Kodak Sets Patent-Auction Date for Early August
06/12/2012| 12:55pm US/Eastern
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Eastman Kodak Co. (>> Eastman Kodak Company) is moving to put its massive stash of digital-imaging patents, which so far hasn't appeared to excite bidders, up for sale at a confidential auction in early August.
Kodak's proposed auction timeline, filed with the Manhattan bankruptcy court Monday, calls for preliminary bids by July 16 and more-detailed offers by July 30 ahead of an August 8 auction.
The company expects to disclose the identity of the winning bidder and the purchase price by August 13, but that offer would remain subject to approval of a bankruptcy judge for a sale to close. Court papers show Kodak is requesting an August 20 hearing before the judge.
Kodak filed its auction proposal days after The Wall Street Journal said bidders' interest was flagging for some 1,100 patents worth as much as $2.6 billion. While 20 potential bidders have signed the confidentiality agreements necessary before Kodak lets them dig through its sensitive business data, the company is seeking to move forward without a common fixture of bankruptcy auctions: a stalking-horse bidder whose job it is to set a floor price for the assets.
To bring bidding forward after a year of marketing efforts, Kodak said it must be able to take the infrequent step of keeping the identity of its bidders and the amount of their offers under wraps until designating a winner.
"The bidding procedures are designed to allow bidders to give us their best offers without fear of showing their cards to competitors," Timothy M. Lynch, Kodak's chief intellectual-property officer, said in a statement Monday.
Another possible concern for would-be buyers is litigation over the patents with such technology heavyweights as Apple Inc. (>> Apple Inc.) and BlackBerry maker Research In Motion Ltd. (RIMM, RIM.T). Kodak was dealt a setback Monday night in a fight over an important picture-taking patent with Apple and Research In Motion, though the fight continues.
A Manhattan bankruptcy judge will take up the auction timeline at a July 2 hearing.
Specifically up for grabs are two groups of patents. The first group includes more than 700 patents covering technology used in digital cameras, smartphones and tablet computers to capture, process and transmit images. The second group has more than 400 patents for technology used to analyze, manipulate, store and access images. Both portfolios include foreign patents as well as pending U.S. and foreign patent applications.
According to Kodak, it has been able to earn more than $3 billion from licensing the patents over the past decade.
The patent sale, which Kodak tried to carry out before its Chapter 11 filing in January, is a condition of its $950 million bankruptcy loan from lenders led by Citigroup Inc. (C). Kodak faced a June 30 deadline to get its auction timeline on file with the court, among other benchmarks set out in the loan.
Write to Jacqueline Palank at jacqueline.palank@dowjones.com.
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