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Opening bids for the patents being auctioned as part of Kodak’s on-going bankruptcy are due to be made this week. The 1,100 rights are being divided into two portfolios: one of 700 patents covering digital-capture technology; and one of 400 for document imaging technologies.
According to the Wall Street Journal two consortia have so far emerged as potential participants in the auction. The first is made up of Microsoft, Apple and Intellectual Ventures. The other comprises Google, several of its Android partners (Samsung, HTC and LG Electronics), as well as defensive patent aggregator RPX. If this turns out to be the case, what we will have essentially is the Nortel auction all over again – Android versus the rest. Does that mean we will get the same result?
Obviously, we will have to wait and see. However, a consortium comprising Apple, Microsoft and IV probably could not be more of a provocation to Google to stay in the bidding whatever the cost. Its issues with the first two companies – which, like itself, are IV investors – are well known, but it’s worth remembering that Google is also reported to have had a pretty major falling out with IV too. The thought that perhaps its three deadliest rivals want those Kodak patents is certain to concentrate minds in Mountain View. One thing is for sure, with Samsung, HTC and LG Electronics on board, money is not going to be an issue. All of the reported members of the Google group are likely to want the patents for defensive reasons only.
Looking at the other consortium, Microsoft already has licensing deals with Samsung, HTC and LG; as does Intellectual Ventures. Apple does not and is currently engaged in various litigations with Samsung and HTC; while there has been speculation that it may soon be at war with LG too. So far, Microsoft, Apple and IV have not taken aim at Google directly, but all three do have disputes of one kind or another with Motorola Mobility.
While IV and Microsoft have very clear monetisation strategies – they want royalties from those they believe are infringing their patents – Apple continues to follow the thermonuclear war approach: no compromises, no deals, all-out destruction. At some stage, therefore, if the price does start to get high, the objectives that the three might have for wanting the Kodak patents may start to weigh on their willingness to keep on bidding.
The job of Lazard, the auction organisers, will be to manage the process so that it delivers as much cash as possible. The level of transparency involved in a bankruptcy sale, as well as the degree of organisational flexibility it affords, will certainly help. Everyone will know who is bidding and how much; as with the Nortel sale, parties will be able to form new alliances throughout if the organisers approve. It is also likely that there are going to be other bidders that we do not yet know about. In the end, the result will depend on how much one side wants to prevent other sides from getting their hands on the patents.
Last year, it turned out that the Rockstar consortium, which started life without Apple but eventually saw the company come on board and make the majority financial contribution, wanted the Nortel patents most, but that Google wanted them pretty badly too – dropping out only after submitting a joint bid of $4 billion with Intel. This time round, having lost the Nortel auction and up against two of those that beat it last time, as well as IV, and in alliance with three key Android partners, it could well be that Google will want to go the extra mile. If that is the case, it will probably end up being very good news for Kodak, not to mention RPX.
IP management, Licensing, IP litigation, Patents, IP business, IP valuation