A new report from Bloomberg indicates that Google and Apple are allegedly teaming up on a bid of more than $500 million (£312 million) for Kodak's treasure trove of patents after Kodak declared bankruptcy in January of this year.
The portfolio of around 1,100 patents is an important piece of the financial puzzle that could ultimately allow Kodak to pull itself out of bankruptcy as early as the first half of 2013. However, the final purchase price is likely to be far less than the estimate Kodak first threw out as to the total worth of the portfolio itself – a sum of up to $2.6 billion (£1.6 billion), according to an article by the Wall Street Journal.
If the pairing seems unlikely at first glance, given the heated levels of competition between the two tech dynamites, you're not the first one to think that. However, as explained by TechCrunch's Rip Empson, there's a method – and definitely a number of advantages – behind the two companies' supposed madness.
For starters, teaming up allows each company to jointly offer more for Kodak's entire portfolio. Previously, the two companies (which had themselves organized individual consortiums of their own for bidding on Kodak's patents) each offered less for the portfolio, as a whole, then what they are allegedly offering now as a result of their temporary partnership.
For Kodak, that simply means more money comes to the table as a result of the sale, one that would likely never reach the initial billion-dollar estimates as a result of the patents themselves already being broadly licensed. For Apple and Google, it allows each company to escape a potential costly bidding war for Kodak's portfolio.
And beyond money, of course, is litigation. Specifically, teaming up allows Google and Apple to avoid future costly (and frustrating) legal issues surrounding a present-day patent purchase – not the situation either company wants to be in after engaging in a costly bidding war for Kodak's patent portfolio.
"It's also a good move considering the outcome of the somewhat ridiculous Nortel patent war, which resulted in a consortium of tech companies (including Apple) paying $4.5 billion (£2.8 billion) and basically squeezing Google out. Then Google paid a ridiculous $12.4 billion (£7.7 billion) for Motorola and its 20,000 patents," Empson writes.
"Whether or not one thinks that was worth it, the evidence seems to show the benefit of finding more productive ways to approach patents going forward. If the companies can follow through with that, it would be great for the entire ecosystem."