Kodak Patent Deal – Locking Down the Loose Nukes

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With Kodak now gone, today comes the announcement that pretty much every major technology giant on the planet has agreed to jointly purchase 1,100 of Kodak’s patents for $525M. Google, Apple, Samsung, Facebook, Microsoft, Amazon, RIM, Hwawei, Adobe, Fujifilm, HTC, even Shutterfly (whaaa?). It’s a regular League of Nations, groups otherwise currently engaged in the throes of fevered patent wars amongst themselves. So what gives?

The analogy that springs to mind is the crumbling of the former Soviet Union. The last thing that the global technology industry needs is loose nukes, in the form of intellectual property. So rather than create yet another ridiculous patent bidding war, or worse yet leave the stockpiles lying around for the next Klausner or NTP to snap them up and wreak havoc, the giants all decided to collude for the greater good. Under the auspices of famed IP merchants Intellectual Ventures and RPX, the deal was concluded with a direct purchase by IV and subsequent licensing to all parties.

Kodak was certainly hoping for a bigger haul – $2.6 billion according to the WSJ. Given Nortel’s $4.5 billion IP sale after a tasty bidding war, this was not entirely unrealistic. But the reality is that the technology titans are a bit worse for wear after the past few years. Litigation, injunctions and the like get expensive and distracting to senior management, and as Apple found out this week, sometimes you lose in a big way. If Apple’s second patent is ultimately invalidated, they will likely see their $1.05B damages against Samsung reversed, and will find it much harder to keep Samsung from shipping products into various markets.

It certainly seems we may see more brokered deals like this going forward.

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