Kodak, Shutterfly Resolve No-Compete Lawsuit

Shutterfly and Kodak are walking away from a legal battle that erupted after Shutterfly purchased Kodak’s online photo service.

During Kodak’s bankruptcy, Shutterfly scooped up Kodak Gallery in a $23.8 million deal. Shutterfly later sued Kodak, claiming that the company’s new My Kodak Moments social-networking application violated the deal’s no-compete clause.

Shutterfly allows (as Kodak Gallery once did) users to create and purchase photo books. So does the My Kodak Moments app, albeit for photos uploaded from Facebook albums.

Kodak, in bankruptcy at the time, disputed Shutterfly’s claims and pledged to “vigorously defend” itself against the suit.

Now, that won’t be necessary. The companies have “consensually resolved” the lawsuit, according to court papers filed last Friday with the U.S. Bankruptcy Court in Manhattan.

No further details were offered in the one-page filing. A Kodak spokesman declined comment Thursday. A Shutterfly representative and attorneys who represented the companies in the litigation didn’t return calls seeking comment.

Kodak emerged from Chapter 11 protection last September after shedding many of its assets—besides Kodak Gallery, it sold its digital patent portfolio and spun off its document- and personal-imaging businesses.

Write to Jacqueline Palank at [email protected]. Follow her on Twitter @PalankJ.