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Rockstar Group Unloads Patents for $900M

The Rockstar Consortium, made up of Apple, Microsoft, Ericsson, BlackBerry and other big names in tech, has agreed to sell more than 4,000 patents to patent clearing house RPX for $900 million.

The group bought 6,000 patents from bankrupt Nortel in 2011 for a cool $4.5 billion, outbidding Google (Nasdaq: GOOG) and using its new intellectual property to take on the Android maker in court over alleged infringements. By selling them to RPX Corp. , Rockstar has also agreed to drop any of its remaining court battles. (See Rockstar Patent Holders Sue Google & Friends and DoJ OK's $4.5B Nortel Patent Sale.)

The Wall Street Journal reports that RPX will license the patents to a separate syndicate of around 30 other technology companies, including Google and Cisco Systems Inc. (Nasdaq: CSCO), both of which settled patent suits with Rockstar last month. And the WSJ says the companies involved in Rockstar will get to keep the 2,000 patents they didn't contribute to the consortium, which are amongst Nortel's most valuable.


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Why this matters
The mobile patent wars dominated headlines in years past with some questioning whether all the litigation came at the expense of innovation. As part of its deal with RPX, Rockstar is dropping suits against Samsung Corp. , LG Electronics Inc. (London: LGLD; Korea: 6657.KS) , High Tech Computer Corp. (HTC) (Taiwan: 2498) and Huawei Technologies Co. Ltd. . Plus, the new licensing deal, encompassing 30 companies, should mean we won't see a return to the levels of courtroom drama the industry had in the past. That's a good thing for handset makers, operators and consumers -- really everyone but the lawyers.

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— Sarah Reedy, Senior Editor, Light Reading

kq4ym 12/24/2014 | 6:41:55 PM
Re: numbers It does seem that maybe this is just a multi billion dollar investment, consisting of the loss it's taking by Rockstar to keep the law suites at bay. Otherwise why would they take such a deep discount from the original purchase price?
Kruz 12/24/2014 | 6:57:19 AM
Re: numbers I guess Rockstar failed to license the patents over the years and had to eventually sell these at a low cost. This seems like an obvious loss but also as is a sign that patent litigation is calming down.
MarkC73 12/23/2014 | 3:08:09 PM
Re: numbers Loss on investment would definitely depend on what the patents are and how much margin they get off of the products they sell that use those patents.

I might spend a million dollars to get all the patents to make a mircowave cooker, but if I make $10 off a million of them in a year, and then sold the patents to a clearing house for $100k and kept a few key ones for myself; I'd call that pretty good.  Yet we can't really speculate without more information because how much you can make off the patents doesn't solely come off of licensing or selling them.

Then again if it was a sweet deal, you'd think they'd gloat about it PR-wise.
Ariella 12/23/2014 | 1:45:29 PM
Re: numbers @Sara I figured they would hold on to the most valuable ones. Yet, as you say, they still face quite a loss in this sale.
sarahthomas1011 12/23/2014 | 1:42:08 PM
Re: numbers They are the 4,000 patents the group owned, rather than the 2,000 split amongst the companies. They definitely took a loss on the deal, and it's unclear how much money the patents made it over their four years of ownership. The ones they are keeping, however, are said to be the most valuable. 
Ariella 12/23/2014 | 1:31:38 PM
numbers

Aee the 4,000 patents they seek to sell for $900 million from the 6,000 patents they bought for $4.5 billion? If so, it sounds like a loss, unless they're keeping the 2,000 that they were really after when buying the whold batch.

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