Non-practising entity (NPE) Spherix has acquired 101 patents from Rockstar Consortium, in the second deal between the companies.
The patents, directed to technologies including data, optical and voice communication, join the seven Spherix acquired from Rockstar in July 2013. Those patents cover mobile telecommunications.
As part of the deal, US company Spherix has issued $60 million worth of securities. But it said that Rockstar, which is backed by Apple and Microsoft, is entitled to “future recoveries” after Spherix receives a 100 percent return on the securities’ value.
The patents will be owned by a spin-off company, Spherix Portfolio Acquisition II.
Anthony Hayes, Spherix chief executive, said the deal transforms his firm into one of the most IP rich public companies today.
“Based on our analysis arising from our discussions with Rockstar, we believe the portfolio acquired of over 100 patents and patent applications are found in technology used daily by consumers and businesses, as they cover the way traffic, video and voice are carried over public and private networks.”
The portfolio contains both industry standard patents and those found in “product implementations of various Internet service and network device vendors throughout the world,” according to Rockstar chief executive John Veschi.
Rockstar will continue working with Spherix by sharing information about the newly-acquired patents, helping to commercialise them and working with their inventors.
Some of the 101 patents complement the seven sold to Spherix last year, according to the companies. After that deal, Spherix used the portfolio to sue several companies, including Vtec and Uniden, for patent infringement.
More litigation is expected to follow this deal, said Paul Devinsky, partner at McDermott, Will & Emery LLP.
“I do expect the patents to find themselves initially in negotiations and then in the court room.”
But individual companies are unlikely to be worried about being sued at the moment, he added, because the patents appear to have been selected for assertion against end users, not manufacturers.
Despite selling off a chunk of its patents, Rockstar will still have an interest in their monetisation. Stephen Park, partner at Paul Hastings LLP, said the consortium is “basically divesting their legal title in the patents but is trying to retain an interest in the proceeds”.
And with potential anti-NPE US legislation on the horizon, Rockstar may have to decide how to monetise its portfolio from now on, Devinksy said.
“They may think that because people are saying we have to do something about the troll model, we better get something out of this business model now before it becomes more difficult.
“Or they may say that until and unless we feel pain in our business model, we will go after everybody in sight. Because there could be a sunset on the business model, let’s become active now.
“They want to ensure that this portfolio does not become a $4.5 billion dust collector,” Devinsky said.
Rockstar, whose remaining owners are IBM, Ericsson and Sony, was established in 2011. The company bought defunct telecommunications firm Nortel Networks’ portfolio of more than 4,000 patents, which cover networking, communications, and Internet technologies, for $4.5 billion.
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