InterDigital's patent sale efforts have a bigger relevance for struggling tech giants, who expect to fund turnaround efforts through similar sales and licensing cash, but may find problems if licensing agreements and litigation diminishes the value of portfolios.
"I believe the value is reduced by encumbrances. I think that is also weighing heavily on the Kodak patent sale," says Erlickman. InterDigital's M&A efforts have coincided with a similar effort by Kodak. However, after failing to sell patents at the end of 2011, Kodak is now conducting those sales in courts after filing a Chapter 11 bankruptcy earlier in the year, amid a cash crunch.
Earlier in June, Kodak said it has signed confidentiality agreements with 20 parties on the sale of its 1,100 patent strong portfolio of intellectual property related to digital photos and imaging services. The company also said it has generated over $3 billion from licensing digital imaging patents from smartphone makers like Samsung, LG and Motorola Mobility. Separately, Kodak is also litigating patents with
, HTC and Research In Motion.
Kodak's efforts, taken with InterDigital's Monday deal have a broader relevance for IP rich but strategically slumping tech giants. "Investors can and should read from the success of [Kodak's auction] that companies with strong patent portfolios can monetize their IP assets to augment their revenues from their core business lines," says Alexander Poltorak, the chief executive of General Patent Corporation, who expects the looming auction to be a success.
"Even if some of these companies fall short of a resounding success in the market, technology trailblazers, such as Nokia, Research In Motion or AOL will ultimately be rewarded for their innovation through monetization of their patents, which result from their R&D activities."
-- Written by Antoine Gara in New York