NEW YORK (Reuters) - Eastman Kodak Co. EK.N said on Thursday it has developed digital camera technology that nearly eliminates the need for flash photography, part of the company's effort to make money from its deep patent portfolio.

A Kodak employee holds up a Next Generation Color Filter in an image released by the company on June 14, 2007. REUTERS/Handout

The world’s biggest maker of photographic film says its proprietary sensor technology significantly increases sensitivity to light. Image sensors act as a digital camera’s eyes by converting light into an electric charge to begin the capture process.

Kodak, which is in the last year of a lengthy and expensive transformation into a digital photography company as its film business shrinks, intends to lean on its wealth of intellectual property to boost its bottom line, expecting up to $250 million this year alone in royalties and related revenues.

For example, Chief Executive Antonio Perez has previously said its new inkjet printer strategy grew out of the discovery of existing, unused patents for printer ink.

“Our strategy is to get it out of the lab and onto the street,” said Chris McNiffe, general manager, Kodak Image Sensor Solutions.

Analysts have looked at that outlook skeptically, since Kodak has given few details about the types of patents it intends to exploit. Moreover they say licensing contracts are incremental and hard to bank on in the long term.

“They have been guarded about their portfolio, with certain degrees of success,” said analyst Christopher Chute of research firm IDC. “But at the end of the day you need to have invented something or have some kind of intellectual property in order to maintain a market position.”

STOCK RISES

Kodak shares rose to $29.00 -- their highest level in more than a year -- on the news, and traded at $28.47, up 5.3 percent on the New York Stock Exchange early Thursday afternoon.

But while the development points to progress in Kodak’s plan it does not remove some of the company’s more pressing concerns.

“The monetization of Kodak’s IP licensing is a positive to the Kodak story,” said independent analyst Shannon Cross, of Cross Research. “However, ... the company still faces challenges from losses associated with its inkjet initiative, pressures from the migration to digital cinema and margin challenges in its digital camera business.”

Kodak said the new technology advances an existing Kodak standard in digital imaging. Today, the design of almost all color image sensors is based on the “Bayer Pattern,” an arrangement of red, green and blue pixels first developed by Kodak scientist Bryce Bayer in 1976.

In this design, half of the pixels on the sensor are used to collect green light, with the remaining pixels split evenly between sensitivity to red and blue light.

After exposure, software reconstructs a full color signal for each pixel in the final image. Kodak’s new proprietary technology adds “clear” pixels to the red, green and blue elements that form the image sensor array, collecting a higher proportion of the light striking the sensor.

Manufacturing customers interested in the design will likely get a chance to sample it in early 2008, but Kodak’s McNiffe was unsure when devices using the technology would be in stores. The technology could be used at first in consumer gadgets such as cell phones and eventually products made for industrial and scientific imaging.

IDC’s Chute said Kodak would probably use the technology for its own cameras, hoping to gain a competitive edge.

“The potential (for its success) is always there, but it’s a wait-and-see thing,” he said.