Rochester Business Journal

Apple Inc. on Wednesday moved to block an earlier Eastman Kodak Co. bid to have their long-running patent dispute decided in U.S. Bankruptcy Court.

Kodak last month filed a motion in Bankruptcy Court proposing to have its patent beef with Apple resolved as part of its ongoing Chapter 11 case. A Bankruptcy Court hearing could bring a quick resolution to the dispute. And, if it went in Kodak’s favor, would clear the way for Kodak to sell a valuable chunk of its intellectual property portfolio.
 
But in a motion it filed Wednesday in the Manhattan U.S. District Court, Apple portrayed Kodak’s gambit as an attempt to derail presentation of the patent flap where it should rightly be heard—in a federal district court by a jury.

Prior to Kodak asking for Bankruptcy Court protection in January, Kodak and Apple sued and countersued each other in several federal and state courts over the digital image-capture patents in question. They also are arguing the dispute before the U.S. International Trade Commission.

Neither party disputes that Apple employs technologies covered by the Kodak patents in its popular iPhone, iPad and iTouch products.

Kodak takes the position Apple is infringing on patents that others have paid some $300 billion in licensing fees to use. Apple should either stop selling the infringing products or pay royalties, Kodak maintains. In court papers, it tags Apple as having avoided paying $1 billion in royalties to Kodak, making it single biggest infringer of the image-capture patents.

Apple maintains it should not have to pay royalties because Kodak stole image-capture technology from Apple, and later secretly patented the IP when Kodak and Apple jointly were working on digital image capture. It only discovered the alleged ruse, which occurred years ago, after Kodak sued it for infringement in 2010, Apple states in court filings.

Kodak has owned and successfully litigated the disputed patents for years and having the dispute decided as part of the bankruptcy would help speed its planned sale of Kodak’s extensive digital image-capture patent portfolio, “a centerpiece of (its) reorganization plan,” Kodak said in its motion in May. Monetizing the patent portfolio would go a long way toward helping it work its way out of bankruptcy. 

Not so fast, Apple said, in this week’s filing. With the Bankruptcy Court move, Kodak “is attempting to strip Apple Inc. of its rights under federal patent and state law in at least 10 U.S. patents” and has tried to use the bankruptcy to avoid a fair hearing of the patent flap.

In its Bankruptcy Court filing in May, Kodak asserted Apple has no interest in nine of the 10 patents and accused the iPhone maker of trying to use Kodak’s weakened cash position to push through an outcome favorable to itself.

If Kodak were to win the dispute in Bankruptcy Court, it would be able to fetch a higher price for the patent portfolio. But that would not be enough of a reason to have the dispute—a “non-core” issue in the Chapter 11—heard as part of the bankruptcy, Apple maintained in papers.

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