Apple, Microsoft-led Rockstar Consortium Sells Nortel Patents for $900 Million

In November, 2013 a group of mobile IT heavyweights—Apple (AAPL), BlackBerry (BBRY), Ericsson (ERIC), Microsoft (MSFT) and Sony (SNE)—operating as a consortium calling itself Rockstar and armed with a Nortel patent portfolio it won for an eye-popping $4.5 billion in 2011 by outbidding Google (GOOG), filed an infringement suit in U.S. District Court, Eastern Texas Division, against not only the search giant but also ASUS, HTC, LG, Pantech, Samsung and ZTE, all of which produce Android-based devices.

Intended or not, the move showed off the seamier side of the IT patent wars. Google recently settled its dispute for an undisclosed amount but in what may be another step in the cooling of the patent skirmishes of the past few years, other vendors faced with existing Rockstar suits–HTC, LG and Samsung–are off the hook.

That’s because RPX, a San Francisco, CA-based patent company, acquired some 4,000 telecommunications patents from Rockstar for about $900 million, or 20 percent of the original purchase price the Apple and Microsoft-led group paid for the entire patent portfolio three years ago.

The original Rockstar patent portfolio consisted of about 6,000 patents but some 2,000 licenses previously were distributed to various Rockstar owners and are not part of the RPX deal.

“Leading technology companies from multiple industries came together to shape this transaction,” said John Amster, RPX chief executive and co-founder. “We commend everyone involved for their leadership and commitment to clearing the risk of the Rockstar portfolio by negotiating a reasonable purchase price in one efficient transaction.”

RPX’s subsidiary RPX Clearinghouse, will license the patents to a syndicate of some 30 IT companies, including Cisco and Google. RPX also will license the patents to outside companies under fair, reasonable, and non-discriminatory (FRAND) terms.

The RPX Clearinghouse includes software and media providers, semiconductor manufacturers, wireless carriers and wireline network operators, Multiple System Operators (MSOs), and Original Equipment Manufacturers (OEMs).

“With RPX acting as a clearinghouse and deal manager, a global consortium of unprecedented scale came together willingly and reached a fair value for licensing patent rights in a negotiated business transaction instead of a courtroom,” said Mark Chandler, Cisco General Counsel. “This is an approach and transaction that is constructive for the entire industry,” he said.