Defense Play RPX, a defensive patent aggregator, has raised an undisclosed amount of Series B funding led by Index Ventures with Kleiner Perkins Caufield & Byers and Charles River Ventures participating. The company also raised an undisclosed Series A round of funding in September 2008 from Kleiner Perkins and and Charles River Ventures.
RPX first launched in November 2008 as a way to help companies defend themselves specifically against patent trolls (organizations that buy up patent portfolios with the express intention of forcing other companies to license those patents or face a lawsuit). RPX buys up its own patents, or strikes licensing deals on behalf of its members, and the charges companies $35,000 to $4.9 million a year for perpetual licenses to those patents. The deal is that if companies pay up, any patents in RPX’s portfolio can’t be used in litigation against a member company.
The company says that it has purchased nearly $90 million in patent rights in the mobile, Internet search, telecommunications, consumer electronics and RFID markets to date. RPX will use the funding to try to surpass its goal of acquiring $100 million in patents during its first year of operation, which means that the company has raised (via venture funding, debt, credit lines etc.) over $100 million. Not too shabby for a startup that launched during a recession.
RPX’s membership already includes many of the world’s largest technology companies, including HP, Nokia, Sony, Samsung, LG, Panasonic, and Seiko-Epson.
Isn’t this essentially a racket?
http://en.wikip...otection_racket
Yes it is, you’re right.
Yea, but for $5 million a year for these companies, why not?
$5 million today … how much tomorrow?
No…the way it works is sort of like a club: each member agrees not to sue other members over any patent “loaned” to the club. For the privilege of not getting sued by any other club member, they pay the club a membership fee.
It’s a fairly well-known way to make money, one party secures the means to influence all other parties, then rather than competing in the market they use their influence to take the profits without the risk of actually doing business. To give it an air of legitimacy they integrate it into their targets businesses as an inevitable cost. Depending on the market there are different means to the end, threats of legal action are far more common than threats of violence. You can call it a club, or a racket, it’s all in the eye of the beholder. It’s certainly an effective money-making technique, although money won’t buy friends and making it through these means won’t get you many either. Friendless and rich, the life of an extortionist.
This may be the best innovation in tech this decade.
They sound similar to Intellectual Ventures.
Sort of ironic – “help companies defend themselves specifically against patent trolls (organizations that buy up patent portfolios with the express intention of forcing other companies to license those patents or face a lawsuit)” vs.
“the deal is that if companies pay up, any patents in RPX’s portfolio can’t be used in litigation against a member company.”
They sound sort of like a patent troll.
Good for them regarding the Series B round.
the word “defensive” is awesome marketing
basically pay us $x and we won’t sue you over any of our patents
as opposed to a patent troll where you pay $x and you wont get sued over 1 patent
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