Kodak could win $1 billion in patent royalties from Apple, RIM

Mar 25, 2011

The outcome of a ruling later today in a patent lawsuit by photo company Eastman Kodak (EK) against Apple (AAPL) and Research in Motion (RIMM) could cost the latter two companies as much as $1 billion.

That’s according to Bloomberg, which has been monitoring the details of the lawsuit over photo technology between Kodak and the two companies. Kodak holds a patent on technology for previewing digital photos after taking them, and alleges that both Apple and RIM have used the technology without paying Kodak its due.

The decision today will come from the U.S. International Trade Commission, regarding whether the body should review a judge’s ruling in the patent case. If the ITC does choose to review the ruling, it could mean money for Kodak — as much as the $1 billion in royalties the company is asking.

The judge’s decision from back in January found in favor of Apple and RIM — that the two companies aren’t in violation of Kodak’s patent, which involves the image preview feature as it relates to camera phones. But the review would give Kodak a second chance to win the case. Kodak already receives royalties from similar patent disputes with LG and Samsung. Meanwhile, Kodak lost half its market value last year, according to Bloomberg, indicating that it’s taking a beating in the photography world.

It was an ITC judge’s ruling that worked in Kodak’s favor for its LG and Samsung patent disputes. The ITC’s rulings can block imports of products from companies found to be in violation of U.S. companies’ patents. The body can’t actually impose monetary rulings, but it can threaten to expel products that it claims violate patents — meaning it’s often better for companies to settle with one another to get the disputes dropped rather than face the rulings of the ITC and lose access to the U.S. market.

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Apple and RIM refused to comment on the situation. Kodak also has a civil suit pending against the two companies in Rochester, New York, where it’s based, but the ITC generally moves a lot faster than district courts on these kinds of cases. If the ITC does decide to review the ruling, the case would be finished by May 23.

It’s potentially bad news for Apple if the ITC decides to take the case. The company is already embroiled in other lawsuits, both as plaintiff and defendant. Apple recently filed a suit against Amazon.com (AMZN) for the use of the name “Appstore” for the retailer’s recently launched Android marketplace. Apple owns the name “App Store,” but that trademark is already being disputed by Microsoft (MSFT) for being too broad and generic.

Then there’s the suit against Apple for allowing apps to pass on personal information to advertisers. That case doesn’t seem to have moved much since it was filed in December, but alleges that Apple aggregates information about app use among its users to sell to advertisers, and that apps themselves can track a variety of user actions and information and send them back to advertisers without the user knowing.

Those cases will probably take a while to sort out if they ever get to court, but the Kodak situation has a lot more immediacy. If the ITC sides with Kodak, iPhone and iPad cameras could cost the company a whole lot more money than they used to. That probably won’t have a drastic increase in cost for Apple product consumers, but you never know.

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Phil Hornshaw

Phil Hornshaw is a freelance writer, editor and author living in Los Angeles, dividing his time between playing video games, playing video games on his cell phone, and writing about playing video games. He’s also the co-author of So You Created a Wormhole: The Time Traveler’s Guide to Time Travel, which attempts to mix time travel pop culture with some semblance of science, as well as tips on the appropriate means of riding dinosaurs. Check out his profile.

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