Kodak may have sold its patents, but retains its intangible crown jewel 10 Jan 13
Kodak announced this week that it will license its brand to consumer photography company JK Imaging. The terms of the agreement have not been made public. The licensee plans to use the Kodak name to market products such as digital cameras, pocket video cameras and portable projectors.
The deal gives relatively unknown JK Imaging a headstart as it enters the consumer photography market, allowing it to instantly leverage the brand equity that Kodak nurtured over the many years that it dominated the industry. While Kodak has been forced to sell off its patents, its trademarks, reputation and the other elements of its brand present the beleaguered company with another way to create value.
Just before Christmas, it emerged that Kodak had agreed to sell its 1,100-strong portfolio of digital imaging patents to a consortium consisting of Intellectual Ventures and RPX for $525 million, ending a formal auction process that had commenced back in July 2012 when it was approved by the US Bankruptcy Court.
While $525 million is by no means an inconsiderable sum, it falls well short of Kodak’s earlier estimate that the portfolio could be worth as much as $2.6 billion. Though that figure may have been calculated in a less-than-rigorous fashion, the fact that the offer eventually accepted was nowhere near it suggests that those companies seen as the most likely buyers just didn’t think the patents were worth as much to them as Kodak had hoped – perhaps because they already had wide encumbrances from Kodak’s licensing activities.
Consumers’ transition from film to digital photography, and Kodak’s failure to address this, has been characterised as the root cause of the company’s current crisis. But despite its inability to remain relevant to its customers, Kodak’s past reputation as a highly innovative market leader has ensured that its powerful brand persists. Kodak is still quite possibly the most well-known and well-loved name in the photography industry – and even though estimations of its brand’s financial worth have plummeted in recent years (InterBrand reckoned it to be the world’s fourth most valuable brand back in 1996, while it was ranked at 82nd the last time it made the list of the top 100 in 2007) the Kodak name still holds plenty of value, as JK Imaging has recognised.
Of course, it is extremely unlikely that any number of trademark licensing agreements like this could raise the same kind of money that the patent sale did. But it does prove that Kodak possesses IP apart from its patents that other businesses consider to be valuable enough to pay for. The deal with JK Imaging and the recent expansion of an existing trademark licence agreement with Sakar demonstrate that there is a range of options when it comes to leveraging intangible assets for strategic advantage – and even in the throes of bankruptcy, businesses can create value for their investors, employees and other stakeholders if they have the mindset to realise that.
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