In the past week it has come to light that Eastman Kodak Co. has begun preparations to file for Chapter 11 bankruptcy, a move which would mark a new low point in the storied company's slow decline. Over the past decade, as Kodak watched its core product, film, slowly vanish from the marketplace, it made the strategic decision to target the inkjet printer market, a decision that has failed to pay off.
The one asset that may allow Kodak to avoid bankruptcy is its intellectual property holdings. Kodak has been trying to follow the example of Nortel, a company that also fell behind the technological edge but was able to auction off its patent portfolio for more than $4 billion. Some experts have estimated Kodak's portfolio to be just as valuable as Nortel's, and argue that it represents the struggling company's most valuable asset.
This demonstrates once again the enormous importance of intellectual property to any company. When a business is on the cutting edge technologically, patents can provide a defense against competitor encroachment, and a lack of protection can have disastrous results, such as the nightmare scenario that Google recently avoided. Patents remain just as important, however, when a company such as Kodak falls behind the technological edge, serving as an important store of value and providing a tangible representation of a company's intangible investment in research and development.
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