RPX Corporation Buys Rockstar Consortium’s Patent Assets

RPX Corporation’s (RPXC) subsidiary, RPX Clearinghouse LLC inked a deal with Rockstar Consortium LLC to purchase the patent assets controlled by Rockstar Consortium.

Established in 2011, Rockstar Consortium was formed by Apple, Blackberry, Ericsson, Microsoft and Sony in order to purchase 6,000 patent assets from the Nortel bankruptcy estate. However, 2,000 of these patent assets were earlier given away to Rockstar owners and are not a part of the deal.

The RPX Clearinghouse syndicate comprises a wide range of software and media providers, semi-conductor manufacturers, wireless carriers and wireline network operators, Multiple System Operators (MSOs) and Original Equipment Manufacturers (OEMs).

The purchase will result in RPX Clearinghouse receiving license payments from a syndicate of more than 30 companies including Cisco and Google.

Post-transaction, the participants of the syndicate will receive non-exclusive licenses to the Rockstar patents. Additionally, RPX Clearinghouse will make the patents easily accessible under fair, reasonable, and non-discriminatory (“FRAND”) terms.

According to Cisco, RPX acting as a clearinghouse and deal manager encouraged a global conglomerate of extraordinary scale to willingly come forward and participate in a negotiated business deal reaching a fair value for licensing patent rights instead of meeting in the courtroom.

Microsoft joined Rockstar to ensure a greater access to the Nortel patent portfolio for itself and the industry at large. Such a move is also expected to promote innovation.

RPX management believes that the clearinghouse approach will convert the patent licensing process from that of lengthy litigations to a transparent and scalable one providing a rational solution to both licensors and licensees.

RPX’s fee for this transaction has already been included in its 2014 guidance. The remaining amount will be recognized upon closure of the transaction. Additionally, in exchange of ownership of the patents, RPX expects to contribute $35 million to the transaction.

Currently, RPX carries a Zacks Rank #4 (Sell).

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