RPXC

RPX Corporation (RPXC)

$15.34
*  
0.07
0.46%
Get RPXC Alerts
*Delayed - data as of May 4, 2015  -  Find a broker to begin trading RPXC now
Exchange: NASDAQ
Industry: Miscellaneous
Community Rating:
View:    RPXC After Hours
 
 
Symbol List Views
FlashQuotes InfoQuotes
Stock Details
Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain
CHARTS
Basic Chart Interactive Chart
COMPANY NEWS
Company Headlines Press Releases Market Stream
STOCK ANALYSIS
Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison
FUNDAMENTALS
Call Transcripts Annual Report Income Statement Revenue/EPS SEC Filings Short Interest Dividend History
HOLDINGS
Ownership Summary Institutional Holdings Insiders
(SEC Form 4)
 Save Stocks

RPX Corporation (RPXC)

Goldman Sachs Technology and Internet Conference Call

February 13, 2013 5:00 pm ET

Executives

John A. Amster – Chief Executive Officer and Co-founder

Analysts

Brian Karimzad – Goldman Sachs Group Inc.

Presentation

Brian Karimzad – Goldman Sachs Group Inc.

Hi, good afternoon everybody here and on the webcast. I’m Brian Karimzad from Goldman Sachs Research and pleasure to introduce our next company, the RPX Corporation and CEO, John Amster. John, welcome.

John A. Amster

Thanks for having me.

Brian Karimzad – Goldman Sachs Group Inc.

Anytime. I guess that first place to start. You reported yesterday, but I don’t want to getting the details of that, just yet and the price of bucks to renew the story here is so, can you give us some background on RPX and how defensive patent aggregation has evolved and how you’d fit into broader patent picture?

John A. Amster

Sure, so we have been around for four plus years. We got first financing by about 4.5 years ago. And we did saw on the observation that there were thousands of companies being sued by these non-practicing entities, NPEs commonly refer to as pattern trolls that the average length of a patent troll litigation was 18 months, 50% transaction costs. We are talking about a very, very large market with billions of dollars being spent annually and operating companies really having no solution.

The other observation was that very large portion of the patents that are being asserted against operating companies in these NPE cases are bought at some point within a reasonable period of time prior to the lawsuit for a very small fraction of what those costs end up being. So it’s a very large arbitrage to buy patents before they end up in the hands of NPEs. The problem is that no one company wants to go buy a lot of these patents because they are often not very good, they even when they are good, people don’t want to own them they just want to get their license to them.

So in effect there is no clearing house, there is no function in this market to get rid of all those patents before they end up in litigation. And we started RPX to create that clearing house. And so what we did at first was offer a service where companies passed an annual fee we build them annually we go out, we use the aggregate of those fee of those, subscription fees to then go buy as patents as we can, and still maintain a profit.

And so since inception augmented by additional contributions from our clients, we spent over $0.5 billion, we’ve resolved hundreds of litigation on behalf of our clients, and we believe avoided hundreds and more. And so we are delivering a very good ROI for now 140 clients and it’s really the only thing I get in the patent space.

Brian Karimzad – Goldman Sachs Group Inc.

Fair enough. Help us, I guess, to get a sense then of how you think about the addressable market for your particular service, and how that maybe has changed over the last couple of years, you put out some matrices before, but again for folks that are new to it hopefully frame that?

John A. Amster

Sure, at a very high level there are 1,000 of companies that are consistently sued by MPEs and there have recently been a bunch of costs studies around what the costs are of this market and I really do consider that to be in a broader sense what the addressable market is. Two professors recently reported that they thought the addressable market is actually $30 billion that the MPE problem cost company’s annually $30 billion

We think it’s more or like $7 billion, so with 50% transaction cost, so from our perspective call it three, it doesn’t really matter. What we also know from a matrix is that we think that re-priced a lot of litigation that’s out there today. We think that you can resolve virtually all the litigation out there today for low billion of dollars with a couple of exceptions. But you can eliminate probably 85%, 95% of the risk for a very reasonable amount of money, less than the annual TAM. In other words, companies could pay a company like RPX billions of dollars, and that could be considered a many billion of dollars cost savings. And so the big picture, that’s the way we look at the concept of the clearing house, but just to throw out a few steps. Since the beginning of 2010, there have been 1,800 companies, unique companies that have been sued by an MPE.

390 of those 1,800 companies have been sued five times or more since 2010. In Q4 alone there were 1071 NPE lawsuits against 920 unique company defendants, 855 of which are still prospective clients of RPX. 145 of those 855 were sued twice just in Q4. This is a massive problem; there is no insurance for it. Companies spend $0.50 of every dollar on legal fees, so I think the addressable market is huge.

Brian Karimzad – Goldman Sachs Group Inc.

Fair enough. What about the reform legislation that was in the place in 2000, I mean, the metrics you’re saying don’t indicate much change.

John A. Amster

I think the reform was terrific for the patent market, in particular, if you offer a service to reduce patent risk, because it’s very clear now a year plus after AIA that to extent it had any impact, it was a negative impact. In other words, the problems gotten worse and they passed the legislation.

Read the rest of this transcript for free on seekingalpha.com