Kodak Allowed to Auction Patents, Despite Apple's Claims

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Eastman Kodak said on Monday that it has received approval from bankruptcy court to go ahead with the auction of its digital imaging patent portfolios, despite claims to some of those patents by Apple and another company, FlashPoint Technologies.

The court granted Kodak the right to sell these patents "free and clear" of the two companies' claims at the auction, subject to the applicable provisions of the U.S. Bankruptcy Code, Kodak said in a statement.

Kodak will however have to provide "adequate protection" for Apple and FlashPoint if the patent sale is closed before the dispute between Kodak and the two companies is resolved, it said.

The bankruptcy court has also authorized Kodak to alternatively sell the patents subject to Apple and FlashPoint's claims, if mutually agreed between Kodak and the winning bidder, Kodak said.

The papers were not immediately available on the court website. While proposing the auction to the court in a filing in June, Kodak said the sellers propose to sell all or any portion of the digital imaging patents to successful bidders free and clear of all claims and interests, to maximize their value. Holders of claims and interests, if any, will be sufficiently protected by the availability of the proceeds of the sale, Kodak said in that filing.

Kodak, which filed for bankruptcy in January, filed last month a motion before the U.S. Bankruptcy Court for the Southern District of New York, seeking court approval for confidential bidding for the auction that it expects will be held in early August. The patents are to be auctioned in two separate portfolios called the Digital Capture and Kodak Imaging Systems and Services (KISS) portfolios.

Apple has in bankruptcy proceedings claimed 10 of the patents in the Digital Capture portfolio citing its invention of the patents, and claims arising from joint development work and a contract between Kodak and Apple.

FlashPoint, an intellectual property company, holds that a 1996 agreement between Apple and FlashPoint assigned Apple's rights in the claimed Kodak patents to FlashPoint.

Kodak filed a complaint last month against both companies, charging them with derailing the sale of its patents relating to digital imaging. It asked the court for an injunction barring Apple and FlashPoint from asserting ownership claims under any theory, including inventorship, to the Kodak patents, as their public campaign could create uncertainty as to the ownership of the claimed Kodak patents.

The company said Monday it will still seek dismissal of the "baseless" claims by Apple and FlashPoint this month.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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