A victory for Eastman Kodak Co. (EK) in its patent fight with Apple Inc. (AAPL) and Research in Motion Ltd. (RIMM) may add more than $1 billion in revenue from royalty payments, Chairman and Chief Executive Officer Antonio Perez said.
Kodak “deserves to win,” Perez, 65, said in an interview in New York yesterday.
A decision is scheduled for about 5 p.m. Washington time today on whether the U.S. International Trade Commission will review a judge’s findings from January that Apple’s iPhone and RIM’s BlackBerry don’t violate Kodak’s patent on an image- preview feature in camera phones. Opening a review would revive Kodak’s effort to extract compensation from Apple and RIM.
Kodak, which had lost almost half its market value in the past year, rose 27 cents, or 8.6 percent, to $3.40 at 4 p.m. in New York Stock Exchange composite trading.
“This is a lot of money, big money,” said Perez, who estimates the royalties may be similar to payments the company received from Samsung Electronics Co. and LG Electronics Inc. (066570)
Kodak used the ITC to gain $550 million from Samsung and $414 million from LG for allegedly infringing the same patent as in the Apple and RIM cases. The ITC is a quasi-judicial arbiter of trade disputes that can block imports of products found to infringe U.S. patents. While the agency can’t order monetary damages, the threat of being shut out of the U.S. market often provides the incentive for settlements.
“It would be important for Kodak to get a favorable ruling on this matter because most of its operating businesses lose money whereas intellectual property royalties go directly to the bottom line,” Jim Kelleher, an analyst at Argus Research in New York, said yesterday in an e-mail. He rates the shares “hold.”
In the Samsung and LG cases, a different ITC judge sided with Rochester, New York-based Kodak, and the phonemakers settled before the full six-member commission ruled on the case. Should the agency decide to review the findings from January by Judge Paul Luckern in the Apple and RIM case, a final decision would be made by May 23, according to the ITC’s calendar.
Kristin Huguet, a spokeswoman for Cupertino, California- based Apple, said the company doesn’t comment on pending litigation. Officials with Waterloo, Ontario-based RIM didn’t respond to an e-mailed query about the case.
Kodak, a 131-year-old company that popularized photography with the Brownie and Instamatic cameras, generated $838 million from patents last year. The company has told investors it expects to average $250 million to $350 million in annual revenue from intellectual property licensing through 2013. That figure doesn’t include potential Apple and RIM royalties.
The company in January reported 2010 revenue of $7.2 billion, about half the total from 2005, and said two of its three main businesses had losses from continuing operations before interest expense, taxes and other charges.
Perez, CEO since 2005, has said he is using proceeds from intellectual property licensing to invest in the company’s inkjet printing, packaging and software units to blunt falling revenue from camera film.
RIM declined $7.20, or 11 percent, to $56.89 on the Nasdaq Stock Market. Apple jumped $6.57 to $351.54.
A related civil lawsuit is pending against Apple in a federal court in New York. Both Apple and RIM have filed lawsuits against Kodak. The ITC typically finishes its cases more quickly than district courts.
The 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).