The fall from grace of iconic Eastman Kodak (PINK:EKDKQ) has been well documented. In its efforts to rise from the ashes, Kodak announced plans to auction off about 1,100 patents from its portfolio of nearly 11,000. Kodak's hope is to generate enough cash to become a viable entity again; or, at the least, begin the process.

As I wrote recently, Google (NASDAQ:GOOGL) and Apple (NASDAQ:AAPL) were the primary contenders for Kodak's 1,000-plus patents up for bid, with rumors circulating that the two behemoths had combined to offer $500 million. Strange bedfellows, but patent auctions tend to do that. As it turns out, the longtime rivals were only the headliners of an all-star cast.

The deal
The proceeds that Kodak receives from the patent auction are significantly less than the estimated $2.6 billion that an advisory firm once valued them at. But, for Kodak, the final $525 million paid for the patents will do just fine, as it meets a key milestone in its efforts to emerge from bankruptcy by mid-2013.

In an agreement Kodak signed earlier this year, the sale of this portion of its patent portfolio opens the door for as much as $830 million in financing to exit bankruptcy. According to Kodak CEO Antonio Perez, "This monetization of patents is another major milestone toward successful emergence [from bankruptcy]."

Though Google and Apple were getting all the press, Research In Motion (NYSE:BB),, and Microsoft, were also part of the winning bid consortium. Coincidentally, Facebook (NASDAQ:FB) also took part in the deal for technical rights to the photo-sharing and digital patents. What makes Facebook's participation coincidental is that it follows on the heels of the PR nightmare that Facebook's Instagram business unit has become. More on the Instagram fiasco can be found here.

So what's the big deal?
There are two primary benefits to Apple, RIM, Samsung, and other auction winners, in buying Kodak's patents. As part of the deal, the patent infringement lawsuits Kodak brought against several of the consortium's members are immediately dismissed. According to Kodak, Apple and RIM together owed it over $1 billion in technology licensing fees.

The newly acquired patents will also negate the possibility of future legal troubles relating to the use of the licensed digital photo technologies. For these industry heavyweights, the combined $525 million is a small price to pay to alleviate future patent infringement concerns.

As usual, the courts have to approve the deal, but it's not likely that problems will arise. For Kodak, the patent sale still leaves it with over 9,600 licenses, and meets its goal of obtaining financing to exit bankruptcy in six months or so. For the winning bidders, multiple, on-going lawsuits are immediately laid to rest, and perhaps there'll even be one or two less in the future. All in all, a good outcome for everyone involved. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.