Shares of wireless developer InterDigital plunged more than 21 percent Tuesday after the company announced an end to a six-month auction.

InterDigital shares fell as low as $35 in the first two hours of Tuesday trading, valuing the King of Prussia, Pa.-based company at only $1.6 billion. Six months ago, after putting itself up for sale, it was valued as much as $40 billion. In early afternoon, the shares had recovered slightly to $36.20, down only 18.2 percent.

InterDigital's announcement  -- coupled with last week's bankruptcy by imaging giant Eastman Kodak which has been trying to auction more than 1,100 patents for five months - may indicate the patent bubble has burst.

I'm not sure it was a bubble, lawyer Ian DiBernardo of Stroock said in an interview. There's been a convergence of technologies so that Apple isn't just a computer maker anymore. It's a provider of telecom equipment and entertainment. Google is now in the mobile business. And Microsoft is, too.

The result is that heightened awareness of technology and patents that undergird it, may spur exagerrated values, DiBernardo added.

Last year, trustees of bankrupt telecommunications equipment maker Nortel Networks launched an auction of the Canadian company's entire patent portfolio, which attracted a lot of interest from bidders including Google, Apple, Intel, Nokia, EMC, Ericsson and Research in Motion.

Once bidding began in June, some parties, like Google, dropped out when the values rose above $900 million. Ultimately, the so-called Rocket Syndicate headed by Apple and including RIM, Ericsson, EMC won the pile for $4.5 billion.

The rich haul motivated InterDigital, a veteran engineering company whose intellectual property is designed into many mobile phones, antennas and networks, to put the entire company up for sale. Stroock's DiBernardo said that values for the Nortel trove may have been heightened because the company had collapsed. If it were still in business, values may have been lower.

On Monday, though, InterDigital CEO William Merritt said Evercore and Barclays Capital had terminated the auction. Instead, InterDigital will try to license patents and collect royalty income.

Another lawyer involved with patents, S. Gregory Boyd, of Davis & Gilbert, suggested in an interview that a company like InterDigital may have been the victim of exagerrated expectations, too. The licensing and litigation strategy is getting more difficult, he said. Companies that had already licensed many patents, like InterDigital, should probably have realized that their value was already well-known to the mobile sector.

Also Monday, new RIM CEO Thorsten Heins, in his first day on the job, also said RIM might also consider licensing patents, rather than auction itself to a bidder to private equity partner, a change from the Waterloo, Ontario-based BlackBerry developer's prior strategy.

RIM has already disclosed its share of the Nortel Networks pie exceeded $600 million.

Separately, plans by Kodak, of Rochester, N.Y., to sell pieces of its imaging portfolio, estimated to yield as much as $3 billion, fell flat. The company hired Lazard to manage the sale last summer. CEO Antonio Perez had been counting on the cash from the sale to tide Kodak through a difficult fourth quarter, as Kodak attempts to restructure.

Failure to close that auction was one reason cited in Kodak's filing in U.S. Bankruptcy Court in Manhattan last week. In the fourth quarter, though, Kodak announced it has licensed Canada's Imax a specified number of patents for large-screen theatres for which it expected to collect long-term royalties.

Meanwhile, while Google dropped out of the Nortel auction, in August it announced a $12.5 billion bid for Motorola Mobility, the smartphone and set-top box maker, in part to obtain its 17,500 patents. That  acquisition is expected to close in the first quarter.