Take Two for Eastman Kodak in Patent Row with Apple, RIM

Dan Whalen is a JD candidate at Osgoode Hall Law School.

Eastman Kodak has received some uplifting news in its ongoing patent dispute with tech giants, Apple and Research In Motion. Last week, the US International Trade Commission announced that it will review an earlier opinion rendered against the photography pioneer. If the decision is reversed, the beleaguered Kodak stands to gain more than US$1 billion in settlement.

At issue is a patent for previewing digital images on smartphones, which Kodak obtained in 2001 and claims that Apple and RIM have infringed. In January, however, the ITC’s chief administrative judge delivered a preliminary ruling that the companies had not, in fact, violated Kodak’s patent. The decision was another blow to the traditionally print-focused camera company, which has fallen on tough times as it struggles to stay relevant in the digital world. It operates with a skeleton crew of only 18,800 employees, down from 70,000 in 2002, and its stock has dropped over US$25 to a paltry US$5 in the same period.

Nevertheless, Kodak has worked admirably to redefine itself, having invested US$3.4 billion in a three-year overhaul completed in 2007. It has done well to carve out a niche for itself as licensor to some of the world’s top tech companies; the company boasts over 1,000 digital-imaging patents alone, which are used by almost all digital cameras. Its Chief Intellectual Property Officer formally acknowledges this strategy: “Our primary interest is not to disrupt the availability of any product but to obtain fair compensation for the use of our technology.” Indeed, Kodak has announced to investors that it expects up to US$350 million in annual revenue from intellectual property licensing through 2013.

Kodak has been unafraid to go on the offensive when this latest revenue stream is at risk. In 2008, the company filed a complaint with the ITC against Samsung and LG over accusations that they had infringed on the same patents at issue in the present Apple and RIM case. The ITC sided with Kodak, which soon after received US$964 million from the cellphone makers. Kodak has also recently filed two suits against Apple alleging infringement of other patents related to digital cameras and certain computer processes.

The ITC will decide by May 23 whether the initial decision should be altered or let to stand. Failure of its bid could be a devastating blow to the fragile camera company. Success, on the other hand, would not only bring riches but status to the 131-year-old Kodak as a company that has fought for and won a place in the digital world.