Kodak Imaging, Eastman Kodak sued by Shutterfly over $24 million deal

By Jim Witters

Wilmington, Del., March 22 - Shutterfly, Inc. filed an adversary complaint against Kodak Imaging Network, Inc. and Eastman Kodak Co. regarding a $23.8 million transfer agreement in which Shutterfly bought rights and data of the Kodak Gallery web business, according to a March 22 filing with the U.S. Bankruptcy Court for the Southern District of New York.

Specifically, Shutterfly says Kodak violated the purchase agreement by marketing its "My Kodak Moments App" that allows customers to use the Kodak Gallery's "Smart Fit Technology" to create photo books from images stored on Facebook and to buy photos directly from Kodak.

The software application and marketing of those services violates the terms of the transfer agreement, which prohibits Kodak from essentially duplicating the Kodak Gallery business in the United States or Canada for three years, according to Shutterfly.

Kodak denies its actions violate the transfer agreement.

Shutterfly is seeking to recover damages "caused by the defendants' breaches of the transfer agreement and to enjoin further violations."

No hearing has been scheduled to hear the complaint.

Kodak is a Rochester, N.Y.-based imaging technology products and services provider to the photographic and graphic communications markets. The company filed for bankruptcy on Jan. 19, 2012. The Chapter 11 case number is 12-10202.

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