* Final decision at ITC expected in May
* Shares spike after hours
* Kodak's IP seen as key business
(Updates Apple share activity after-hours)
By Diane Bartz and Noel Randewich
SAN FRANCISCO/WASHINGTON, March 25 A U.S. trade
panel has agreed to review Eastman Kodak Co's EK.N claim that
Research in Motion Ltd RIM.TORIMM.O and Apple Inc (AAPL.O)
are infringing on its patents in a case that could mean
hundreds of millions of dollars in royalties.
The shares of Kodak -- a company once synonymous with home
photography, but now struggling in a world of digital cameras
and smartphones -- spiked about 20 percent in extended trading
after closing 8.6 percent higher as the company moved closer to
a possible payout.
The Washington-based International Trade Commission, which
hears many patent cases involving imported products, said on
Friday it would review an initial decision by an ITC judge in
January that Research in Motion and Apple did not infringe on
Apple declined to comment on the panel's decision to review
Kodak filed an ITC complaint against Apple and RIM in
January 2010, arguing Apple's iPhone and RIM's camera-enabled
Blackberry infringe on a Kodak patent related to a method for
It is asking the ITC to bar the importation of Apple and
RIM mobile phones and other wireless devices with digital
cameras. A final decision is expected in May.
Kodak's campaign to protect its intellectual property
follows years of expensive restructuring that have been slow to
Many investors see Kodak's value in its lucrative portfolio
of intellectual property. It has more than 1,000 patents in its
trove and in 2010, it made an estimated $630 million from its
licenses, according to Argus Research.
Kodak settled similar patent disputes with LG and Samsung
in 2009 and 2010. The two South Korean consumer electronics
makers agreed to pay Kodak $400 million and $550 million,
respectively, to license its technology.
In late January, Eastman Kodak Co reported a
larger-than-expected quarterly loss and a 25 percent drop in
revenue on poor digital and licensing sales.
Cross Research analyst Shannon Cross said Friday's decision
makes it more likely the companies involved with reach a
settlement. But she warned that Kodak would likely receive less
in this case because fewer units are involved.
"We note that the vast majority of Kodak's IP settlements
have been one-time payments for perpetual licenses and
therefore Kodak has little recurring IP royalty revenue," she
wrote in a note to clients.
She repeated concerns about Kodak's inkjet and
entertainment film businesses.
Kodak call options volume exploded on Friday, with about
twice the typical trading, according to Trade Alert. Investors
were betting the ITC would stop short of finalizing the earlier
ruling, thereby keeping Kodak's patent claims alive.
Apple's shares gained 1.9 percent in Friday's regular
Nadsaq session and edged up slightly in after-hours trading
following the panel's announcement.
RIM's stock dropped 11.23 percent during the session and
were mostly flat in after hours trade.
The case at the ITC is 337-703.
(Reporting by Noel Randewich; Editing by John Wallace, Andre
Grenon and Richard Chang)