Patently Absurd

What’s Worth More: Kodak’s Patents, or Its People?

kodak edison Whats Worth More: Kodaks Patents, or Its People?

Quick, to the patent office!

Tim Carmondy has an interesting piece up on Wired’s Epicenter blog about the value of Kodak’s patent portfolio. Following the massive $12.5 billion purchase of Motorola by Google, and the recent record setting $4.5 billion auction for Nortel’s patent portfolio, it’s a seller’s market for ailing tech companies with large and storied troves of patents.

Kodak has an incredible array of patents in the mobile photo space dating back to the early 20th century. While it might seem odd that patents on vintage cameras could be valuable in the age of Instagram, when it comes to defending a patent in court, the more prior art a company can own, the better. It’s the reason Bloomberg recently ran a story entitled, Kodak Worth More in Breakup With $3 Billion Patents: Real M&A.

Step back for a second and think about this. A patent is a government granted monopoly. The idea is to exchange a period of exclusivity, during which an inventor can reap the rewards of his or her labor, for that knowledge entering into the public domain after the patent expires. Of course, Kodak’s patents are now decades, even centuries old. And they are being brought to bear on a market which iterates in six months cycles.

But the greatest irony comes when you step back and look at the overall American economy. Betabeat is working on a feature piece about an innovative New York City start-up working on a new camera. This start-up discovered that Rochester, NY, a five hour drive north to the edge of beautiful lake Ontario, and longtime headquarters of Kodak, had a treasure trove of resources–not old patents valuable as weapons in a wasteful patent war. It was the tens of thousands of talented engineers, machinists and optical experts who had been laid off by Kodak over the last decade.

We’ll have a fuller picture for you next week, but here is the basic message. The tech giants are sitting on huge piles of cash, much of which they would like to repatriate. That money can go toward scooping up patent portfolios and enriching lawyers, or it can go toward building out the next generation of mobile hardware and putting thousands of talented Americans back to work. Kodak may be worth the most right now, on paper, when it’s cut up into pieces for its patents. But to build a sustainable future, American companies should be focused on people, not patents.

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Comments

  1. Kink Fisher says:

    How valuable are those talented employees if they have not produced a compelling product that the market is willing pay for? How valuable are those talented employees if the market has no demand for them? If they really are as valuable as you say, they will have no trouble getting jobs. If they don’t, maybe their skillsets are outdated? Me, I’m your average, run-of-the-mill software developer, and I still get two emails a week on average from recruiters.
    It could be argued that the only value Kodak eventually produced is the knowledge on top of which a large part of current camera technology is based. As long as companies keep using that technology in their products which actually have market demand, that knowledge has value. Guess what the patents represent?

    1. Davidsede says:

      If you spend any time in Rochester, you’ll see that the market does in fact have demand for them – the factories which used to house Kodak are now home to many smaller, more innovative companies, and the city employs roughly the same number of people it did when Kodak was a major employer. 

      The point, I think, is not that the patents are without value – it’s that kodak management largely squandered the talents of a large group of people whose value is clear to the marketplace. When a company fails to make the best use of all of its employees’ contributions, it is headed for collapse. Kodak is a perfect example of this. 

  2. Anonymous says:

    s/12.5 million/12.5 billion/

  3. Rishi Juneja says:

    Hi Ben, I noticed that you said “Following the massive $12.5 million purchase of Motorola by Google,…” but the reality is that it was $12.5 billion. 

    1. Nitasha Tiku says:

      Thanks, Rishi! It’s fixed.

  4. Charles Forsyth says:

    “Kodak has an incredible array of patents in the mobile photo space dating back to the early 20th century.”

    Surely those patents will now have reached their 20-year term.

  5. Jim says:

    As an ex-Kodak employee, Kodak has not been focused on its people for at least 15 years. Kodak was focused on making Wall Street happy. And the fastest way to make Wall Street happy was to announce a downsizing/rightsizing/layoff.

    After you do that for a while, you go beyond cutting fat, beyond cutting muscle, to the point now where they’re auctioning off kidneys.

    Sad, really. There was some VERY cool tech I worked with in the early ’90s that is only now really mainstream.

  6. coupon code says:

    Houston, who started receiving patents in 1881, was said to have chosen
    “Nodak” as a nickname of his home state, North Dakota (NoDak).This is contested by other historians, however, who cite that Kodak was trademarked prior to Eastman buying Houston’s patents.