Firm to buy up patents to ward off 'patent trolls'

San Francisco start-up RPX says it plans to buy patents for products it neither produces nor sells in order to offer legal protection for companies such as clients Cisco Systems and IBM.

Stephanie Condon Staff writer, CBSNews.com
Stephanie Condon is a political reporter for CBSNews.com.
Stephanie Condon
2 min read

A new company is launching with the intent of acquiring patents to shield technology companies from costly patent lawsuits.

RPX, a San Francisco-based start-up, calls itself a "defensive patent aggregator." The company plans to buy available patents to keep them out of the hands of "patent trolls," or firms that obtain patents for the purpose of suing other companies for royalties or licensing fees.

RPX will sell memberships to companies for a fixed annual fee that could range from $35,000 to $4.9 million, depending on the member company's operating income. For the price of the annual membership, companies will receive the patent licenses purchased by RPX. The Wall Street Journal reported that Cisco Systems and IBM have already signed up.

Patent trolls have raised more than $6 billion over the last 10 years to acquire patents to initiate lawsuits, RPX says on its Web site. eBay went all the way to the Supreme Court in a patent dispute with MercExchange, a small Virginia-based company claiming that the online auctioneer had infringed on three of its patents. The two companies eventually reached a settlement agreement.

RPX is financed by two venture capital firms, Kleiner Perkins Caufield & Byers and Charles Rivers Ventures. Its two chief executives, John Amster and Geoffrey Barker, previously served as vice presidents of Intellectual Ventures, another company in the business of purchasing patents.

RPX says it has acquired 150 U.S. patents and has submitted 60 U.S. patent applications worth a total of $40 million in areas including Internet search, radio frequency identification, and mobile technology.