Patent startup gains high profile backing

A $100 million bankroll
RPX will not assert patents against other companies, but generate revenues from licensing and selling the patents it buys, Amster said. The startup does not expect to seek other direct equity investments either from venture capitalists or high tech companies.

The model of a "patent-buying cooperative" set by Allied does not optimally align the interests of potential customers, something RPX will address, Amster said.

The startup also aims to help companies reduce personnel time and costs spent defending patent suits. Amster quoted figures from a 2005 survey by the American Intellectual Property Law Association survey which estimated litigation costs were approximately $4.5 million per case, not including the costs of any settlement.

RPX aims to buy as much as $100 million in patents and patent applications in 2008. To date it has spent $30 million acquiring about 100 U.S. patents and 50 patent applications including a portfolio that applies to mobile communications and Internet search and another on RFID and distribution of goods.

"They have important implications for existing and emerging applications that could create problems for a wide range of companies," Amster said.

The startup has been building its staff, hiring Paul Saraceni, an associate general counsel for intellectual property strategy at Yahoo as the startup's Chief IP Officer.

Joe Chernesky, president of IPotential (San Mateo, Calif.), a patent consulting and brokering firm said RPX could do well, in part due to its founders' backgrounds at Intellectual Ventures. "This is one that I think will be interesting to watch," Chernesky said.

Chernesky was less bullish on Allied which he said has struggled to purchase patents in the face of stiff competition from Intellectual Ventures.

"Intellectual Ventures has a huge presence and they have been buying everything up," he said. "They can have an offer on the table within three weeks, and Allied didn't have the procedures in place to do that," he added.

Brian Hinman, former chief executive at Allied, said Intellectual Ventures was "a very aggressive competitor," but he said he expects Allied to be successful. In his 18 months at Allied, Hinman said the company grew its staff and tapped into multiple sources of patents.

"Some strategic patent portfolios were purchased," said Hinman.

"When I joined in March 2007, there was nothing in place except a few companies, a concept and a strategy," he added. "The execution was left to me."

Hinman joined Verizon, an Allied member, in August of 2008 as vice president of intellectual property.