New patent aggregator RPX may have an Oedipal complex

Correction: The article inadvertently states that RPX has raised $40 million in venture capital funds. This is incorrect. A spokesperson contacted the author to note that a correct reading of the website would be that "The company has acquired more than $40 million in patent rights since its founding."

Patent trolls are the bane of existence for technology companies. Patent trolls buy up patents so that they can extort money from companies that actually build and sell products. The world's largest patent troll is arguably Intellectual Ventures, which holds billions of dollars worth of patents.

It is therefore surprising to hear that the former general manager of Strategic Acquisitions and vice president of Licensing at Intellectual Ventures, John Amster, along with former vice president of Licensing at Intellectual Ventures, Geoffrey Barker, have banded together to create RPX, a "defensive patent aggregator. Is Intellectual Ventures spawning its own defense mechanisms?

This sounds a bit like the radar gun/detector industry, wherein the same manufacturers that help police nab speeding motorists also build the radar detectors to help avoid getting caught. Can RPX be trusted?

Probably. This is no ordinary patent aggregator. For one thing, as The Wall Street Journal reports, RPX is funded by venture firms Kleiner Perkins and Charles River Ventures: it has to turn a profit. The company raised $40 million, according to its website, and has already acquired more than 150 U.S. patents and has filed more than 60 U.S. applications. Other patent aggregators like Linux's Open Invention Network operate as non-profits, with all the benefits (and downsides) that come with that status.

Cisco and IBM have joined as early members of RPX, and the Journal reports rumors that Hewlett-Packard, Verizon, and Google have also joined.

But the big question may well be how RPX deals with Intellectual Ventures, which is much bigger and much more complex than a typical patent troll. Intellectual Ventures uses patents as an offensive strategy, while RPX uses patents as a defensive mechanism. I would assume the two will work together in some way, and indeed, I presume that the founders' credentials and ties to Intellectual Ventures must have been a primary selling point to the venture capitalists.

What this means in practice could well determine RPX's success as a defensive patent aggregator. Is RPX prepared to kill its father, Oedipus style? (We won't inquire into its mother.)

[boolebabbage]

I think Intellectual Ventures 'earns' (not revenue) north of $350M a year now pursuing a quiet business model that allows the big IT vendors to buy (effectively) patent insurance, including firms such as Cisco. I don't see what RPX brings to the table. I never hear about Open Invention Network so I assume they have largely failed in their mission and now some of their same backers are also investing in RPX?

[RobCashman]

Okay, first of all, very cute analogy to Oedipus. You even got a chuckle out of me. Secondly, a business model such as theirs IS something to be feared, but ALSO in an awe-stricken kind of way. Companies who cheated inventors out of licenses that rightfully should have gone to the inventors have created trolls and troll conglomerates. Obviously patent reform will somehow address this issue because corporations are shaking in their pants when a conglomerate such as this one or its family knocks on the door. Perhaps they'll eventually have to hang on to the same patent law they threw under the bus when they decided to infringe in the first place. I equate a conglomerate to the Angel of Death (AoD). If one is virtuous (e.g. if a company stays within their protected rights covered by their patents and rightfully takes licenses to those inventors whose patents they are practicing), then that company will get a pass and they won't have to submit to the will of the AoD.

What scares me is not the acquisition of patent rights from inventors who have been cheated out of licenses that rightfully belong to them, but think tanks of scientists who patent "just to stay ahead of technology." Now that is freightening, because a company with enough resources can rule the world if they speculate and patent each and every speculation. This appears to be exactly what is happening, and from a corporate perspective, it is HIGHLY profitable.

That being said, I am sure that once patent conglomerates begin to stifle business' ability to grow because they have to pay the keeper to cross the bridge -- the true meaning of a troll -- then at that point if not before, government will have to step in to preserve the patent system and restore it so that patents are returned to being used to further innovation rather than to stifle productivity.

[MEM-TEK]

Interesting article and comments. I do need to point out an error in the article:

"This sounds a bit like the radar gun/detector industry, wherein the same manufacturers that help police nab speeding motorists also build the radar detectors to help avoid getting caught."

Absolutely none of the radar/lidar gun manufacturers produce radar detectors. Likewise, none of the radar detector manufacturers produce radar/lidar guns for law enforcement. These two groups of manufacturers are and have been at war with each other for over two decades.