It was a sad note to read this morning that bankrupt film and camera maker Eastman Kodak (NYSE:KODK) was seeking agreement to sell some 1,100 patents for $525 million to private equity investor Intellectual Ventures and patent risk manager RPX (NASDAQ:RPXC).

It wasn't that long ago that, despite experiencing financial difficulties, Kodak eschewed possible life-saving partnerships and stubbornly sat on what it thought it was a gold mine of opportunity: its vaunted patent portfolio that it believed would fill its coffers with riches.

Kodak pursued many tech companies including Apple (NASDAQ:AAPL), Research In Motion (NASDAQ:BBRY), Samsung, and others, bludgeoning them with threats of massive fines for patent infringement. Some, like Samsung and LG Electronics, caved and voluntarily cross-licensed the technology. Others pushed back on the notion they were in violation, and ultimately were vindicated.

The go-go months
Yet those were heady times, and after a consortium of tech companies bought up bankrupt Nortel Network's patents for $4.5 billion, followed by Google (NASDAQ:GOOGL) paying $12 billion mostly just to get hold of Motorola's patent portfolio, suddenly dollar signs were in everyone's eyes.

We saw InterDigital (NASDAQ:IDCC) soar because it owned essential patents in the mobile communications space and VirnetX Holdings (NYSEMKT:VHC) jumped as well because it basically owns the patents on communication security.

Kodak was not immune. The one patent it was using as a cudgel against the tech giants was said to be worth $1 billion in royalties alone. With a portfolio containing 10,000 times that many patents, the sky was the limit... but only if someone was willing to buy them, and when you're teetering on the edge of bankruptcy, there's not a lot of incentive for buyers to pay a premium. Better to let the company crash and buy the patents for pennies on the dollar in bankruptcy.

One man's treasure...
Which is apparently what's happening to Kodak today. In order to restructure itself in bankruptcy, Kodak had to sell the patents to secure $830 million in exit financing . Now it needs the court's imprimatur on the sale. More disturbing to me is that CEO Antonio Perez, who devised Kodak's failed turnaround scheme of relying upon one-time infusions of cash to save the company, is still at the helm overseeing its dismantling.

Is another man's trash
But the larger point for investors, let alone the companies they invest in, is to not rely patents to save and protect you. They're only as good as the next innovation. Betamax was good for a minute until the arrival of VHS, which in turn was safe only until the DVD arrived. While Blu-ray took too long to beat out HD-DVD to really make an impact, the advent of streaming video will soon put them all to rest.

Pharmaceutical giants like Pfizer (NYSE:PFE) can soar to great heights on the back of a given drug's patents, but when they approach the patent cliff (as many are now), without anything to take a drug's place, they'll fall over the edge.

Dolby Labs (NYSE:DLB) is undergoing scrutiny for its patent portfolio on high-end sound technology. Fairly tight-lipped about which patents are expiring, investors are left to parse its SEC filings in hopes that nuggets like it extending patent protection to Dolby Digital Plus from Dolby Digital will give it a few extra years of life. That's no way to invest.

In short, patents are only one piece of a larger investment puzzle, and no buy or sell decision should be made on the basis of patent protection alone. No doubt buggy whip manufacturers thought they were sitting pretty until the first gas-guzzling jalopy came chugging down the street.

The moral: Don't end up being like Eastman Kodak and having to sell your most valuable assets for a few crumbs because you thought they were the end-all, be-all of your company's worth.

Fool contributor Rich Duprey owns shares of Apple, Dolby Laboratories, and Pfizer. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple, Dolby Laboratories, Google, and RPX. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.