RPX is sometimes called a “defensive patent aggregator.” The company’s main business is to sell expensive memberships to big companies, then buy up patents that are being used, or could be used in the future, by “patent trolls” to sue them. It’s an extremely profitable business—this year, RPX is expecting to earn $56 million on $256 million in revenue.
That’s allowed RPX to expand into other business lines. Earlier this year, it started offering protection from trolls, which RPX calls non-practicing entities or NPEs, through an old-fashioned product: insurance. By paying an annual premium, companies could get their legal fees covered if (or when) they get hit with a patent troll lawsuit. RPX also became authorized as a coverholder at Lloyd’s.
RPX exists because NPE lawsuits have become extremely common and now constitute around 60 percent of all patent suits. In the second quarter of this year, 855 lawsuits were filed by NPEs. Most of those lawsuits are aimed at companies with less than $100 million in revenue; according to RPX, 1 in 10 “top tier VC-funded companies” are sued within five years of being funded.
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