Google and Apple Jointly Pursue Kodak Patents

On Monday 10 December news agency Bloomberg reported that rivals Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) have jointly offered more than $500 million (£311 million) to purchase Eastman Kodak’s patents out of bankruptcy. The two tech giants have partnered to buy some of Kodak’s 1,100 imaging patents, according to anonymous sources quoted by Bloomberg.

Kodak has posted for sale patents related to the capture, manipulation and sharing of digital images to fund a turnaround after seeking Chapter 11 protection in January. The 132-year-old company is going through a rough restructuring process involving focusing less on photography and more on packaging, commercial and functional printing and enterprise services. Patent advisory firm 284 Partners LLC has estimated the patents may be worth between $2.21 billion and $2.57 billion (£1.37-£1.6 billion). Kodak claims it has earned more than $3 billion (£1.87 billion) in revenue by licensing some of its digital-imaging patents to companies including Motorola, Samsung, Nokia and LG. “The portfolio is actually worth much less because it has been widely licensed,” opined Richard Ehrlickman, president of IP Offerings, as quoted by Bloomberg.

Apple and Google went after Kodak’s patents in the summer with two separate groups – Apple teamed up with Microsoft and Intellectual Ventures Management, while Google’s partners included RPX Corp, a patent-aggregation company, and Asian makers of Android phones. The two groups separately offered less than what they are now jointly willing to pay. Such collaborations are typical in patent sales because they allow competitors to neutralize potential infringement litigations such as the one currently led between Samsung and Apple. Instead of competitively bidding against each other, companies simply join efforts and lower their costs to their mutual benefit.

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!m[Companies Eyeing 1,100 Imaging Patents Belonging to the 132-year-old Company](/uploads/story/1004/thumbs/pic1_inline.png)According to disclosures filed with the US Security and Exchange Commission (SEC) George Soros, the man who “broke the Bank of England”, increased his Soros Fund Management holdings of Google shares in the third quarter of this year. Apart from buying 189,374 shares of Google for $143 million (£89 million), Mr Soros’ fund also purchased 1.2 million LinkedIn shares for $141 million (£87.7 million) and 3.5 million of Manchester United stock for $45 million (£28 million).

On the other hand the fund sold 2.3 million shares in Wal-Mart and reduced its stakes in Westport Innovation, Pepsi and Elan.
Over the weekend Goldman Sachs released a 79 page report on the future of the tech industry where they noted that Apple will be in good shape with the increase in mobile but Google is facing trouble. According to the investment bank, Apple customers have shown more willingness to pay for compliments than Android users. In addition to that the power of Apple’s iOS remains significant in operating profits on devices. Goldman Sachs estimates that over the last ten quarters Apple has grown its share of mobile profits from both smartphones and tablets device sales from around 55 percent to almost 70 percent. Google on the other hand doesn’t capture any of the Android Original Equipment Manufacturers’ (OEMs) revenue as it provides its operating system for free.