HTC joins defensive patent pool

SAN JOSE, Calif. — Taiwanese mobile phone maker HTC Corp. has become the twentieth company to join startup RPX Corp. (San Francisco), a defensive patent pool service started a year ago. The fast rise of the startup is a sign the hunger to lower costs and risks of patent infringement litigation is still keen among established electronics companies.

The milestone comes at a time when observers say activity buying and selling patents has been on the decline but the threat of patent infringement litigation remains significant. Congress has been quietly hammering out details of a draft patent reform bill, in part aimed at containing the cost of damages in cases of infringement.

RPX was formed by a former executive of Intellectual Ventures (IV), a high profile patent aggregator started in 2000 by top IP executives from Intel and Microsoft. The new startup's mission has been to provide a broad but low cost alternative to IV for shielding generally large established electronics companies from infringement suits brought by so-called patent trolls.

RPX acquires patents and provides rights to members which pay annual fees ranging from $35,000 to $4.9 million depending on company size. Members include Cisco Systems, Coby Electronics Corp., HP, IBM, InFocus Corp., LG Electronics, Nokia, Panasonic, Samsung, Seiko-Epson and Sony.

"RPX has generated higher revenues in its first year of operations than any other early-stage startup in CRV's history," said Charles River Venture partner Izhar Armony, one of about three venture capital firms that have invested two rounds of funds into RPX.

"The fact that RPX was able to achieve such growth in spite of the economic downturn is evidence of the compelling value proposition of the RPX service," he added in a prepared statement.

To date, RPX has invested $115 million to acquire more than 1,000 U.S. and international patents and patent rights in the mobile, Internet search, telecommunications, networking, consumer electronics and RFID markets. By contrast, backers of Intellectual Ventures were quoted at one point as saying the company in operation for nearly a decade had 30,000 patents.

"The number of patents RPX has been able to acquire since inception speaks to its effectiveness," said Mike Mclean, vice president of professional services at Semiconductor Insights, a division of the company that publishes EE Times.

"The RPX team has demonstrated in only a year that a scalable patent clearinghouse, acting on behalf of multiple technology companies can provide effective protection for operating companies," said Randy Komisar, partner at Kleiner Perkins Caulfield & Byers, another RPX investor.