The Future of Patent Wars: More of the Same, but Less Litigation, Says John Amster of RPX

Intellectual property battles are a perennial hot-button topic in the tech world. Recently we’ve been hearing a lot about so-called “patent trolls,” companies that don’t produce goods or services but rather acquire patents and then try to extract licensing fees from firms they say are infringing on those patents. Most of these disputes involve lawsuits, and an increasing percentage of all patent litigation cases involve patent trolls—roughly 15 percent, according to some sources.

John Amster and his company, San Francisco-based RPX, are trying to do something about this. First, some background. Before co-founding RPX in 2008, Amster spent three years at Intellectual Ventures, the Bellevue, WA-based invention firm led by former Microsoft chief technology officer Nathan Myhrvold. Amster was IV’s general manager of strategic acquisitions and vice president of licensing, based in San Francisco.

Amster started RPX together with co-CEO Geoffrey Barker, another former Intellectual Ventures vice president of licensing, and Eran Zur, the firm’s president. RPX is focused on “defensive patent aggregation.” It buys up patents across a wide range of tech areas, including consumer electronics, mobile handsets, telecommunications, software, Internet, and e-commerce, and charges companies for access to the intellectual property. The idea is to take those patents out of the arsenal of patent trolls, and grant tech companies licenses to the IP stockpile so they can defend themselves more efficiently. Companies pay RPX an annual fee ranging from $40,000 to $5 million, depending on their size.

RPX has been on a tear lately, signing up big customers like Cisco Systems, IBM, Intel, Microsoft, Hewlett-Packard, Nokia, Sony, Samsung, LG, and HTC. A couple of weeks ago, the company announced it has added Dell and Acer to its list of “members,” which now includes 42 firms. So far, it has spent more than $200 million to acquire more than 1,300 patents. RPX is venture backed by Kleiner Perkins Caufield & Byers, Charles River Ventures, and Index Ventures. The company has 40-some employees—three in the Seattle area (including co-CEO Barker)—and it is actively hiring.

Some observers have called RPX a competitor to Intellectual Ventures, but Amster challenges that premise. “We’re completely different. We have two very different visions and goals,” he says. “[Intellectual Ventures] has raised a vast amount of money and has a very diverse set of businesses, from early-stage invention all the way through patents. It’s a totally different business-model vision. They’re a private equity fund for invention. The patent piece is small.”

I recently spoke with Amster by phone to hear about RPX’s progress against patent trolls, and to get his thoughts on where the marketplace for intellectual property is headed. To me, it’s really interesting that defensive “protection” companies are sprouting up to serve the tech community—and where is the line between defensive firms and the trolls?

Here are Amster’s responses to three of my questions, edited for length and context:

Xconomy: Tell me about your vision for RPX and how it’s unique in the world of technology and IP.

John Amster: The basic idea was looking at this problem of patent trolls, or non-practicing entities (NPEs). The difference between [the terms] “patent troll” and “NPE” is important. Why has this thing been phrased as a negative thing? Why is it pejorative? The philosophical view of a lot of companies is that something’s wrong with that. That’s not really true though—at the end of the day, patents are … Next Page »

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