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RPX Acquisition of Nortel Telecom Patents Underscores a Trend Toward More Licensing

Reconciliation is in the air! And it’s not just due to lingering good feelings from the holiday season. According to John Amster, chief executive of RPX, Inc.: “Peace is breaking out.” RPX acquired 4,000 telecom patents this past December so that its subscribers can obtain patented technology rights. “I think people have started to realize that licensing, not litigation, is the best way to make use of patents,” Amster told the Wall Street Journal in December. “[A]nd this deal is a significant acknowledgment of that reality.” RPX reportedly lined up subscribers including Google and Cisco Systems to pay $900 million for important Nortel patents owned by a consortium including Microsoft and Apple called Rockstar Consortium. The RPX subscriber model allows participants to pay a membership fee to the company in order to obtain licenses to these and other patents, enabling them to use the technology and to avoid potential patent litigations.

This article examines RPX’s acquisition of the Nortel patents as an indicator of a trend toward more licensing as a prudent early compromise to avoid patent litigation costs.

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