Stock in Eastman Kodak Co. rose sharply Wednesday after staff investigators at the U.S. International Trade Commission sided with the photography pioneer in its patent-infringement battle with smartphone giants Apple Inc. and Research in Motion Ltd.
The third-party investigators at the federal agency, which oversees trade disputes, found that Apple and Canada-based RIM infringed an image-preview patent Kodak obtained in 2001. They recommended an order barring imports of Apple's iPhones and Research In Motion Ltd.'s BlackBerry phones.
Recommendations by staff investigators are not always followed by the Washington, D.C.-based commission. Its full panel of six commissioners agreed in March to rule on the patent claim by June 23.
The investigators' recommendations were originally filed April 15 and made public Tuesday. Kodak stock jumped 48 cents Wednesday, or 15 percent, to close at $3.60. During the regular session the stock traded as high as $3.73, its highest point since it hit $4.08 on March 28.
Kodak is attempting to negotiate a royalty-paying deal that CEO Antonio Perez estimates could be worth up to $1 billion.
RIM spokeswoman Marisa Conway said the company typically does not comment on pending litigation. Calls to Cupertino, Calif.-based Apple were not immediately returned Wednesday.
"It doesn't necessarily mean that the panel is going to rule in Kodak's favor," cautioned analyst Shannon Cross of Cross Research in Livingston, N.J. "The other thing to keep in mind is this can be appealed ... in which case it's just going to stretch it out further."
"Apple has a big patent portfolio and I guess they've got to balance getting past this (against) having a big bull's-eye on them. They've got so much cash that this could set a precedent to go after them," she said.
In Kodak's latest skirmish with Apple, a judge at the trade commission ruled last Thursday that the 131-year-old camera maker's digital-camera technology does not infringe on Apple's patent rights and said one of the two patents in dispute is invalid.
Judge Robert Rogers Jr.'s reasoning won't be made public until both Kodak and Apple review his ruling and determine if it includes information that the companies feel is confidential. His decision also is subject to review by the agency's six commissioners.
Patent cases can take years to resolve, and agreements over licensing and royalty payments often emerge. But the trade commission, which can order Customs to block imports of products made with contested technology, is seen as a fast-track mediator that typically resolves disputes in 12 to 18 months.
Kodak, based in Rochester, N.Y., has amassed more than 1,000 digital-imaging patents, and almost all of today's digital cameras rely on that technology. Mining its rich array of inventions has become an indispensable tool in its long and painful digital overhaul.
After failed negotiations, Kodak filed a complaint with the commission in January 2010 against Apple and RIM. It also filed two lawsuits against Apple in federal court in Rochester, but it has not specified the damages it is seeking.
Three months later, Apple claimed that some Kodak camera and video camera lines violate two of its patents. One invention relates to a camera's ability to process several images at the same time; the other enables a camera to simultaneously handle adjustments in color, sharpness and other processes.