Kodak to Sell Patents for $525 Million

Kodak to Sell Digital Imaging Patents for $525 Million

Eastman Kodak once described the sale of 1,100 digital imaging patents as a windfall that could prop up and even save the beleaguered company.

Kodak, known for cameras, is working to strengthen itself.

On Wednesday, the sale was finally announced, but instead of bringing as much as $2.6 billion as Kodak once predicted, the selling price was far short of that amount, at about $525 million. The buyer was a consortium that includes many of the world's biggest technology firms, among them Apple, Google, Facebook and Samsung Electronics.

Kodak officials said the sale was another step toward emerging from bankruptcy, and turning around a decades-long slide for the Rochester-based corporation.

“This monetization of patents is another major milestone toward successful emergence,” Antonio M. Perez, Kodak's chief executive, said in a news release. “Our progress has accelerated over the past several weeks as we prepare to emerge as a strong, sustainable company.”

Among the benefits of the sale, Mr. Perez noted, was that it would allow Kodak to largely repay a debtor-in-possession loan it obtained nearly a year ago. It also satisfied a major provision for an $830 million financing facility, approved in November, that required Kodak to sell its patent portfolio for no less than $500 million.

Kodak will retain a license to use the digital imaging portfolio patents in its future businesses, and for those businesses that it is selling.

Part of the sale will be paid by a consortium of technology companies that was organized by Intellectual Ventures and RPX Corporation. The licensees will receive rights to the digital imaging patent portfolio and certain other Kodak patents.

“No single company could have completed this deal, and by creating a consortium we were able to ensure that members get access to these important invention rights,” according to a news release by Intellectual Ventures, a firm in Bellevue, Wash., that invests in patents. “The patent marketplace is very active, and I.V. expects to be involved in more complex transactions like this in the future.”

Mr. Perez said Kodak was now focused on building its commercial imaging business, which includes printing and packaging for businesses. The company believes it has “significant competitive advantages and strong growth prospects,” according to its news release.

The sale is subject to the approval of the bankruptcy court. Kodak filed for Chapter 11 in January. In the time since, it has withdrawn from the market for consumer inkjet printers, which were once part of Mr. Perez's turnaround strategy, and sold its film business, which had made Kodak a household name.

“There has been strong interest in that business, as well as our document imaging business that is also for sale, and we are on track to sell them in the first half of 2013,” Christopher K. Veronda, a Kodak spokesman, said in an e-mail.

As for the sale price of its patent portfolio, Mr. Veronda noted that the $2.6 billion estimate was made by a third party that Kodak cited in court papers.

“Certainly other recent speculation was around a fraction of the $525 million we received,” he said. “The price paid is always a reflection of what buyers are willing to pay for an asset or a license.”

A version of this article appeared in print on December 20, 2012, on page B3 of the New York edition with the headline: Kodak to Sell Digital Imaging Patents for $525 Million.