How much is the Kodak digital patent portfolio really worth?

Neil Wilkof in IP Finance suggests it’s time for the patent valuation community to explain itself with respect to the pre-auction estimate of the digital patent portfolio value at Kodak as compared to the post-auction estimated value.

Pre-auction

In mid-2001, MDB Capital, an investment bank with an IP-value specialty based in San Diego, estimated the Kodak patents could be valued around $2 billion. Christopher Marlett, the chief executive of MDB Capital, suggested Kodak has one of the largest cache of weapons [in the smartphones war] sitting there." Marlett reportedly admitted at the time he owned Kodak stock, but wouldn't disclose how much.

Kodak’s two digital patent portfolios were valued at $2.21 billion to $2.57 billion, based on an estimate by 284 Partners L.L.C., a patent advisory firm cited in a debtor’s motion it filed before a United States bankruptcy court in January, 2012.

Post-auction

The Wall Street Journal reported a deal for the entire portfolio, 1,100 patents, could fetch more than $500 million based on reported negotiations.

ArsTechnica reported Kodak has entered into a credit line of $793 million with its bondholders, provided that the company can raise $500 million from the sale of its portfolio of patents.

True, there are ITC questions about patent validity, and Apple continues to contest the bankruptcy, but does that explain the fall in value … or were the pre-auction estimates of value inflated by conflicting agendas? It’s a fair question.