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

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assets. The problem is not that patents are being monetized, it’s that they’re being monetized through litigation. That’s very inefficient and slow. We started RPX to create efficiency in this market.

NPEs are supported from capital sources to take the risk. Last year, 1,400 companies were hit with NPE cases. We can collect fees from those companies, and we can reduce the risk for those who are paying us money. We can commit to not [offensively] assert patents. We started 18 months ago, and we now have 42 clients. Nothing in the patent space has grown this quickly. Nobody has tried to do what we’re doing before. There have been bits and pieces, but nothing scalable and purely defensive. In almost all other instances, what people charge is based on the value of the patent they’re licensing. Ours is based on the size of the company. We’ve done something unique and risky, which is why we were venture backed. We priced it for scale. Our fee caps out at $5 million.

X: What did you learn from your time at Intellectual Ventures, and what’s the long-term outlook for RPX?

JA: I had a lot of experience going into Intellectual Ventures—more experience in monetizing patents without litigation. I had a good understanding of the value of patents and how to explain them, and an understanding of the intersection of finance and patents.

What [Intellectual Ventures] proved was there is a market for buying patents. And most people who own patents view them as inventions and property that they’re entitled to monetize, and willing to monetize without litigating. It was an interesting arbitrage opportunity. The market accelerated a lot because of what IV did. It’s not about punishing anybody, it’s about getting them paid.

[At RPX] people keep signing up. Early on, we didn’t have any patents; we had 16 customers in the first year. There is a real network effect. When we get customers in a certain area, the next one coming in is a lot less risky. We would be perfectly happy if we continue to grow the way we’re growing. We’ve achieved an important level of critical mass. What’s really important for us, and companies are starting to really see this, is we have a platform now. Because we are an independent participant in this market with our own capital, a very strong team, and clients, there’s a lot you can do … Next Page »

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