Comment: Eastman Kodak patent auction highlights value of IP

Patent portfolios are rapidly becoming the single most valuable asset for technology companies
With Eastman Kodak’s long-awaited patent auction taking place tomorrow, it is rapidly becoming clear that patent portfolios should now be regarded as the single most valuable asset for technology companies.
Eastman Kodak’s patent auction is in fact a last ditch attempt to recoup some of the company’s financial losses and save it from bankruptcy and while the outcome is by no means certain, reports that some major bidders are circling has led to speculation that the proceeds could reach around $2 billion.
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If last year’s Nortel patent auction is anything to go by, Kodak will be expecting to secure this kind of sum and this could be enough to ensure the business lives to see another day despite its financial losses. Ultimately, it may even have a chance to rebuild itself.
The fact that a patent portfolio can come to the rescue in this way is highly significant.  In the past, technology companies have been valued first and foremost based on capital considerations and other physical assets. More recently, brand and goodwill have been regarded as valuable and now patent portfolios are emerging as the single most valuable asset a technology company can own.
As speculation mounts as to which bidder will succeed in acquiring Kodak’s patent portfolio, the auction, which takes place on 8th August 2012, is expected to attract a high level of interest.
Consisting of about 1,100 patents, Kodak’s portfolio includes a large chunk of fundamental digital-imaging technology found in almost every image capable device and this will be viewed as potentially very useful to a variety of technology companies. However, the value of the portfolio has been compromised by a series of recent decisions by the US International Trade Commission. Its most recent decision has rendered some of Kodak’s most valuable and most litigated patents, such as the technology that makes it possible to preview images using a digital camera, invalid.
We will have to wait and see whether the auction achieves the funds expected, but if it does, it will underline the growing importance of patent portfolios as a valuable asset.