How Eastman Kodak Redeveloped for the Twenty-First Century

The company invented transparent photographic film in 1885, but it never stopped innovating. Now Sharon Underberg is helping Kodak take on 3-D printing, brand protection technologies, and Hollywood to expand its iconic status.

One of the most recognized brands in the world—and a leading pioneer in the photography industry—is quite a different company from the one general counsel Sharon Underberg joined in 1989. She has advised on nearly every major transaction Eastman Kodak has completed in the past fifteen years, playing a crucial role in the development and execution of its financing strategy. Kodak’s tactical mergers and acquisitions are also ushering in an exciting new era for the American technology company.

Kodak recently reached a joint development agreement with Carbon3D, a 3-D printing company, to bring Kodak’s materials science expertise into a new range of applications. The legal department worked closely with the business team to drive this deal to closure. “We work hand-in-hand with our corporate development, business, and finance colleagues on M&A and financings,” Underberg says.

Yet one way Kodak has stayed close to its legacy has been in motion picture film. While a majority of movies are shot with digital cameras nowadays, there are many directors who want to shoot with film. Kodak has been on the forefront of preserving film, working with Hollywood studios and business executives to forge agreements that have helped Kodak keep its iconic film manufacturing operations in business for years to come. “It gets to the core of Kodak’s heritage, and what people identify our brand with,” Underberg says. “Imaging is in our blood.”

Thanks in part to Underberg’s team that helped negotiate and document all those arrangements, the initiative received attention and acclaim worldwide. As a result, Kodak’s motion picture film business has recorded five consecutive profitable quarters.

Another prime example of Kodak’s evolution is the recent formation of eApeiron, a joint venture focused on brand protection technologies. Formed by Kodak, Alibaba, and the management team of the new company, eApeiron represents an opportunity for Kodak to monetize assets, including intellectual property, while continuing to participate in a growth market.

“Forming this joint venture was a complex process involving three parties and agreements ranging from asset transfers, intellectual property, research and development, and supply and service to governance and operational matters,” Underberg says. “Legal played a key role and our involvement does not end when the deal closes. There are arrangements to be managed and interpreted over the months to come, particularly given Kodak’s ongoing stake.”

Monetization of intellectual property is a recurring theme at Kodak with patent licenses, joint development agreements, and sales occurring on a frequent basis, as the company’s world-class research and development laboratories partner with other companies to commercialize inventions.

In 2013, the Kodak legal team was instrumental in a successful effort to sell the company’s digital imaging patent portfolio for more than half a billion dollars. Kodak had already made several billion dollars from licensing agreements for a decade, but the need for liquidity pushed the company toward the sales and licensing agreement, which involved more than 1,000 patents and multiple parties.

Underberg’s team is also handling the planned sale of the company’s Prosper commercial inkjet printing business. Recently Kodak announced its intention to sell the business  after receiving strategic interest from third parties. The legal department is deeply involved in the sale process, working with bankers, business leaders, and potential buyers.

As a member of Kodak’s executive leadership team reporting to CEO Jeff Clarke, Underberg has a seat at the table on all high-level strategic decisions, whether that involves new business opportunities, employment policies, financial reporting, or other matters. This partnership with senior business leaders fosters a close working relationship between the legal and business teams that trickles down throughout the organization. Each division has a counsel who serves on the leadership team, which deepens legal’s participation in strategy formation and decision making, according to Underberg.

“It enables us to be proactive rather than reactive,” she says. “When teams are formed to deal with complex business issues, it’s natural for legal to be part of that team and help drive the best solutions for the business.”

Underberg leads a team of fourteen in-house lawyers globally, and she also hires outside counsel for areas such as real estate and benefits. She works to ensure that everyone on her team is versatile so they can handle numerous projects at once. Instilling this work ethic was instrumental in helping Kodak successfully emerge from its Chapter 11 restructuring in 2013. “We’re proud of the speed with which we got through the process (twenty months) given how large and complex the matter was,” she says.

Simultaneous with selling its still-camera film and photo paper operations, photo kiosk business, and document scanner business to United Kingdom-based Kodak Pension Plan (with significant supply agreements remaining in place), and closing exit financing arrangements, Kodak emerged from Chapter 11 as a continuing public company with a new board of directors, a new set of investors, and new stock.

“I don’t know of another transaction like that,” Underberg says about the sale to the UK pension plan. “It was novel and complex, and it provided an effective mechanism to resolve a significant legacy liability and enable Kodak to continue its transformation.”

As Kodak continues to reposition itself in the imaging business, that heritage looms large throughout the company. In fact, Kodak still operates out of Rochester, New York, where it all began. The CEO still works out of the office that once belonged to the company’s founder, George Eastman.

“We are proud to be a company with a longstanding tradition,” Underberg says. “Kodak is a company that is ethical and prides itself on technology and imaging in all forms. It’s a company that has certainly had its share of challenges, but it has been very resilient. We’ve been through a lot, and there’s not much that can faze us.”

Carrying on a Family Legacy

Sharon Underberg likely would never have become a lawyer if it weren’t for her grandmother, who began her career as a stenographer, moved up to legal secretary, found work with the Manhattan District Attorney’s Office, and then became a clerk for a judge in the court of claims. Underberg recalls her grandmother, who grew up in the Bensonhurst bureau of Brooklyn, as an “interesting and dynamic” woman who had dreams of being a singer (she inherited her father’s strong singing voice).

While she never made it to the stage, she frequently entertained her granddaughter with stories of her career in law. “The judge she worked for was not an easy person,” Underberg says. “He was demanding and could be difficult, but he provided her with opportunities to expand her abilities.”

Underberg says that even though her grandmother presented her job as stressful, there was an element that she clearly relished, and that ruminated with Underberg. In her stories, she was always busy and emotions flared during trials. The young Underberg listened wide-eyed.

“My grandmother was a bit of a theatrical person, and probably having some drama in her professional world was appealing to her,” she says. “I know she enjoyed telling those stories in a bit of an embellished fashion. But she was in the thick of it, and that made a lasting impression on me.”

Thumbnail photo by James Bogue