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Bad Decisions and Patent Infringement led to Kodak financial Woes

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kodak-logo1We have talked about Apple’s business model and their corporate ethics before so when we found out that they are suing Eastman Kodak while they are in the midst of declaring bankruptcy we were not shocked or surprised. In fact if you look at Apple’s history they spend more time in court accusing other companies of breaking the laws than AMD did trying to fight Intel.

The central argument in this particular battle is Apple’s claim that they invented the digital camera in partnership with Kodak back in the early 1990s. They are accusing Kodak of pulling a RAMBUS like move and filing for a patent during the research and development period. This effectively locked Apple out of their legal right to certain aspects of the Digital camera market (which they would love to have in their portfolio). Kodak failed to capitalize on the digital market which led to much of the financial troubles they are in now.

This is not to say that Kodak did not have some amazing digital products. In fact I can remember when they released their digital back to many professional medium and large format camera. These were highly sought after by professional photography studios, but the cost was far too high for your average photographer to buy into. This lead to companies like Nikon and Canon to come out with less expensive products. These products not only cut into Kodak’s digital camera business (which they did not see as a threat) but also began to cut into their film business.

Professional Photographers began to find that they were able to cut costs on larger projects using digital imaging as they saved money on film, processing and re-shoots. As the technology improved and began to reach the “nominal” resolution of film (this means the resolution for a typical reprint at 8x12 inches for 35mm) the demand for film cameras and, of course, the film they needed dropped eating further into Kodak’s revenues.

This all led to get them into the state they are in now; in bankruptcy court and looking for Chapter 11 protection. Apple on the other hand desperately wants the patents and licensing rights to Kodak’s digital imaging portfolio. They have made previous claims on it, all of which have been rejected. They are now back on appeal and are asking the bankruptcy court to continue to allow their suit during these proceedings.  Their greatest fear is that Kodak will sell of these patents to an Apple rival which could put Apple at risk.

Kodak claims they have no desire to sell these off as part of their digital imaging business unit and are still looking for licenses its inventions.

“Apple should not be using the bankruptcy to seek to disrupt Kodak’s enforcement of its patents given that infringers like Apple, who continue to violate Kodak’s intellectual property rights and refuse to properly compensate it, have contributed to Kodak’s current circumstances,”

The move by Apple appears to come at a time when they feel Kodak cannot afford to put up a good defense to their litigation. Especially given the fact that the International Trade Commission has already rejected their ownership claims before. I think their statement here sums up Apple pretty well;

“It is against the public interest for the commission to expend its resources initiating and prosecuting an investigation when it is known, based on Kodak’s own admissions, that Kodak will be selling the asserted patents and divesting itself of the parts of its business”

Apple wants really wants these patents and honestly could care less about “the public interest”. I really think this is one of those times when we are getting a glimpse at the real corporate ethics of Apple as well as an eye-opener on the way they do business.

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Last modified on Thursday, 16 February 2012 09:24

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