Matthew Daneman

Staff writer;

Eastman Kodak Co. and Shutterfly Inc. have mutually agreed to drop a legal fight over who owns Kodak moments online.

Shutterfly sued Kodak in March 2013 in U.S. Bankruptcy Court, charging that Kodak’s My Kodak Moments smartphone app violated a non-compete clause the two companies had in the world of online purchasing of prints and photo merchandise.

That non-compete clause was part of the $23.8 million agreement the two struck in 2012 when Shutterfly bought Kodak’s Kodak Gallery online photo album business. That acquisition was part of Kodak’s Chapter 11 bankruptcy, and in its lawsuit, Shutterfly said it was trying to enforce its rights in that court-approved bankruptcy sale.

“Because the Kodak Gallery business was a direct competitor of Shutterfly, a significant driver of the purchase price agreed to by Shutterfly was (Kodak’s) non-compete covenant,” Shutterfly said in the suit. That non-compete language bars Kodak from “essentially duplicat[ing]” its Kodak Gallery in the United States or Canada for three years, Shutterfly said.

But My Kodak Moments — which launched in 2011 and lets users order prints of their Facebook photos or merchandise printed with those photos — essentially duplicates what Kodak Gallery was doing, Shutterfly argued.

Kodak countered that Shutterfly didn’t buy the entire Kodak Gallery business, including the technology behind it and that its Retail Systems Solutions business — which put together the app — was explicitly exempted from the non-compete language. That Retail Systems Solution is now part of Kodak Alaris, which spun off from Kodak in 2013.

The dismissal of the suit, filed with U.S. Bankruptcy Court earlier this week, says the two “consensually resolved” the legal fight, but gave no details.

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