Kodak patent declared invalid in case vs Apple, RIM

A key digital-imaging patent held by Eastman Kodak Co. was declared invalid Monday because of "obviousness" by an administrative law judge, dealing a blow to the bankrupt imaging company that is trying to squeeze its intellectual property portfolio for much-needed cash.

The ITC judge said in a ruling Monday that Apple's iPhone 3G and some RIM products did infringe one of Kodak's patent claims for previewing images on a device with a digital camera. But the judge also said that Kodak's claim on the patent was invalid.

As such, the judge said neither Apple nor RIM had violated trade laws that could have led to an injunction. Kodak has said its patent is critical to how those devices take pictures. The ITC's final decision is expected by Sept. 21.

Kodak shares fell 9 cents, or 33%, to 18 cents in recent trading Monday afternoon, while Apple shares gained 5.5% to $559.50 and RIM shares rose 5% to $11.55.

"We expect to appeal to the full commission his recommendation on validity," Kodak said in a statement. The judge's "recommendation represents a preliminary step in a process that we are confident will conclude in Kodak's favor."

Kodak noted that a previous ITC investigation found that the same Kodak patent was valid and infringed by Samsung Electronics Co. Also, the company said, the U.S. Patent and Trademark Office confirmed its validity in December 2010.

RIM, in a press release, noted that this was the second of two ITC judges with technical backgrounds who have found Kodak's patent invalid. Apple declined to comment.

Kodak's legal setback comes as the company is working through bankruptcy proceedings. The imaging company filed for bankruptcy on Jan. 19, automatically halting all pending litigation against the company. Kodak has still locked horns in courtrooms both at the ITC, and against Apple in another battle over the ownership of another patent.

So far, Kodak has had a hard time asserting its patents in the ITC. Last year, a judge said neither Apple nor RIM had violated Kodak's patents, but the full six-member commission modified the complaint and asked for another review.

Kodak also has accused Apple of trying to shake up a planned patent sale in a bid to avoid paying Kodak more than $1 billion in patent-infringement damages and royalties. Kodak says Apple is the biggest infringer of Kodak's portfolio of digital-camera patents, used in Apple's iPhones and iPads. It is also a potential buyer of those same patents, which are worth as much as $2.6 billion and which Kodak is counting on to pay its creditors.

Kodak originally sought to sell its patents outside of bankruptcy, but buyers' uncertainty about Kodak's financial health led to its Chapter 11 filing.

(Published by WSJ - May 21, 2012)