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PATENTS AND TRADEMARKS

Is This What Patent-Infringement Insurance Looks Like?

Patent clearinghouse companies offer "memberships" in what they are describing as a sort of patent-infringement insurance. Some call it a glorified protection racket.

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A new type of business model has sprung up in reaction to--and some say in league with--patent trolls.

Patent clearinghouse companies including RPX now offer "memberships" in what they are describing as a sort of patent-infringement insurance. Detractors call it a glorified protection racket.

For an annual subscription fee based on a company's annual revenue, a member gets the rights to the patents in the RPX portfolio. The fees for a small or midsize business average around $100,000 to $200,000 per year.

RPX has vowed that it will never litigate its patents. RPX, however, routinely sells patents that are no longer valuable to third parties that are free to litigate them against anyone who isn't an RPX member.

"You don't get the benefit of our service unless you're part of the service," says John Amster, CEO of RPX and formerly an executive at Intellectual Ventures. "It's an effective way to show companies that they can't get a free ride off our service because we've said we won't litigate our patents."

So far, the company has signed up 116 members and has 2,000 U.S. and international patents. They're mostly technology and software patents.

 

Last updated: Dec 13, 2012

KRIS FRIESWICK is a business writer living in New York City. Kris wrote for the June 2012 issue about Defy Ventures, a program that teaches ex-cons to be entrepreneurs.
@Kris_Frieswick




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