Monday, November 24, 2008

WSJ mentions RPX again

Don Clark, in an article titled Start-Up Takes on 'Patent Trolls' begins:

A San Francisco start-up [RPX] is disclosing details of a new service to address patent risks facing technology companies, and has lined up Cisco Systems Inc. and International Business Machines Corp. as initial members.

You remember Cisco, the (former) home of patent troll tracker Rick Frenkel and home of Mallun Yen, the IP chief who is not a registered patent attorney.

Clark continued:

RPX, in response, plans to become what it calls a "defensive patent aggregator," buying patents to keep them from firms that might use them as the basis of lawsuits or to press for licensing payments. Companies that pay a fixed annual fee receive licenses to the patents purchased by RPX, which pledges never to assert them.

John Amster, RPX's co-chief executive, hopes to attract hundreds and eventually thousands of corporate members. "At thousands of members I think it's a game-changing business," Mr. Amster said. (...) revenue comes from membership fees -- $35,000 to $4.9 million, depending on a company's operating income (...) Mr. McCurdy said AST and RPX could wind up bidding against each other on patents, but sees them mostly as allies pursuing similar goals. "They are completely complementary," he said.

Cisco was mentioned: A spokesman for Cisco, which is based in San Jose, Calif., said RPX's "objective of defensively pooling patents is a sensible approach to the continuing problem of litigation by firms that don't produce products or services."

RPX currently has rights in 150 patents and 50 apps.

In a post titled Is RPX’s “Defensive Patent Aggregation” Simply Patent Extortion By Another Name?, TechCrunch quotes Amster:

Our pricing is set on a rate card based on the value of the service, which is based on the size of your company. We are guaranteeing the rate card won’t change, other than CPI adjustments.

The "value of the service" would seem to be related to the probability of getting sued, times the cost of a lawsuit, which would have nothing to do with the size of the company.

TechCrunch writes: What RPX really offers is a team who knows how the patent game is played, buying up patent rights on behalf of its members. They know how it is played, incidentally, because they used to play for the other side. Patent trolls, known as “non-practicing entities” (NPEs) in legal parlance, are making up an increasing percentage of all patent litigation—nearly 17 percent last year, up from about 3 percent at the beginning of the decade. And intellectual-property litigation always goes up during a downturn (see charts below). The folks at RPX are gearing up to do battle against the patent trolls they once worked for.

One guesses that knowledge of the "patent game" is distinct from knowledge of the patent system, per se. If companies like Cisco would learn more about the patent system and "what's in" patents in their technical area, they might not need to engage companies who buy up rights to a raft of patents, which may or may not be threatening to companies like Cisco.

See previous posts on IPBiz: [Then, TechCrunch on previous WSJ article: And copycat companies like RPX Corporation (headed up by a former Intellectual Ventures executive and backed by Kleiner Perkins and Charles River Ventures) are beginning to pop up.]


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