue before investments in those areas have time to pay off.
Kodak’s patents give the company exclusive rights to sell or license its inventions. Since 2008, Kodak has generated almost $2 billion in licensing fees and royalties from intellectual-property battles, both in negotiations and through the courts. The company’s dispute with Apple and RIM centers on technology Kodak patented in 2001 for extracting a still image while previewing it in the camera’s LCD screen.
Chief Executive Antonio Perez estimates that Kodak could get up to $1 billion from the two companies over the life of the patent if Kodak gets a favorable ruling today before the U.S. International Trade Commission in Washington.
Because the federal agency can block imports of patent-infringing products, a Kodak victory could force Apple of Cupertino, Calif., and RIM of Waterloo, Ontario, Canada, to spend hundreds of millions of dollars apiece in licensing fees to bring in smartphones made overseas. Apple and RIM declined to comment on the case.
Kodak’s transition to a new world of photography was hindered by a reluctance to phase out celluloid film. The world’s biggest film manufacturer finally started a four-year digital makeover in 2004, spending $3.4 billion to close aged factories, chop and change businesses and eliminate 37,000 of its 64,000 jobs.
It closed 2007 on a high note with net income of $676 million, then ran smack into the recession.
To bridge the economic chasm, Kodak cut back operations even more drastically, squeezing cash from a fast-shrinking film business, a portfolio of more than 1,000 digital-imaging patents and the sale of non-strategic units, including microfilm and image sensors.
Kodak’s stock has lost more than 85 percent of its value since the onset of the recession and now hovers below $3.50 a share.