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Kodak Can Sell Its Patents in Bankruptcy, Judge Rules

Eastman Kodak Co., the photography pioneer that seeks to sell digital-imaging patents, won court approval to auction the assets as part of its bankruptcy restructuring.

U.S. Bankruptcy Judge Allan Gropper in Manhattan said at a hearing yesterday that he would approve an order allowing a sale process for more than 1,100 patents.

Kodak is selling its digital-imaging patents as part of a plan to shrink the company and focus on printing rather than photography. The patents relate to the capture, manipulation and sharing of digital images, according to the company.

Kodak, based in Rochester, New York, is moving ahead with the sale amid a fight with Apple Inc. over ownership of 10 of the patents being sold. Kodak sued Apple to block ownership claims by Apple, while Apple has filed counterclaims against Kodak over the patents.

Timothy Lynch, Kodak’s chief intellectual property officer, said in a statement that the sale of the patents can proceed even if the dispute with Apple isn’t resolved by the time any deal is completed. Lynch called Apple’s claims “baseless.”

“We are gratified that the court has enabled us to move ahead with our patent auction in a timely manner and with clarity on ownership for the winning buyer,” he said.

Kristin Huguet, an Apple spokeswoman, declined to comment. The Cupertino, California-based company said in a court filing that Kodak “unlawfully” used confidential disclosures by Apple to obtain patents and claimed Apple’s technology as its own.

Data Room

Kodak said in June that 20 parties had signed confidentiality agreements and had been given access to an electronic data room. Kodak, which filed for bankruptcy in January, hired Lazard Ltd. to help find a buyer for the assets.

Kodak said it has generated more than $3 billion since 2001 from licensing the digital-imaging patents to users, including Samsung Electronics Co., LG Electronics Inc. and Nokia Oyj.

Under the sale process, interested buyers must submit bids by July 30, and if there’s more than one qualified bid, Kodak may conduct an auction Aug. 8, according to rules outlined in court papers. After the bid deadline, the company can engage in exclusive negotiations with a bidder and reach a sale agreement without prior notice to other bidders, according to a court filing.

The identities of unsuccessful bidders will be kept secret from other bidders and the public, Kodak said. Only the winning bidder and the amount of the bid will be announced.

The case is In re Eastman Kodak Co., 12-10202, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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