Eastman Kodak Patent Death in Fight Against Apple & RIM (EK, AAPL, RIMM)

Eastman Kodak Company (NYSE: EK) is one of those companies where the walls keep coming in.  The company’s shares are indicated lower after the shrinking photo and printing legend announced that the the U.S. International Trade Commission, or the ITC, initially ruled that the action brought by Kodak against Apple Inc. (NASDAQ: AAPL) and Research In Motion Limited (NASDAQ: RIMM) issued an initial determination recommending that the patent claim at issue is invalid and not infringed.

Kodak was trying to claim that all the digital cameras in these consumer electronic devices and smartphones were infringing Kodak’s patent and intellectual property for previewing images on digital camera-enabled devices.  What is interesting about this case is that Kodak noted that this particular Kodak patent was recently confirmed as valid by the U.S. Patent and Trademark Office.

The Kodak patent covers the technology related to a method for previewing images. Kodak will continue its fight and it noted that the ITC had previously upheld the patent in its case against LG and Samsung.  Kodak also noted that Kodak has licensed this patent in question and others to technology companies like LG, Panasonic, Motorola, Nokia, Olympus, Samsung, Sanyo, Sharp, Sony, and Sony Ericsson.

It is without surprise that Kodak said it believes that the decision will ultimately go in its favor. Kodak currently has legal actions underway in federal courts against both Apple and Research in Motion in the Northern District of Texas and in the Western District of New York. The final decision in this case is expected by May 23.

So far, Wall Street is treating this as a full loss for Eastman Kodak.  Shares were down nearly 5% and under the $5.00 mark again at $4.91 in the after-hours session last night.

At issue is not over whether or not Apple and RIM would have to stop using the technology.  Eastman Kodak wants royalties on a per unit basis or under another equally beneficial payment methodology.

If there is a company that can use revenues any way it can get it, that is Eastman Kodak.  The last three years have seen revenues decline and that is expected to continue.  2007 was $10.3 billion, 2008 was $9.4 billion, and 2009 was $7.6 billion.  Thomson Reuters shows the expected revenues for 2010 are $7.39 billion and for 2011 the revenues are expected to be $7.06 billion.

This is a situation where it appears that the analogy of Miss Havisham applies to a company.

JON C. OGG