Eastman Kodak Co. (EKDKQ:US) lost its patent case against Apple Inc. (AAPL:US) and Research In Motion Ltd. (RIM) over digital image-preview technology, a U.S. trade agency said today in a decision that could hurt the company’s efforts to get a high price selling its patents.
Kodak said it will appeal.
The U.S. International Trade Commission upheld a judge’s findings that neither Apple nor RIM violated Kodak’s rights in the patent. The commission said it agreed with the judge that the patent claim was invalid. Its reasons for the decision will be released once both sides have a chance to redact confidential information.
Kodak has been seeking a victory to force Apple and RIM to pay licensing fees and bolster the value of the patent portfolios Kodak intends to sell. Kodak said in a court filing that Apple alone owes more than $1 billion in royalties. The dispute has dragged on for about 30 months, almost twice as long as a typical ITC case.
The patent’s validity “has been upheld in previous litigation at the ITC, and was affirmed by the U.S. Patent and Trade Office in the face of two separate challenges, so we are confident that its validity will ultimately be upheld,” Chris Veronda, a spokesman for Kodak, said in a statement.
Kristin Huguet, a spokeswoman for Apple, said the company had no comment.
The patent in the case is in one of two portfolios that Kodak is selling, which may be its most valuable assets. One group includes patents for digital-capture technology and the other covers imaging systems and services.
Kodak can challenge the decision at a federal appeals court that specializes in U.S. patent law.
Kodak said last month that 20 parties had signed agreements to view confidential information ahead of potential bids for its two patent portfolios. The company plans to announce winning auction bidders Aug. 13.
Kodak said it has generated more than $3 billion by licensing the digital-imaging patents to users including Samsung Electronics Co., LG Electronics Inc., Google Inc.’s Motorola Mobility unit and Nokia Oyj.
Kodak, which sought Chapter 11 bankruptcy protection in January, filed the ITC case in January 2010. The dispute has dragged on longer than the typical agency case because the original judge retired shortly after the commission told him to reconsider aspects of his findings, and proceedings were delayed until a new judge was hired.
Apple, based in Cupertino, California, has claimed it is the true owner of the image-preview and other Kodak patents because of a research agreement between the companies in the 1990s. That contention was rejected in the ITC case, and is pending in a separate lawsuit.
Kodak Chief Executive Officer Antonio Perez in March 2011 said a victory at the ITC could force a settlement that would generate $1 billion in new revenue for the Rochester, New York- based company. Since then, Kodak said in a bankruptcy filing, potential damages have continued to rise.
Apple and Waterloo, Ontario-based RIM both deny infringing the patent and challenged its validity. ITC Judge Thomas Pender in May said the patent was invalid because it was an obvious variation of earlier work by others related to image processing.
The judge said that, were the patent valid, Apple’s iPhone 3G and RIM’s BlackBerry phones would infringe it, while the iPhone 3Gs and iPhone 4 would not. The commission said it agreed with that finding.
The patented feature, which Kodak claims is used in all modern cameras, saves energy by previewing low-resolution versions of a moving image while recording still images at a high resolution. Pender said it would have been obvious in light of earlier inventions related to image processing.
Kodak has another case against Apple at the ITC involving different patents. That case, which also targets mobile phones made by HTC Corp., is scheduled for trial in February.
Today’s case is: In the Matter of Certain Mobile Telephones and Wireless Communication Devices Featuring Digital Cameras, and Components Thereof, 337-703, U.S. International Trade Commission (Washington).
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