Photography giant Kodak is on the verge of bankruptcy, which is why it’s auctioning its 1,100 digital photography related patents. The bidders in these auctions typically are “consortiums” composed of multiple companies hoping to utilise their collective resources to acquire these patents.
The bidding group brings together a raft of strange bedfellows. It includes Apple Inc. and Google Inc., fierce competitors in the global smartphone market.
A deal for the entire portfolio—one of many options under discussion— could fetch more than $500 million based on recent negotiations, people familiar with the process said.
People familiar with the matter said the consortium bidding on Kodak’s patents also includes Samsung Electronics Co., LG Electronics Inc. and HTC Corp., all companies building smartphones based on Google software.
Kodak initially expected more than $2 billion for its 1,100 digital photography patents, which is almost twice the amount of cash it had in the bank in June this year. The company hopes to pay off debts owed to banks and secured bondholders using the money raised from this auction.
Most companies use patents acquired in auctions like these as defensive measures rather than tools to go on the complete offensive, which is why they team up and distribute the costs. These deals also tend to be scrutinised by the Department of Justice for anti-trust concerns, but as long as the patents are licensed at reasonable rates there isn’t an issue.