More Proof That Patents Worth Millions (or Billions!)

RPX Corp. (NASDAQ: RPXC) has announced that its subsidiary, RPX Clearinghouse, will purchase the patent assets of Rockstar Consortium for $900 million. Originally Rockstar was formed by Apple Inc. (NASDAQ: AAPL), BlackBerry Ltd. (NASDAQ: BBRY), Ericsson (NASDAQ: ERIC), Microsoft Corp. (NASDAQ: MSFT), and Sony Corp. (NYSE: SNE) in 2011. It is worth noting that at that time these companies paid $4.5 billion for the portfolio.

The purpose of Rockstar was to purchase roughly 6,000 patent assets from the Nortel bankruptcy estate. Of these patents, 2,000 were previously distributed to various Rockstar owners and are not part of the transaction.

RPX Clearinghouse will also receive license payments from a syndicate of over 30 companies, including Cisco Systems Inc. (NASDAQ: CSCO) and Google Inc. (NASDAQ: GOOG). The syndicate includes a broad range of software and media providers, as well as semiconductor manufacturers, wireless carriers and wireline network operators.

Finally when the deal is executed, the syndicate participants will receive non-exclusive licenses to Rockstar patents and RPX Clearinghouse will make the patents available for license to all other interested companies.

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Mark Chandler, general counsel of Cisco, said:

With RPX acting as a clearinghouse and deal manager, a global consortium of unprecedented scale came together willingly and reached a fair value for licensing patent rights in a negotiated business transaction instead of a courtroom. This is an approach and transaction that is constructive for the entire industry.

John A. Amster, CEO and co-founder of RPX, further commented on the scale and how this approach might change patent licensing in the future:

This is the largest syndicate of its kind, and it proves once again that our clearinghouse approach can transform the patent licensing process from one dominated by prolonged litigation to one that is transparent, scalable, and provides a rational outcome for licensors and licensees alike.

With the distribution of these patents, this could potentially clear the air in the higher level lawsuits that are pending against the Google’s Android operating system.

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Finally, RPX received a fee for its role in the transaction, and it expects to contribute roughly $35 million to the transaction in exchange for ownership of the patents. RPX will recoup a majority of the investment from licenses already under contract.

Shares of RPX were down over 1% at $13.72 Tuesday afternoon. The stock has a consensus analyst price target of $18.83 and a 52-week range of $12.71 to $18.16.

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