Apple, Microsoft-Backed Rockstar Sells Patents; Ends Litigation

Apple, Microsoft-Backed Rockstar Sells Patents; Ends Litigation

Patent risk management company RPX Corp said on Tuesday it would buy patents owned by Apple Inc and other firms for $900 million (roughly Rs. 5,711 crores), helping to further scale back lawsuits over smartphone technology.

The sale consists of the more than 4,000 patents still owned by Rockstar Consortium, which was formed from the $4.5 billion (roughly Rs. 28,557 crores) purchase of about 6,000 Nortel Network Corp patents in 2011 following its bankruptcy.

The deal puts an end to litigation started last year by Rockstar against several handset manufacturers whose phones operate on Google Inc's Android operating system, which fiercely competes with Apple mobile products.

While the sale price is far less than what Rockstar had paid for the original 6,000 patents, the most valuable 2,000 of them had already been distributed to consortium members, RPX Chief Executive John Amster said.

The deal was partly motivated by the Rockstar owners rethinking their strategy for the patents, Amster said, noting that he expects Rockstar will cease to exist in its current form after the sale.

RPX was formed primarily to buy patents before the sellers can be sued for infringement. The sellers pay RPX a fee that it says is cheaper than the cost of fighting the patents in court.

As part of the deal, RPX also said it will license the patents to more than 30 companies, including Google and Cisco Systems Inc, both of which last November settled patent lawsuits filed against them by Rockstar.

Besides Apple, Rockstar also includes Microsoft Corp, Sony Corp, Blackberry and Ericsson.

"I think they were not thrilled at the litigation and thought there was a more efficient way to get fair value for the portfolio," Amster said. "It could have taken many years more of litigation to get the same value.

Ericsson said the deal was good news for the industry. Microsoft said it "demonstrates our patent system working to promote innovation." Apple, Sony, Google and Blackberry all declined to comment.

The deal is the latest to help calm the protracted smartphone legal battles. Earlier this year, Apple and Google agreed to drop all lawsuits between them, and Apple and Samsung Electronics Co Ltd did the same for litigation outside of the United States.

© Thomson Reuters 2014