Startup Company Seeks RFID and Other Patents

The firm's patent coffers include approximately 300 different patents in the mobile, Internet search, telecommunications, consumer electronics and RFID markets, Amster says, all chosen for their potential to be acquired by NPEs. One particular portfolio, acquired by RPX in October 2008, comprises patents related to the use of RFID tags in a supply chain. The portfolio consists of 93 U.S.-granted or -allowed patents and 38 pending applications, and has four sub-portfolios covering the use of product codes in search engines to retrieve product details, a variety of methods for linking product codes to information and purchasing channels, a number of RFID tagging and payment systems (including tracking technologies), and technologies such as the watermarking of digital audio files.

"The reason we bought that portfolio is that it was very broad, and this is exactly the type of portfolio an NPE would look for—a patent that is very broad, and that could be asserted against a lot of companies," Amster states. "There's the potential to assert against not only companies that make RFID products, but against companies that use RFID tags, such as retailers."

To enable its defensive patent-aggregation service, RPX's team of 19 employees search for patents—and in some cases, patent rights—that create value for its members. RPX will even buy patents in the midst of assertion, which Amster says RPX has done three times already. The firm does not consult with its members when buying patents—in fact, the RFID-related portfolio, as well as many other patents, was acquired before any members signed on. It is largely this characteristic that makes the company's model different from what are known as patent pools. Typically, a patent pool is formed by a group of businesses that get together to cross-license their patents and aggregate intellectual property (IP) rights (see Justice Department Gives Nod to EPC Gen 2 Patent Pool).

A patent pool generally sticks to the patents and IP rights that belong to its members, without actively acquiring patents. Not only does RPX not consult its members, it also doesn't narrow patent acquisitions to a few technologies or industries. Instead, the firm focuses its buying decisions on those patents likely to be purchased by NPEs, as well as patent portfolios that are broadly based and can be asserted against a lot of companies, products and services. RPX indicates it would consider purchasing additional patents involving RFID in the future, however, assuming those patents were relevant to its members' businesses.

The value to RPX's members, Amster explains, is that they'll receive licenses to all patents held by the company, as long as they are paying members. The firm will vest any member that has kept its membership active (by paying membership fees for three years) by offering that member perpetual licenses for all patents acquired by RPX during that three-year span—even if a member opts not to renew its membership.

According to Amster, RPX has plans to add to the more than $70 million worth of patents it has already bought. "The goal of the business," he says, "is to buy at least $100 million worth of patents a year."