Rockstar Sells Patents to RPX: Is it the End of Patent Wars? - Analyst Blog

Rockstar Consortium Inc. — formed by Apple, Inc. (AAPL), BlackBerry (BBRY), Ericsson, Microsoft (MSFT), and Sony — will sell patents to RPX Corp., a patent risk management company. Rockstar, one of the biggest patent trolls in the U.S., will sell 4,000 patents owned by its members for $900 million.

These patents were a part of the 6,000 that it purchased for $4.5 billion from Nortel Network Corp in 2011 following its bankruptcy. Notably, the remaining 2,000 patents — regarded as key patents mostly associated with chips, optical and wireless technology — have already been distributed among consortium members.

One of the prime objectives behind the formation of Rockstar was to keep crucial intellectual properties out of Google's (GOOGL) reach to curb its position in the smartphone space. In 2011, Rockstar won the competitive bidding against Google and purchased the full portfolio of about 6,000 patents from Nortel. Following this victory, Rockstar sued some major Android-based smartphone makers such as HTC, LG and Samsung to counter competition against member companies. 

With the end of 2014, we believe that the latest patent sale by Rockstar will bring an end to the long-pending dispute between the members of the consortium and Google on smartphone technology. This deal represents smartphone manufactures' efforts to settle legal tussles, which disrupt technological development and the promotion of new products and services.

Additionally, this year, Apple extended the olive branch by dropping all lawsuits against Google and Samsung Electronics Co Ltd.

We believe the patent sale involves a key aspect of this deal which includes transferring the risk of patent infringement to a third party. RPX primarily buys patents from those who want to do away with those rights and are likely to be sued for infringements. The deal hints at the possibility of consortium members doing away with other patent rights that may result in infringement issues, increasing regulatory expenses much higher than their intrinsic value.

In addition, the deal indicates collaborative approach of smartphone makers who are trying to attain optimum gain from the re-sale of the remaining patent rights by entering new deals with other companies. In this context, RPX has already struck deals to license those patents to more than 30 companies, including Google and Cisco, which dilutes the main purpose of forming Rockstar.

In the coming days, we expect new strategies to be adopted to resolve the complexities associated with intellectual property rights. This will not only facilitate the development of new and innovative technologies and services, ensuring growth for smartphone makers but also benefit end users by offering cost-effective solutions to meet the ever-rising need for technology.