Avenue Capital Group and Blackstone Group LP (BX)’s GSO Capital Partners LP unit are among investors that own debt in Eastman Kodak Co. (EK) and are seeking to profit from a potential sale of its digital-imaging patents, said people with knowledge of the matter.
The creditors hold second-lien debt backed by Kodak’s patent portfolio and want the company to use cash from an asset sale to pay bondholders before pouring proceeds back into money- losing operations, said the people, who asked not to be named because the talks are private. Fidelity Investments and P. Schoenfeld Asset Management LP also hold Kodak second-lien debt, the people said.
Some bondholders have met with bankruptcy lawyers and restructuring advisers during the past two weeks to study forming a committee that would help ensure they are paid, said these people. Rochester, New York-based Kodak, which announced a sale process for its patents in July, may fetch about $3 billion for the portfolio, investment bank MDB Capital Group estimates.
“Bondholders want the rights to the actual cash as opposed to trusting management to figure out how to monetize the assets and appropriately utilize the cash,” said Shannon Cross, an analyst at Cross Research in Livingston, New Jersey.
Gerard Meuchner, a spokesman for Kodak, said it is premature to discuss the use of patent proceeds before a sale is concluded. He confirmed Kodak’s Sept. 30 statement that the company has “no intention” of filing for bankruptcy.
Some potential bidders for the patents are wary of proceeding because a purchase may amount to a so-called fraudulent transfer if Kodak is insolvent, said the people. Kodak confirmed Sept. 30 it hired Jones Day to advise it on options.
“The patent sale will probably fetch a much better price in bankruptcy court and that would therefore be a more favorable outcome for much of the estate,” said Amer Tiwana, an analyst at CRT Capital Group LLC in Stamford, Connecticut. “If they were to sell the patents outside of bankruptcy, then there will be questions over fraudulent transfer and a potential for litigation from bondholders.”
Financial advisers from Moelis & Co., Houlihan Lokey, and Rothschild have spoken with creditors about their options, the people said. Kodak’s second-lien debt holders have spoken with lawyers at firms including Kramer Levin Naftalis & Frankel LLP, Stroock & Stroock & Lavan LLP, Kirkland & Ellis LLP and Akin Gump Strauss Hauer & Feld LLP, the people said.
Chief Executive Officer Antonio Perez, who took the helm in 2005, has sharpened Kodak’s focus on the printing business to help revive revenue. Perez announced plans in July to explore options for the portfolio of more than 1,100 patents, including some for processing, editing and storing images.
Lazard Ltd. (LAZ) is advising Kodak on options for the patent portfolio. Lazard also helped Nortel Networks Corp. sell about 6,000 patents and applications to a group that included Apple Inc. for $4.5 billion in June.
Bayer Settles With Onyx Over Regorafenib Cancer Treatment
Bayer AG (BAYN) settled a lawsuit with Onyx Pharmaceuticals Inc. over the promotion and sale of regorafenib, a cancer treatment.
Under the agreement reached Oct. 11, Bayer will pay Onyx a 20 percent royalty on worldwide sales of regorafenib for use in oncology, San Francisco-based Onyx said yesterday in a regulatory filing. Leverkusen, Germany-based Bayer also will pay Onyx $160 million for the Japanese royalty rights for Nexavar, a liver-cancer treatment, according to the filing.
“These new agreements strengthen the collaboration and provide Onyx the opportunity to participate significantly in the market potential of regorafenib,” Onyx Chief Executive Officer N. Anthony Coles said in a statement.
Regorafenib hasn’t been approved by the U.S. Food and Drug Administration or the European Medicines Agency, according to the statement. Nexavar is approved in the U.S.
Google, Verizon Gaining Against ‘Money-for-Nothing’ Patent Cases
Google Inc. (GOOG), Verizon Communications Inc. (VZ) and Cisco Systems Inc. (CSCO) are making headway in efforts to persuade the U.S. International Trade Commission to limit patent-infringement cases brought by licensing companies.
Letting licensors that don’t make products file cases is contrary to the ITC’s role in protecting against unfair trade practices, said Cisco General Counsel Mark Chandler. An Oct. 4 ruling by a U.S. appeals court bolstered that argument when it sided with the ITC’s determination that closely held PPC Inc. failed to show it had a “domestic industry” to protect when it brought an infringement case in 2008 over cable connectors.
Research in Motion Ltd. (RIMM), Hynix Semiconductor Inc. (000660) and other technology companies are seizing on the moment to press the ITC to rethink whether licensing businesses can have a domestic industry when they make no products or have no research laboratories. Manufacturers also should be restricted from bringing ITC cases if they are relying solely on the licensing of patents not being used for products, Google, Hewlett-Packard Co. (HPQ) and Cisco have argued as well.
Called patent-assertion entities or non-practicing entities and sometimes derided as “trolls,” these businesses that sue on their products but don’t make products covered by the patents were once shut out from the ITC, which mainly heard cases from companies that sold a physical product. The law changed in 1988, when Congress said licensing programs also are worthy of protection.
The presence of NPEs before the ITC in 2006 -- which stood at one case -- increased after the Supreme Court that year made it harder for licensing companies to obtain orders in district courts for an infringer to stop using the invention. The threat of such orders had driven most of the financial settlements that non-practicing licensing companies sought.
There should be a direct connection between patents and products on the market, Google, Hewlett-Packard and Cisco said in a May 24 filing that commented on the Pioneer complaint against Schaffhausen, Switzerland-based Garmin.
The commission in the past year has begun soliciting input from third parties on cases that may affect the “public interest” from the beginning instead of waiting for a judge to rule on the underlying complaint. That’s opened the doors for the technology companies to submit arguments on cases that would normally settle before reaching the six commissioners.
The difficulty for the ITC is in determining what type of licensing activities should be protected. Rambus Inc. (RMBS) and Tessera Technologies Inc. (TSRA) are among design firms that rely on licensing their research rather than taking on the cost of setting up manufacturing plants. Both have filed cases at the ITC. San Diego-based Qualcomm Inc. (QCOM), which makes phone chips and licenses its technology, also filed an ITC complaint when it was in a licensing dispute with Espoo, Finland-based phonemaker Nokia Oyj. (NOK)
Pioneer, the Kanagawa, Japan-based maker of car-navigation systems and audio equipment, licenses a portfolio of patents. The commission said in its June 24 ruling on the case that it was impossible to determine that the three patents asserted against Garmin were the drivers behind the licensing program.
The Pioneer decision may hurt operating companies with large patent portfolios such as Royal Philips Electronics NV and International Business Machines Corp. (IBM), Finnegan Henderson’s Brittingham said. Pioneer, he said, “is not what people would call an NPE.”
Pratt & Whitney Pays $1.5 Billion for Rolls-Royce Venture Stake
Pratt & Whitney said it’s buying Rolls-Royce Group Plc (RR/)’s share of a venture that supplies engines for Airbus SAS jets and forming a new partnership to power mid-size aircraft, following a patent dispute.
Pratt & Whitney will buy Rolls-Royce’s portion of their International Aero Engines venture for $1.5 billion, the companies said in statements yesterday. The British engine maker will also receive an undisclosed payment for each hour flown by the current fleet of aircraft powered by V2500 engines for 15 years.
The companies will form a new partnership to power mid-size aircraft, seating 120 to 230 passengers, the statement said. Each will hold an equal share in that venture, which will focus on high-bypass ratio geared turbofan technology.
Pratt & Whitney will continue its partnership in IAE with Germany’s MTU Aero Engines AG and Japanese Aero Engines Corp., according to the statement. Rolls-Royce will continue to build parts for the engines as well.
The two companies settled their patent dispute in mid-July. This included two infringement suits in federal court and a case before the U.S. International Trade Commission.
Terms of the resolution were not disclosed.
The Pratt & Whitney case is United Technologies Corp. (UTX) v. Rolls-Royce Plc, 10cv1523, U.S. District Court for the District of Connecticut (New Haven). The Rolls-Royce case is Rolls-Royce Plc v. United Technologies Corp., 10cv457, U.S. District Court for the Eastern District of Virginia (Alexandria).
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SF Giants, MLB Sued by Gogo Over ‘San Francisco’ Trademark
Major League Baseball and the San Francisco Giants Baseball Club were sued for trademark infringement by a Hayward, California-based sporting goods manufacturer.
GoGo Sports Inc. has accused the team and the league of infringing its “San Francisco, California” trademark. According to the database of the U.S. Patent and Trademark Office, GoGo Sports registered the mark in March and claims to have used it since 2008.
The mark has the words “San Francisco” in a stylized script, with “California” written in a small text atop a flourish underlining the text.
Counsel for the league said in a Sept. 5 letter to GoGo Sports’s lawyer that the Hayward company’s registration is limited in scope. Additionally, the Giants team has used this script for more than 15 years and it has become “famous and well-known for identifying the Giants,” according to the letter.
In an e-mail sent Sept. 21, the league threatened to litigate the dispute over the mark both at the patent office and in federal district court. The correspondence back and forth between counsel for GoGo Sports and for the league is included in the court file as an exhibit to the complaint.
GoGo Sports said in its court filing that it hasn’t infringed and isn’t infringing “either directly or indirectly, contributorily, by inducement or otherwise, any trademark or protectable interest of the Giants.”
The company asked the court to declare it doesn’t infringe the team’s trademarks, and to bar the team and the league from challenging the sporting goods company’s trademarks. It didn’t ask for monetary damages.
The case is Gogo sports Inc. v. Major League Baseball Properties Inc., 2:11-cv-07992-JHN-JEM, U.S. District Court, Central District of California (Los Angeles).
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Creator of Steve Jobs Memorial Apple Logo Registered Design
An image of Apple Inc. (AAPL) founder Steve Jobs that was widely distributed over the Internet after Jobs’ death Oct. 5 from pancreatic cancer has been registered by its creator, the San Jose Mercury News reported.
The image of the Apple logo as a black silhouette with Jobs’s profile taking the place of the iconic bite from the apple was created by Los Angeles resident Farzin Adeli, according to the Mercury News.
He filed an application to register the copyright the day after he created the image, and is working with IP counsel with the intention of having his work used to promote more research on pancreatic cancer, according to the newspaper.
Baltimore Art Museum’s Images to be Downloadable for Free
The museum’s goal is to have its artwork better known and shared with national and international audiences, according to the newspaper.
Users will be able to download the images for free, Artdaily reported.
The works will be made available through a Creative Commons license, according to Artdaily.
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