Kodak Hits Apple, RIM Over Patents
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Fresh off getting royalty-paying deals with Samsung Electronics Co. and LG Electronics for its digital-camera technology, Eastman Kodak Co. is going after Apple Inc. and Research In Motion Ltd.
The iconic camera maker said Thursday it filed two lawsuits against Apple and a complaint with the International Trade Commission against both Apple and RIM, alleging their phones and other products infringe on Kodak's digital-imaging technology.
Kodak didn't specify the amount of compensatory damages it seeks, and it hasn't quantified the benefits it expects from agreements it reached with Samsung Monday and LG in November as part of settlements in similar trade disputes. But Kodak said an ITC administrative law judge found the same patent involved in the Apple and RIM ITC disputes to be valid and enforceable in the Samsung case.
Kodak said it owns more than 1,000 patents involving digital imaging, which is the primary focus of Kodak's research and development spending, according to Kodak spokesman David Lanzillo. The three companies have been neck and neck in patent issuances in recent years, with Kodak registering 296 in 2009, RIM 306 and Apple 289, according to IFI Patent Intelligence.
"We are seeing faster-cycle technology innovation," said Frank Gens, chief analyst at technology research firm IDC. "You have to be very good at generating intellectual property and protecting it." He added that many technology companies are ramping up their patent businesses as the mobile Internet, cloud computing and other technologies are poised to change the technology landscape.
Falling sales and profits for Kodak's traditional film and photo-finishing operations have increased the importance of its digital businesses and of using its broad patent portfolio to generate revenue and profits. Kodak has set a goal of collecting $250 million to $350 million in annual intellectual-property-licensing revenue for the next several years.
But through the third quarter, such revenue was on track to generate only $175 million to $200 million of the company's estimated $7.25 billion in revenue, according to Citi Investment Research. The firm has said that patent-licensing revenue is expected to generate 10% to 15% of Kodak's gross profit in 2009.
Kodak alleged Thursday that Apple's iPhones and RIM's camera-enabled BlackBerry phones infringe on a Kodak patent that covers technology related to image previewing. Kodak also filed two other suits against Apple Thursday in the U.S. court for the Western District of New York that claim patent infringement "related to digital cameras and certain computer processes." Kodak's court filing said Apple has infringed on a Kodak patent that links data between objects with its iMac, Mac Pro, MacBook, iPhone, iPod Touch and other products.
Apple and RIM declined to comment.
Laura Quatela, chief intellectual-property officer at Kodak, said the company has had talks with Apple and RIM "for years" to reach a deal. "We have invested hundreds of millions of dollars creating our industry-leading patent portfolio," she said in a statement. "We are taking this action to ensure that we protect the interests of our shareholders and the existing licensees of our technology."
Kodak said it has licensed digital-imaging technology to about 30 companies, including some leaders in the mobile-device industry. It isn't looking to disrupt the availability of any devices but seeks "fair compensation for the use of our technology" in Apple and RIM products, the company said.
RIM and Apple, both deep-pocketed companies that make products containing hundreds of components, are common targets of patent-infringement suits. In 2006, RIM paid $613 million to settle a closely watched lawsuit with NTP Inc., a Virginia patent-holding company. Last year, the BlackBerry maker paid $268 million to settle a dispute with Visto Corp., a closely held wireless-email provider.
Apple, meanwhile, is embroiled in a high-profile patent dispute with Nokia Corp. In December, Nokia broadened that dispute by filing a complaint against Apple to the ITC. The ITC has become a popular venue for patent-infringement cases since a 2006 U.S. Supreme Court ruling made it more difficult to obtain injunctions banning sales of infringing products, said Charles Macedo, lawyer at Amster Rothstein & Ebenstein LLP.
That is because the ITC has the power to issue exclusion orders banning imports of infringing products, which is tantamount to an injunction when products made outside the U.S. are involved. Cease-and-desist orders issued by the ITC are governed by a different standard than the 2006 Supreme Court decision, Mr. Macedo noted.
In September, RIM chose to settle an ITC case with Saxon Innovations LLC, a Texas patent-holding company, rather than risk a negative outcome at an ITC hearing. Settlement terms weren't disclosed. RIM is still facing an ITC complaint by Prism Technologies LLC, a closely held Omaha, Neb., company.
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