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Rockstar sells phone patents in $900m deal
From the Financial Times of Tue, 23 Dec 2014 18:36:11 GMT
Mock models of the Samsung Electronics Co. Galaxy S5 smartphone are displayed at the company's d'light store in Seoul, South Korea, on Monday, July 7, 2014. Samsung Electronics is scheduled to report operating profit and sales figures on July 8. Photographer: SeongJoon Cho/Bloomberg©Bloomberg

Rockstar, an intellectual-property consortium led by Apple and Microsoft, has ended its litigation against Samsung, LG and other smartphone makers, as part of a $900m deal with patent management company RPX.

The deal is the latest sign of a cooling in the smartphone patent wars, which saw their high point with a $1bn damages claim in 2012 against Samsung over the Korean electronics firm’s alleged copying of Apple’s iPhone.

Google and Cisco are among more than 30 tech companies that have formed the largest syndicate of its kind with RPX to pay $900m to acquire and licence the patents, which were originally bought by Rockstar from bankrupt telecoms equipment maker Nortel for $4.5bn in 2011.

Rockstar, whose members also include BlackBerry, Ericsson and Sony, acquired 6,000 patents in the 2011 deal, of which 2,000 of the most valuable were distributed among individual members of the group.

The transaction with RPX relates to the remaining 4,000 patents, over which Rockstar had sued several of the world’s leading handset makers, including Samsung, LG, Huawei and HTC.

Those lawsuits will now be withdrawn. Google and Cisco, which had also been targeted by Rockstar in the courts, settled their cases last month.

“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, general counsel of Cisco. “This is an approach and transaction that is constructive for the entire industry.”

The deal with RPX also marks the end of the Rockstar collaboration.

“We joined Rockstar to ensure that both Microsoft and our industry would have broad access to the Nortel patent portfolio,” said Erich Andersen, deputy general counsel of Microsoft, “We’re pleased to have accomplished that goal through this sale and our valuable license to the patents being sold.”

Apple declined to comment.

This year has seen Apple settle its intellectual property battles against Google and, outside the US, Samsung, over smartphones that use the Android operating system.

Apple’s cases against Samsung in the US continue to progress through the courts, although it has not yet received any of the damages that juries have awarded to it in their two lawsuits.

Patent experts say that no clear victor has emerged in the numerous lawsuits over smartphone designs and technology, costing hundreds of millions of dollars in legal fees and failing to make a meaningful impact on the mobile market, either through damages or injunctions blocking infringing handsets from sale.

However, many of the settlements do not preclude future litigation and further cases could still emerge as new challengers enter the market.

For example, Xiaomi was forced to suspend sales in India earlier this month after a patent dispute with Ericsson. Xiaomi is among the fastest growing mobile companies in China and has been in talks to raise a new round of funding that would value the company at more than $40bn, despite what many see as substantial risk of intellectual property litigation.

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