2015 Report...RPX Corporation 2015 Patent Marketplace Report 5 NPE Litigation • NPE litigation...

2015 Report NPE Litigation, Patent Marketplace, and NPE Cost High-level Findings

Litigation Volume 2

RPX presents its annual NPE Litigation, Patent Marketplace, and NPE Cost reports for 2015 as one comprehensive reference guide to the state of the patent ecosystem. Given the many connections between findings across each area, this collective view through all three lenses offers the most accurate depiction of that landscape. Our Summary of Observations (page 5) highlights the most important of these connections across each area. By centralizing our viewpoint, we hope to illuminate important context that might otherwise be obscured.

The merit of this approach is evident, in particular, when considering three of the metrics that observers of the patent market watch most keenly: litigation volume, the pace of pre-litigation patent offerings, and cost of NPE litigation to industry. In 2015, NPE litigation volume re-stabilized, up 28% from 2014. And pre-litigation patent offerings held steady. Taken alone, the two points would suggest little if no lasting change in the patent landscape.

But new data also suggest that the cost of NPE litigation in 2015—especially for certain types of cases—is down from 2014, indicating that NPEs are facing some headwinds. When used properly, new patent validity challenges before the Patent Trial and Appeal Board (PTAB)—a byproduct of the 2011 America Invents Act (AIA)—can be less expensive and as effective as such challenges in district court. Likewise, in the two years following the Supreme Court’s decision in Alice Corp. v. CLS Bank International, the success rate of patent eligibility attacks in district courts almost certainly accounts for some of the overall reduction in litigation cost. An Evolving Landscape The takeaway from these and other data in the report is that NPEs are persisting, notwithstanding challenges forcing them to adjust their strategies in a post-reform world. That said, the pendulum might swing back: over the past three years, the PTAB’s rate of instituting petitions challenging patent validity has declined, following an initial burst out of the gates. And while it is too soon to identify whether any post-Alice pendulum effect is developing, we are beginning to see courts indicate some worry about overzealous application of the case.

From the Editors 2

3RPX Corporation | From the Editors

The takeaway from these and other data in the report is that NPEs are persisting, notwithstanding challenges that force them to adjust their strategies in a post-reform world.

While our 2015 reporting indicates some evolution in the patent landscape itself (though somewhat limited to the lower end of the market and to certain sectors), our data also reflect significant progress in RPX’s pursuit of transparency in this chronically opaque marketplace. This year’s cost estimates are our most precise yet—the result of an expanded data set and increasingly sophisticated analysis. As always, we have revised historical estimates based on these gains. In the case of overall cost to industry, this revision has resulted in a downward adjustment to industry cost estimates that we have published in the past. Where we had estimated that NPE litigation costs industry in the range of $10 billion or more in direct expenses annually, we now estimate that number to be $7 – 9 billion.

Two factors—new data and refinements to methodology—account for the difference. In our continual collection of data, many of the new survey responses from both new and existing participants reflect lower costs per case. And we use all data, cumulatively, to calculate per-case costs—projecting those costs onto the NPE litigation volumes for each year to reach our estimate. This means any fluctuation will be reflected across both present and historical estimates for annual litigation cost.

Regarding methodology, RPX has changed its calculation of litigation volume within the cost estimate. We now use a less traditional but, in our view, more accurate measure of activity: counting defendants in litigation campaigns—essentially, groups of cases brought by the same plaintiff over the same patents—rather than counting their individual cases. We find that this campaign methodology more closely aligns with the way companies count their own litigations and reduces duplication inherent in raw litigation data.

ProgressRPX will continually revisit and refine its methodology and analysis—an imperative, given the fiscal challenges and systemic imbalances that persist in patent litigation, and given the role that market intelligence and transparency play in correcting those issues. While policy and judicial action can move the needle to a degree, NPEs have demonstrated both tenacity and adaptability. The practical reality is that NPE litigation continues to cut deeply into the bottom lines of thousands of companies, to shrink research and development budgets, and to impact funding from investors—sometimes fatally.

In our fourth year of reporting, RPX continues to level this asymmetric playing field, establishing a platform and clearinghouse of market intelligence that all parties can use to transact patents based on credible valuation, not the threat of litigation. This goal of accuracy and transparency underpins our mission. While other observers and participants in the market necessarily have a stake in what the data in this report show, RPX remains focused on its third-party role of striving for the exactitude required for sound decision-making in the exchange of patent assets.

The 2015 NPE Litigation, Patent Marketplace, and NPE Cost Report is a product of this commitment, providing all those affected by NPE risk access to clear, centralized information available nowhere else.

44Table of Contents

Summary of Observations 5

NPE Litigation Report 6

Patent Marketplace Report 41

NPE Cost Report 71

Methodology 81

About RPX 87

5RPX Corporation | 2015 Patent Marketplace Report

NPE Litigation• NPE litigation volume in 2015 surpassed 2014 by cases filed and defendants added

(Chart 3, Litigation), with periods of volatility surrounding newsworthy judicial and legislative events (Chart 12, Litigation). NPEs remained the primary source of patent litigation activity, accounting for more than 60% of defendants added for the sixth straight year (Charts 2 and 10, Litigation).

• First-time defendants shouldered the brunt of the action (Charts 5 and 6, Litigation). And smaller companies—those with less than $100 million in revenue—again accounted for over 60% of the unique NPE defendants added.

• The early, fast growth in the popularity of IPR and CBM petitions appears to be leveling off, with filing rates from second quarter of 2014 onward remaining relatively steady at roughly 400 – 500 petitions. Success rates also have declined, with the quarterly institution rate dropping from an early high of 92% in Q1 2013 to 67% in Q4 2015 (Charts 22 – 31, Litigation).

• The Eastern District of Texas took its largest share of NPE volume (64%) since at least 2009, with Delaware a distant second (6%). The remaining 30% of NPE litigation volume was spread almost evenly throughout the dozens of other federal districts (Charts 36 and 37, Litigation).

• NPE litigation in the International Trade Commission (ITC) continued to decline after a brief spike in 2011 (Chart 18, Litigation).

Patent Marketplace• A steady volume of portfolios has been offered to RPX in the last five years, but the

number of patents offered to RPX in the last three (and thus, the average portfolio size) has markedly increased (Charts 1, 2, and 3, Patent Marketplace).

• RPX continues to see a mix of technology offerings. The largest contributor by portfolios offered is E-commerce and Software (23.4%). By patents, it is Semiconductors (30.1%) (Charts 4 and 5, Patent Marketplace).

• Median initial asking prices have remained stable, though the average fluctuates quarter to quarter. Trends in the median asking prices vary when viewed at the sector level (Chart 6 and Charts 19-39, Patent Marketplace).

• Most portfolios still transact within six months to one year of their offer date. For more recent offerings, the average transaction latency is shorter (Charts 14 and 15, Patent Marketplace).

NPE Cost• RPX estimates that NPEs cost operating companies $7.4 billion in 2015—lower than

historical costs. This is unsurprising: new legal tools (Alice, IPRs) are giving defendants more effective means to combat low-quality assertions rather than settle at a nuisance payment. That said, the more credible assertions are less vulnerable to such attacks, and thus, the higher end of the market remains a persistent threat (Chart 1, Cost).

• One of the primary costs to operating companies of all NPE activity is the cost of mounting a legal defense against NPE suits. For suits costing between $100 thousand and $1 million to resolve, 57% of that cost was legal and 43% was settlement or judgment payments to NPEs (Chart 3, Cost).

• Litigation remains the largest portion of direct NPE costs. That said, other costs are significant, especially for larger companies; they tend to spend relatively more on non-litigation assertions and validity challenges (Chart 2, Cost).

• IPR petition costs are generally in the six figures: $200 thousand on the low end, and $700 thousand on the high end, for those that reach a final decision. Much (40 – 60%) of that total cost is incurred in the first six months between filing the petition and institution. The range of costs to file a petition are fairly narrow, but there is a wide range costs for petitions that go to final decision (Charts 6 and 7, Cost).

• Average legal and settlement costs naturally increase as a case progresses, even doubling or tripling at key events in the litigation sequence (Charts 5A, 5B, and 5C).

Summary of Observations 5

Litigation Volume 6

NPE Litigation

Litigation Volume 7

Key 2015 Findings

NPEs Persist

• NPE litigation volume in 2015 surpassed 2014 by cases filed and defendants added. NPEs added slightly more than the five-year historical average number of defendants to their 2015 campaigns (Charts 1, 3, and 9).

• Litigation activity was volatile: in the most active weeks, NPEs sued two to three times the 2015 weekly median number of defendants. This is likely due in part to recurring legislative activity and newsworthy judicial events that drove short-term surges in NPE filings (Chart 12).

• First-time defendants continued to account for over half of the unique defendants sued by NPEs each year (Charts 5 and 6).

PAEs Still DominateNPEs remained the primary source of litigation activity, accounting for more than 60% of defendants added for the sixth straight year (Charts 2 and 10). PAEs remained the most dominant archetype, accounting for 96% of the defendants added across all NPE campaigns (Chart 16).

Short CampaignsMost defendants terminated from an NPE campaign in 2015 were out within one year of being added to it, and 42% were out within six months. This accounts in part for continued reduction in 2015 of the NPE litigation backlog (–13%) (Charts 11 and 13).

New NPEsNew NPEs made up 48% of all unique NPEs filing suit in 2015—a slight increase of their share over past years (Chart 17).

Chart 1: Patent Cases Filed

768 1,423

3,033 3,734

2,903 3,621

1,409

1,522

1,556

1,626

1,508

1,598

2,177

2,945

4,589

5,360

4,411

5,219

2010 2011 2012 2013 2014 2015

Operating Company Cases NPE Cases

2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015

NPE CasesOperating Company Cases

35%

48%

66% 70%

66% 69%

2010 2011 2012 2013 2014 2015

Chart 2: NPE Cases Filed as Percentage of All Patent Infringement Cases Filed

Litigation Volume

8RPX Corporation | 2015 NPE Litigation Report

Chart 3: Total Defendants Added in Cases

Chart 5: Unique DefendantsNote: Unique counts are not additive.

Chart 6: First-time DefendantsNote: Unique counts are not additive.

Chart 4: Total NPE Defendants Added as Percentage of Total Patent Infringement Defendants Added

4,195 5,253

4,385 4,717 3,571

4,411

2,693

2,649

2,472 2,460

2,406

2,428

6,888

7,902

6,857 7,177

5,977

6,839

2010 2011 2012 2013 2014 2015

Total Defendants Added in Operating Company Cases (Total)

2,642 2,931 2,570

2,600 2,176 2,688

2,277 2,152 2,048 2,041 1,804 1,764

2010 2011 2012 2013 2014 2015

Unique Defendants Added by NPEs

Unique Defendants Added by Operating Companies

Total: 4,669 Total: 4,819 Total: 4,387 Total: 4,424 Tota 3,810 Total: 4,281

2010 2011 2012 2013 2014 2015

2010 2011 2012 2013 2014 2015

Total: 4,669 Total: 4,819 Total: 4,387 Total: 4,424 Total: 3,810 Total: 4,281 Total: 3,287 Total: 3,258 Total: 2,722 Total: 2,673 Total: 2,234 Total: 2,605

2010 2011 2012 2013 2014 2015

2010 2011 2012 2013 2014 2015

nt Defendants Added

61% 66% 64% 66%

60% 64%

2010 2011 2012 2013 2014 2015

1,809 1,932 1,508 1,472

1,147 1,505 1,786 1,628 1,494 1,480 1,282 1,297

2010 2011 2012 2013 2014 2015

First-Time Defendants Added by NPEs First-Time Defendants Added by Operating Companies

Total: 3,287 Total: 3,258 Total: 2,722 Total: 2,673 Total: 2,234 Total: 2,605

Total Defendants Added in NPE Cases

Unique Defendants Added in NPE Cases First-time Defendants Added in NPE Cases

Total Defendants Added in Operating Company Cases

Unique Defendants Added in Operating Company Cases First-time Defendants Added in Operating Company Cases


Litigation Volume

Chart 7: New Campaigns FiledMethodology Note: The campaign calculation is defined in the Methodology section.

Chart 9: Total Defendants Added in Campaigns Chart 10: Total NPE Campaign Defendants Added as Percentage of Total Patent Infringement Defendants Added

Chart 8: NPE Campaigns Filed as Percentage of All Patent Infringement Campaigns Filed

308 395 352 348 323 331

806 843 771 788 661 672

1,114 1,238 1,123 1,136

984 1,003

2010 2011 2012 2013 2014 2015

3,902 4,745

3,850 4,143 3,246

4,139

2,502

2,394

2,244 2,224

2,097

2,089

6,404

7,139

6,094 6,367

5,343

6,228

2010 2011 2012 2013 2014 2015

(Total) Total Defendants Added in Operating Company Campaigns

2010 2011 2012 2013 2014 2015

2010 2011 2012 2013 2014 2015

New NPE Campaigns

Total Defendants Added in NPE Campaigns

New Operating Company Campaigns

Total Defendants Added in Operating Company Campaigns

2010 2011 2012 2013 2014 2015

2010 2011 2012 2013 2014 2015

ns Filed

28% 32% 31% 31% 33% 33%

2010 2011 2012 2013 2014 2015

Infringement Defendants Added

61% 66%

63% 65% 61%

66%

2010 2011 2012 2013 2014 2015


Litigation Volume

2011 > 2012 > 2013 > 2014 > 2015 > 2016 >

2013

2012

2014

2015

2011

+1,215 (24%)

+260 (4%) -342 (-5%) -1,463 (-24%)

-871 (-19%)

2016

BacklogTerminationsAdditions

Backlog of Active NPE Defendants DecreasedThe estimated backlog of NPE cases continued to decrease, despite the uptick in litigation volume over 2014. This is because the number of terminations exceeded the number of new additions in 2015. Sixty-two percent of the defendants terminated in 2015 were out within one year of the original filing date (Chart 13); some of these, though not all, were added to litigation in 2015 and then out again before 2015 was over.

Methodology Note:“Active NPE Campaign Defendants” is the total number of NPE campaign/active defendant pairings. “Backlog” refers to the number of all active NPE defendants at the beginning of the year shown. “Terminations” and “Additions” respectively refer to defendants terminated or added at any time during that same year. For example, 2013 began with 6,305 active defendants. In the rest of 2013, 4,143 new defendants were added, while 4,442 defendants were terminated—some from the backlog, some new—for a net change of -299 defendants by the start of 2014.

Chart 11: Active NPE Campaign Defendants Backlog

+301 (5%) +1,148

(24%)

6,004

4,856

6,3056,006

4,404

3,820

+4,745+3,850

+4,143

+3,246

+4,139

-3,549

-3,597

-4,442-4,848

-4,723

-299 (-5%)

-1,601 (-27%)

-584 (-13%)


Litigation Volume

Defendant Additions Were Volatile Again During 2015 4,139 total defendants and 2,688 unique defendants were added to NPE campaigns in 2015. Much like in 2014, the rate at which these defendants were added varied significantly throughout the year. NPE activity spiked in tandem with newsworthy amendments to the Federal Rules of Civil Procedure. In the weeks leading up to the effective date of the new Rules (November 23rd, 30th), the number of defendants sued by NPEs exceeded the median weekly total (77.5) by more than two to three times.

Patent ReformCongress introduced three major bills to reform patent law: the Innovation Act (1), the Strong Patents Act (2), and the Patent Act (3). The Senate and the House approved the Patent Act (4) and the Innovation Act (5) out of committee. The bills never reached the floor for debate.

Supreme Court CasesThe Supreme Court continued to scrutinize patent cases, deciding appeals in Teva v. Sandoz, Commil v. Cisco, and Kimble v. Marvel. While less impactful than some of the 2014 decisions, these cases still reflect the judiciary’s increased focus on patent law.

New FRCPThe new Federal Rules of Civil Procedure became effective on December 1st (week 48, day 2). The Judicial Conference’s changes eliminated form pleading (including Form 18 for patent cases) and changed case timing and discovery rules in an effort to streamline litigation. Plaintiffs rushed to the courthouse in the weeks leading up to the effective date, reaching 2.6 and 3.7 times the weekly median number of defendants added.

Note: Weekly unique counts are not additive to the yearly total.

Total Campaign Defendants Unique Campaign Defendants

Week of 2015

2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

300

250

200

150

100

50

0

Chart 12: 2015 Weekly Defendants Added in NPE Campaigns mpaigns by week*/ select case when extract(week from defendant_started) = 1 then 2 else extract(week from defendant_started) end as week, count(dist

0

50

00

50

00

50

00

50

4 6 8 10

12

14

16

18

20

22

24

26

28

30

32

34

36

38

42

44

46

48

50

52

Teva

Commil

Kimble

1

23

4

5

3.7x

2.6x

Litigation Volume


0–6 Mos 7–12 Mos 1–2 Yrs 2–3 Yrs 3–4 Yrs 4–5 Yrs >5 Yrs 0–6 Mos 7–12 Mos 1–2 Yrs 2–3 Yrs 3–4 Yrs 4–5 Yrs >5 Yrs

Chart 13: Duration of Litigation for NPE Campaign Defendants Terminated in 2015 N = 4,723

Chart 14: Duration of Litigation for NPE Campaign Defendants Active at Year-end 2015 N = 3,820

42%

20% 17%

8% 6% 3% 4%

0–6 Mos 7–12 Mos 1–2 Yrs 2–3 Yrs 3–4 Yrs 4–5 Yrs >5 Yrs

35%

23%

13% 13% 6% 4% 5%

0–6 Mos 7–12 Mos 1–2 Yrs 2–3 Yrs 3–4 Yrs 4–5 Yrs >5 Yrs


Litigation Volume

Chart 17: New NPEs Filing Suit

ew NPEs filing suit*/ select distinct extract(year from mid.defenda

160 167 160 137 167 175

161 206 201 229 204 187

321

373 361 366 371 362

2010 2011 2012 2013 2014 2015

New NPEs Existing NPEs

2010 2011 2012 2013 2014 2015

New NPEsExisting NPEs

Chart 15: NPE Campaigns Filed in 2015 by NPE Type Chart 16: Total NPE Campaign Defendants Added in 2015 by NPE Type

83%

13%

3% 1%

96%

4% 0.6% 0.1%

PAE InventorUniversityNCE

PAE InventorUniversityNCE

Litigation Volume


s of patent infringement to compile the RPX data set. Investigations were counted b

6

21 14 9 7

49

48

22 32 33 33

55

69

36 41 40

36

2010 2011 2012 2013 2014 2015

NPE ITC Investigations

Operating Company ITC Investigations

Chart 19: Initiated NPE Investigations as Percent of Initiated ITC Patent Investigations

Chart 18: Total Initiated ITC Patent Investigations

ons ving allegations of patent infringement to compile the RPX data set

11%

30%

39%

22% 18%

8%

2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 20152010 2011 2012 2013 2014 2015

NPE ITC InvestigationsOperating Company ITC Investigations

ITC Activity Continues to DeclineNPE litigation in the International Trade Commission (ITC) continued to decline after a brief spike in 2011. NPEs accounted for only 8% of all investigations initiated in 2015, below their lowest previous share (11% in 2010). That said, the overall number of initiated investigations has remained relatively stable for the last four years, since most were brought by operating companies. Most likely, NPEs are continuing to seek more favorable venues.

Methodology Note:RPX reviewed all initiated Section 337 ITC investigations and identified those involving allegations of patent infringement to compile the RPX data set. Investigations were counted based on the year an investigation was initiated, and complaints that had not led to an investigation by the end of 2015 were not included in the data set.

The decrease in overall respondents compared to past reports reflects improvements to roll-up and classification of respondent entities as reported from EDIS data.


Litigation Volume

Chart 20: Total Respondents Added to ITC Investigations Chart 21: Total NPE ITC Respondents as Percent of Total ITC Respondents

16

162 122 52 71 29

242

241

106 129

203

104

258

403

228 181

274

133

2010 2011 2012 2013 2014 2015

NPE ITC Investigations

Operating Company ITC Investigations

2010 2011 2012 2013 2014 2015

NPE ITC InvestigationsOperating Company ITC Investigations

2010 2011 2012 2013 2014 2015

6%

40%

54%

29% 26% 22%

2010 2011 2012 2013 2014 2015

16

2,833

1,965

868

4,361 809

529

12 178 2,833

759

391

101 714

Petitions Pending Terminated Adverse Judgment

Joined Institution Decision

Pending Terminated Adverse Judgment Final Decision

Not Instituted

Instituted

Pre-Institution > Trial Phase >

Patent Validity Challenges

Chart 22: Status of Post-grant Petitions at Year-end 2015Note: Includes IPR and CBM

Petitions Pending Terminated AdverseJudgment

Joined InstitutionDecision

Pending Terminated AdverseJudgment

Final Decision

Pre-institution > Trial Phase >

Not Instituted

Instituted

Key 2015 Findings

PTAB Proceedings Begin to Mature

• Over 4,000 petitions for IPR or CBM review were filed from their inception (September 16, 2012) through the end of 2015. Filing rates from second quarter of 2014 onward remained relatively steady at roughly 400 – 500 petitions per quarter in total, suggesting that early popularity of these proceedings has begun to level off (Charts 22, 25, and 31).

• The PTAB issued only 714 final decisions on the merits through the end of 2015. More petitions had terminated (920)—the vast majority due to settlement—or were denied institution (868). Many petitions remained pending as of the end of 2015 (1,568)—(Chart 22).

Success Rates Have Declined

• The quarterly institution rate dropped from an early high of 92% in Q1 2013 to 67% in Q4 2015. Likewise, the quarterly final decision success rate fell from 78% in Q1 2014 to 53% of decisions ruling all challenged claims unpatentable (Charts 23 and 24).

• Relatively more final decisions (34%) than before are now reaching a mixed outcome: some claims are ruled unpatentable, while others survive (Chart 24).

PTAB vs. Litigation

• Eighty-three percent of patents in IPR were also litigated during the same period, yet the vast majority of litigations still do not involve any patent that is challenged in IPR or CBM (Charts 27 – 30, 33 – 35).


Some Claims InstitutedDenied


n chart:)

84% 79% 67% 62% 61%

49% 50% 57% 51% 47% 46% 50%

100%

8% 11%

12% 14% 15%

22% 19% 15%

17% 15% 14%

17%

8% 10% 21% 24% 23%

29% 31% 28% 31% 38% 40%

33%

Q4 2012

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

All Claims Instituted Some Claims Instituted Denied

= 1 49 73 86 120 223 245 283 308 339 318 381 7

Chart 23: Outcomes at InstitutionNote: Indicates percent of IPR and CBM institution decisions in which all, some, and none of the challenged claims were instituted for review. N indicates number of decisions.

All Claims Instituted

Q42012

Q12013

Q2 Q3 Q4 Q12014

Q2 Q3 Q4 Q12015

Q2 Q3 Q4

1 49 73 86 120 223 245 283 308 339 318 381 407N =


All Claims Survive

Chart 24: Outcomes at Final Written DecisionNote: Indicates percent of final written decisions in IPR and CBM in which all, some, or none of the claims challenged in the original petition were ruled unpatentable.

nual update in chart:)

100%

78% 69% 67% 70%

64% 56%

64% 53%

22%

9% 24%

22% 29%

31% 27%

34%

22% 10% 8% 7%

14% 9% 13%

Q4 2012

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

All Claims Unpatentable Some Claims Unpatentable All Claims Survive

N = 0 0 1 0 1 41 55 51 74 110 118 139 124

Some Claims UnpatentableAll Claims Unpatentable

Q42012

Q12013

Q2 Q3 Q4 Q12014

Q2 Q3 Q4 Q12015

Q2 Q3 Q4

0 0 1 0 1 41 55 51 74 110 118 139 124N =

100%




42 24 54 78 120

88

271

183 238

166 174 204 139 37 70

83

126

147

102

187

212

220

229

292 214

236

17

79 94

137

204

267

190

458

395

458

395

466

418

375

Q3 2012

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

Against NPE Patents

Against Operating Company Patents

Chart 25: Total IPR Petitions by Quarter

Q32012

Q4 Q12013

Q2 Q3 Q4 Q12014

Q2 Q3 Q4 Q12015

Q2 Q3 Q4

Against NPE PatentsAgainst Operating Company Patents



40 23 47 67 91 56

136 155 153 101

143 136 100 35 59

76 114

131

97

165 192 174

207

241

169 204

17

75 82 123

181 222

153

301

347 327

308

384

305 304

Q3 2012

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

NPE Patents

Operating Company Patents

Chart 26: Unique Patents Subjected to IPR Petition by Quarter

Q32012

Q4 Q12013

Q2 Q3 Q4 Q12014

Q2 Q3 Q4 Q12015

Q2 Q3 Q4

NPE PatentsOperating Company Patents



Chart 27: NPE Cases Filed Asserting Patents Challenged in IPR

Chart 29: Unique NPE Defendants Added in Assertions of Patents Challenged in IPR

Chart 28: Total NPE Campaign Defendants Added in Assertions of Patents Challenged in IPR

2012 in which the same patent was asserted.

NT IS CHALLENGED IN IPR */ SELECT DISTINCT extract(year from defendant_started)

R */ SELECT DISTINCT extract(year from defendant_started) as year, count(distinct ca

459 759 1,384

961 648

4,286 3,091

2,759

2,285 3,491

4,745

3,850 4,143

3,246

4,139

2011 2012 2013 2014 2015

At Least One Patent in IPR No Patents in IPR

)

TS ADDED TO NPE CASES WHERE AT PATENT CHALLENGED IN IPR*/ select distinct ext

345 542 894 681 515

2,586 2,028 1,706

1,495 2,173

2,931 2,570 2,600

2,176

2,688

2011 2012 2013 2014 2015


2011 2012 2013 2014 2015

te to a litigation filed in 2012 in which the same patent was asserted.

TH PATENTS CHALLENGED IN IPR */ -‐-‐CREATE TABLE OF DC CASES WHER

591 1,184 897

518

1,268

2,442

2,550

2,006 3,103 1,423

3,033

3,734

2,903

3,621

2011 2012 2013 2014 2015


2011 2012 2013 2014 2015

At Least One Patent in IPRNo Patents in IPR



2011 2012 2013 2014 2015

Methodology Note:Relationships are not limited in time. Thus, an IPR petition filed in 2015 might relate to a litigation filed in 2012 in which the same patent was asserted.



Table 1: Top Filers of IPR Petitions in 2015 Against Patents Owned by NPEs

Rank IPR Filer Total Petitions Against NPEs

Other Petitions

1 Apple 62 34

2 Samsung 32 23

3 Alphabet 27 0

4 LG Electronics 25 5

5 Toyota 24 1

6 Sony 20 7

7 Volkswagen 19 0

8 Ford 18 0

9 Unified Patents 17 0

9 Microsoft 17 3

Methodology Note:“Other Petitions” includes petitions filed against patents owned by operating companies.

Chart 30: Number of Patents Subject to IPR by Assertion Status

1 to present).

878

1,247

393

432

Patents In Litigation Patents Not in Litigation

Owned by NPE Owned by Operating Company

Patents in Litigation Patents Not in Litigation

Owned by NPEOwned by Operating Company

2125

Note:Across all years in which patents are eligible for IPR challenge (September 16, 2011 to present).


OWN OF UNIQUE CHALLENGED */ SELECT DISTINCT file_quarter, count (distinct case when po_npe = '1' then patent else null end) as total_unique_patents_

32 23 13 24

37 29 28 18 10 12

16 20

26 23 7 14 14

14 8 8 7 2

19 20

48 43 39 47 44 43 42

20 26

Q3 2012

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

Against NPE Patents


32 18 19

28 23 19 6

16 10 12

16

15 25 22 13

9 14

7 6 5 2

17 20

48

33 34 41

31 36

28 20 23

Q3 2012

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

NPE Patent Families

Operating Company Patent Families


Chart 31: Total CBM Petitions by Quarter

Chart 32: Total Unique Patents Subject to CBM Petition by Quarter

Q32012

Q4 Q12013

Q2 Q3 Q4 Q12014

Q2 Q3 Q4 Q12015

Q2 Q3 Q4

Q32012

Q4 Q12013

Q2 Q3 Q4 Q12014

Q2 Q3 Q4 Q12015

Q2 Q3 Q4

Against NPE Patents

Against NPE Patents





Chart 33: NPE Cases Filed Asserting Patents Subject to CBM Chart 34: Total NPE Campaign Defendants Added in Assertions of Patents Subject to CBM

to CBM te to a litigation filed in 2012 in which the same patent was asserted.

ENDANTS WHERE PATENT IS CHALLENGED IN CBM */ SELECT DISTINCT e

384 408

4,496 3,466 3,735

2,974 4,073

4,745

3,850 4,143

3,246

4,139

2011 2012 2013 2014 2015

At Least One Patent in CBM No Patents in CBM


TH PATENTS CHALLENGED IN CBM */ -‐-‐CREATE TABLE OF DC CASES WHE

337 325

1,391

2,696 3,409

2,667 3,558 1,423

3,033

3,734

2,903

3,621

2011 2012 2013 2014 2015


E

2011 2012 2013 2014 20152011 2012 2013 2014 2015

At Least One Patent in CBMNo Patents in CBM

Table 2: Top Filers of CBM Petitions in 2015 Against Patents Owned by NPEsChart 35: Unique NPE Defendants Added in Assertions of Patents Subject to CBM

Rank

Petitioner

Total CBM Petitions Against NPEs

Other Petitions

1 Apple 4 0

2 Alphabet 4 0

3 Acxiom 2 0

4 Walgreen 1 0

5 American Family Mutual Insurance

1 0

5 Expedia 1 0

5 TriZetto 1 0


TS ADDED TO NPE CASES WHERE AT PATENT CHALLENGED IN CBM*/ sele

335 375

2,705 2,235 2,225 1,921 2,633

2,931 2,570 2,600

2,176

2,688

2011 2012 2013 2014 2015


2011 2012 2013 2014 2015

Methodology Note (Charts 33 – 35):Relationships are not limited in time. Thus, a CBM petition filed in 2015 might relate to a litigation filed in 2012 in which the same patent was asserted.

Methodology Note:“Other Petitions” includes petitions filed against patents owned by operating companies.

Litigation Volume 25Venue

Key 2015 Findings

Eastern District of Texas Back on the RiseIn 2015, the Eastern District of Texas took its largest share of NPE volume (62.5% of defendants, 66% of cases) since at least 2009—significantly more than in 2014 (45%, 48%). Delaware remained in a distant second place (6.5%, 7%), but with a much lower share than it had in 2011 – 2014 (21% of defendants on average). The rest of NPE volume was spread throughout all other districts (Charts 36 and 37).

Defendants in, Defendants outFewer defendants were left in the Eastern District of Texas than started there in 2015, reflecting some transfers and a high number of terminations within a year of initiation.

Delaware, by contrast, still had a higher backlog than its additions by year-end, as it did in 2014. The two districts combined accounted for 63% of the total backlog remaining at the end of 2015 (Chart 38).

Declaratory Judgments The Northern Districts of California and Illinois took the largest share of declaratory judgments (DJs). All of the llinois DJs were filed in the Sockeye Licensing campaign, while California’s were more evenly distributed (Charts 39 and 40).


Venue

Chart 36: Share of Total NPE Campaign Defendants Added by Venue

35%

42%

53%

55%

38%

35%

39%

35%

38%

39%

51%

39%

62%

64%

5%

7%

5%

8%

15%

23%

15%

24%

29%

20%

21%

17%

7%

6%

60%

51%

42%

37%

47%

42%

46%

41%

34%

41%

29%

44%

31%

30%

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

2009

20

10

2011

20

12

2013

20

14

2015

E.D. Tex. D. Del. All Others

D. Del All OthersE.D. Texas

2009 1H

2H

2010 1H

2H

2011 1H

2H

2012 1H

2H

2013 1H

2H

2014 1H

2H

2015 1H

2H


66%

7%

4%

2%

2%

2%

2%

2%

1%

12%

(2,386)

(250)

(132)

(89)

(84)

(73)

(72)

(61)

(45)

(429)

Texas Eastern

Delaware

California Central

Florida Southern

Texas Northern

California Northern

New York Southern

Illinois Northern

Texas Western

All Others

Venue

Chart 37: NPE Cases Filed in 2015 by District Court VenueNote: N = 3,621

Texas Eastern

Delaware

California Central

Florida Southern

Texas Northern

California Northern

New York Southern

Illinois Northern

Texas Western

All Others

(2,386)

(250)

(132)

(89)

(84)

(73)

(72)

(61)

(45)

(429)


Venue

Chart 38: Top Venues by Campaign Defendants Added in 2015 and Active at Year-end

rict Court*/ select distinct court, number_of_campaign_defs / number_of_campaigns as average_defs_per_camp, number_of_campaigns from ( select distin

2,589

271

154

98

95

90

75

67

56

55

54

49

486

1,901

515

153

76

37

55

86

106

40

75

81

66

629

Texas Eastern

Delaware

California Central

New York Southern

Florida Southern

Texas Northern

California Northern

Illinois Northern

Virginia Eastern

New Jersey

Texas Western

Florida Middle

All Others

Added in 2015

Active at Year-End

Active at Year-endAdded in 2015

Texas Eastern

Delaware

California Central

New York Southern

Florida Southern

Texas Northern

California Northern

Illinois Northern

Virginia Eastern

New Jersey

Texas Western

Florida Middle

All Others


Venue

Chart 39: Total Venues by Declaratory Judgment NPE Cases Filed in 2015 Chart 40: District Courts with Largest Ratio of Declaratory Judgment NPE Cases to Total NPE Cases Filed in 2015

Methodology Note: Ratio reflects the number of NPE declaratory judgment cases to the total of all NPE cases filed in that district in 2015, including both infringement cases and declaratory judgment cases. (N) denotes the numerator (number of DJs filed). Districts with fewer than five NPE cases filed in 2015 are excluded.

14%

14%

10%

8%

5%

5%

5%

4%

4%

30%

(11)

(11)

(8)

(6)

(4)

(4)

(4)

(3)

(3)

(23)

California Northern

Illinois Northern

Delaware

Texas Western

California Central

Michigan Eastern

New York Southern

Texas Eastern

Florida Southern

All Others

o of Declaratory Judgment NPE Cases to Total NPE Cases Filed in 2015*/ select distinct court, (1.00 * djs)/(1.00 * all_cases) as shar

20%

15%

14%

13%

13%

12%

11%

7%

7%

1%

(4)

(11)

(1)

(11)

(1)

(6)

(1)

(2)

(1)

(39)

Michigan Eastern

Illinois Northern

Washington Western

California Northern

Minnesota

Texas Western

Oregon

California Southern

Massachusetts

All Others

California Northern

Illinois Northern

Delaware

Texas Western

California Central

Michigan Eastern

New York Southern

Texas Eastern

Florida Southern

All Others

Michigan Eastern

Illinois Northern

Washington Western

California Northern

Minnesota

Texas Western

Oregon

California Southern

Massachusetts

All Others

30Sector and Revenue Analysis

Key 2015 Findings

E-commerce and Software; Consumer Electronics and PCs; Consumer ProductsNPEs targeted a broad range of sectors but mostly focused on the same top three sectors from 2014, together accounting for 58% of all defendants added (Chart 41).

High Revenue, High FrequencyIn 2015, NPEs continued to hit high-revenue companies much more frequently than those with lower annual revenue. Most high-revenue defendants were again hit by litigations in the Mobile Communications and Devices and Consumer Electronics sectors (Chart 42). This frequency trend has continued for the last six years, roughly tracking the rise and fall of overall litigation volume (Chart 46).

Most Defendants Were Private CompaniesNearly three fourths of the unique NPE defendants added, and over one half of the total NPE defendants added in 2015, were private companies (Chart 43). These “unique” and “total” shares differ because private companies tended to get sued less frequently (1.5x) than public companies (3.2x), and so make up a lesser portion of the total volume (Chart 45).

Most Defendants Were Smaller CompaniesIn 2015, companies with less than $100 million in revenue again accounted for over 60% of the unique NPE defendants added and over 40% of total NPE defendants added (Chart 44). Defendants with over $50 billion in revenue are consistently sued six to eight times as frequently as defendants with less than $100 million in revenue (Chart 46).

Chart 41: Total NPE Campaign Defendants Added in 2015 by Sector

company may be included as an “NPE campaign defendant added in multiple sectors” to the extent it was in campaigns classified in multiple secto36%

12%

10%

9%

6%

6%

6%

4%

3%

2%

2%

2%

3%

E-commerce and Software

Consumer Electronics and PCs

Consumer Products

Networking

Financial Services

Media Content and Distribution

Mobile Communications and Devices

Automotive

Semiconductors

Medical

Logistics

Industrial

Other

E-commerce and Software

Consumer Electronics and PCs

Consumer Products

Networking

Financial Services

Media Content and Distribution

Mobile Communications and Devices

Automotive

Semiconductors

Medical

Logistics

Industrial

Other

Methodology Note:“Total NPE campaign defendants added by sector” is based on the classification of the relevant campaign. Accordingly, a company may be included as an “NPE campaign defendant added in multiple sectors” to the extent that its campaign was classified in multiple sectors.


0

10

20

30

40

50

60

50 500 5,000 50,000 500,000

NPE

Cam

paig

ns in

201

5

Reported Revenue ($M in Log Scale)

Sector and Revenue Analysis

Chart 42: NPE Campaign Frequency per Company by Sector and Revenue

NPE

Cam

paig

ns in

201

5

Reported Revenue ($M in Log Scale)

Methodology Note:Companies were categorized based on the most common RPX sector of cases they were added to in 2015. Revenue is based on data from third-party providers and is for annual results available at year-end 2015 (typically 2014 results).

50

40

30

20

10

0

Mobile Communications and Devices OtherConsumer Electronics and PCsNetworking E-commerce and Software

50 500 5,000 50,000 500,000

Samsung

AppleAT&TAmazon

Microsoft

Wal-Mart

LG Electronics

ZTE

Verizon

HTCDell

Hewlett-Packard

Sony

ASUSTek

PanasonicBest Buy

Target

ToshibaAcer

Sharp General MotorsAlphabetSOFTBANK

HuaweiLenovo

BlackBerryTCL Corporation

Cisco


Private 74%

Private 57%

Public 26%

Public 43%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Unique Defendants Total Campaign Defendants


Chart 43: Share of NPE Campaign Defendants Added in 2015 by Ownership Type

<$100M 63%

<$100M 44%

$100M–1B 11%

$100M–1B 10%

$1B–10B 16%

$1B–10B 19%

$10B–50B 8%

$10B–50B 14%

>$50B 3%

>$50B 13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Unique Defendants Total Campaign Defendants

Chart 44: Share of NPE Campaign Defendants Added in 2015 by Company Revenue

Unique Defendants Total Campaign Defendants Unique Defendants Total Campaign Defendants


2015 ChangeYears Private

2010 8%2011 20%2012 0%2013 0%2014 0%

No methodology change.

NPE Cases Per Unique Defendant by 2015 ChangeYears <$100M

2010 -‐4%2011 -‐2%2012 -‐7%2013 3%2014 -‐3%

No methodology change.

1.1 1.1 1.1 1.1 1.2 1.3

1.2 1.4 1.3 1.4 1.3 1.4

1.9 2.2

2.0 2.0 1.8 1.9

2.7

3.5

3.0

3.6

2.7 2.8

7.4

8.6

7.9

8.6

7.4 7.6

2010 2011 2012 2013 2014 2015

<$100M $100M–1B $1B–10B $10B–50B >$50B


Chart 45: NPE Campaigns per Unique Defendant by Ownership Type Chart 46: NPE Campaigns per Unique Defendant by Company Revenue

Public Private

2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015

< $100M$100M–1B $1B–10B $10B–50B> $50B

Methodology Note: Revenue is based on data from third-party providers and is for annual results available at time of report (typically 2014 results). Determination of ownership type is also based on data from third-party providers. Ownership type may change across time as companies switch from private to public and vice versa.

For Summary of Findi

1.4 1.7

1.4 1.4 1.4 1.5

2.5

3.2 2.8

3 2.7

3.2

2010 2011 2012 2013 2014 2015

Private Public

34Top Plaintiffs and Defendants

Key 2015 Findings

Unsurprising TargetsIn 2015, NPEs continued to favor 13 of the top 15 defendants from last year. Google (now Alphabet), T-Mobile, and Sprint fell off, while Lenovo, ASUSTek, and Huawei replaced them at the bottom of the list (Table 3). Fourteen of the top defendants by new campaigns were also the top defendants by active campaigns at year-end, with Toshiba replacing ZTE as the 15th (Table 4). (Note: the difference in total counts from 2014 in this and other tables reflects a shift to campaign methodology where stated. See Methodology for details.)

New and Usual SuspectsAs Tables 5 and 6 demonstrate, familiar names (Wi-LAN, Rothschild, Empire, Acacia) were among the most prolific litigating NPEs in 2015, by both breadth and depth. Acacia remained the top NPE for the last five years by campaign volume, with IPNav trailing a close second (Tables 7 and 8).

Big HittersWhile the top ten NPEs are only 2.7% of all NPEs filing suit in 2015 (Chart 17), they accounted for 15% and 19%, respectively, of all NPE campaigns filed and defendants added (Chart 47).

Table 3: Top 15 NPE Defendants by New Campaigns Table 4: Top 15 NPE Campaign Defendants by Active Status at Year-end

Rank Defendant 2015 2014

1 Samsung 45 33

2 Apple 28 30

3 Amazon 27 28

3 AT&T 27 23


6 Microsoft 24 28

6 Hewlett-Packard 24 18

8 Dell 22 14

8 ZTE 22 12

10 Sony 21 24

10 HTC 21 21

12 Verizon 19 26

12 Lenovo 19 24

12 ASUSTek 19 10

15 Huawei 18 12

Year Totals 4,139 3,246

Rank Defendant 2015 2014

1 Samsung 60 62

2 Apple 54 60

3 AT&T 40 48


5 Lenovo 34 46

6 Alphabet 32 53

7 Microsoft 30 44

7 Verizon 30 43

9 Amazon 29 53

10 Sony 28 44

10 HTC 28 37

12 ZTE 26 23

13 Hewlett-Packard 22 26

14 Huawei 21 28

15 Dell 18 27



Top Plaintiffs and Defendants

Rank NPE 2015 Active at YE

1 Wi-LAN Inc. 13 18

2 Monument Patent Holdings, LLC 8 8

3 Empire IP LLC 5 13

4 Acacia Research Corporation 4 28

4 General Patent Corporation 4 6

4 Positron Intellectual Property, LLC 4 4

7 Leigh M. Rothschild 3 5

7 Blackbird Tech LLC 3 3

9 Intellectual Ventures LLC 2 8

9 Uniloc Corporation Pty Limited 2 7

9 Visual Memory LLC 2 2

Year Totals 331

Rank Defendant Past 5 Years 2015 Only



3 Wi-LAN Inc. 25 13

4 IPNav 21 0

5 Walker Innovation Inc. 17 0

6 Marathon Patent Group, Inc. 15 0

7 General Patent Corporation 10 4

7 Monument Patent Holdings, LLC 10 8

9 The Medici Portfolio LLC 9 0

10 Uniloc Corporation Pty Limited 8 2

Year Totals 1,749 331

Rank Defendant Past 5 Years 2015 Only


2 IPNav 696 96


4 Marathon Patent Group, Inc. 510 3

5 Arrivalstar SA 397 15

6 PJC Logistics LLC 260 0

7 eDekka LLC 254 101

8 Select Retrieval LLC 202 0

9 Walker Innovation Inc. 191 0



Rank NPE 2015 Active at YE


2 eDekka LLC 101 30

3 IPNav 96 64


5 Wi-LAN Inc. 77 68

6 CryptoPeak Solutions, LLC 65 48

6 Shipping & Transit, LLC 65 17

8 Hawk Technology Systems LLC 59 11

9 Olivistar LLC 57 8



Table 6: Top Ten NPEs by Total Campaign Defendants Added in 2015Table 5: Top Ten NPEs by Campaigns Filed in 2015

Table 7: Top Ten NPEs by Campaigns Filed 2011 – 2015 Table 8: Top Ten NPEs by Total Campaign Defendants Added 2011 – 2015


Top Plaintiffs and Defendants

Chart 47: Share of NPE Filings from Top Ten NPEs in 2015 Chart 48: Share of NPE Filings from Serial NPEs in 2015

ns, including campaigns before 2014.

Top Ten 15%

Top Ten 19%

All Others 85%

All Others 81%

Campaigns Filed Campaign Defendants Added

Serial NPEs 19%

Serial NPEs 18%

All Others 81%

All Others 82%

Cases Filed Campaign Defendants Added Campaigns Filed Campaign Defendants Added Campaigns Filed Campaign Defendants Added

Methodology Note: The top ten NPEs are those listed in Table 5 (campaigns) and Table 6 (defendants).

Methodology Note: Serial NPEs are NPEs that RPX has identified as having initiated three or more assertion campaigns, including campaigns before 2014.

Litigation Volume 37Patent Details

Key 2015 Findings

Top Class CodesNPE-asserted patents most commonly had USPC codes associated with software. Once again, the top five class codes accounted for 31% of unique patents asserted by NPEs. Class 705 saw the greatest drop in defendants sued compared to 2014 (Table 9).

Still Many Boom-era NPE PatentsOnce again, most patents asserted by NPEs in 2015 (53%) claimed priority to the period from 1995 to 2000, a time of exceptional growth for Internet technology companies. The mean and median priority dates of patents asserted by NPEs have continued to inch forward from year to year. Patents asserted by operating companies, on the other hand, are much more evenly distributed across history (Chart 49 and Table 10).

Methodology Note:Orange up/down indicators reflect the top five and bottom five class codes by year-over-year increase and decrease, respectively, in each metric. Those that did not make the list of the top 30 by overall volume appear specially below.

“Common RPX Categories” are the most common RPX sector classifications for cases in which patents of the applicable USPC code were asserted in 2015. “Defendants” are those added to campaigns with the listed patent type asserted.


Patent Details

Table 9: USPC Classes of Patents Most Frequently Asserted by NPEs in 2015

Unique Patents DefendantsUSPC Code Common RPX Categories 2015 Total YOY 2015 Total YOY

Top Classes (ten or more asserted patents) 880

705: Data Processing: Financial, Business Practice, Management, or Cost/Price Determination

E-commerce and Software 88 -19 301 -66

709: Electrical Computers and Digital Processing Systems: Multicomputer Data Transferring

E-commerce and Software 88 -13 425 74

455: Telecommunications E-commerce and Software, Networking 73 -16 286 93

370: Multiplex Communications Networking 71 0 222 75

340: Communications: Electrical Consumer Electronics and PCs, E-commerce and Software

69 -3 231 -1

715: Data Processing: Presentation Processing of Document, Operator Interface Processing, and Screen Saver Display Processing

E-commerce and Software 37 6 268 150

375: Pulse or Digital Communications Media Content and Distribution, Mobile Communications and Devices

33 -20 79 14

345: Computer Graphics Processing and Selective Visual Display Systems

Consumer Electronics and PCs, Financial Services 31 -3 112 28

348: Television Consumer Electronics and PCs 28 3 205 100

358: Facsimile and Static Presentation Processing E-commerce and Software 27 6 128 88

713: Electrical Computers and Digital Processing Systems: Support E-commerce and Software, Networking 25 -21 278 209

701: Data Processing: Vehicles, Navigation, and Relative Location E-commerce and Software 23 -5 194 45

379: Telephonic Communications Mobile Communications and Devices, Networking 22 -16 84 -62

514: Drug, Bio-affecting and Body Treating Compositions Biotech and Pharma 22 6 47 18

257: Active Solid-state Devices (e.g. transistors, solid-state diodes) Semiconductors 19 -1 22 10

362: Illumination Consumer Products 19 -8 38 -5

725: Interactive Video Distribution Systems Media Content and Distribution, Networking 18 0 49 18


Patent Details

Unique Patents DefendantsUSPC Code Common RPX Categories 2015 Total YOY 2015 Total YOY

710: Electrical Computers and Digital Data Processing Systems: Input/Output

Consumer Products, Networking 16 -2 52 -22

235: Registers Media Content and Distribution 15 -33 100 57

726: Information Security E-commerce and Software 15 -6 89 34

365: Static Information Storage and Retrieval Semiconductors 14 1 19 9

435: Chemistry: Molecular Biology and Microbiology Biotech and Pharma 14 -4 8 1

704: Data Processing: Speech Signal Processing, Linguistics, Language Translation, and Audio Compression/Decompression

Semiconductors 14 -16 30 8

600: Surgery Medical 13 11 27 7

382: Image Analysis Consumer Electronics and PCs, Mobile Communications and Devices

12 0 45 13

707: Data Processing: Database and File Management or Data Structures

E-commerce and Software 12 -6 94 29

438: Semiconductor Device Manufacturing: Process Semiconductors 11 6 8 -6

D25: Building Units and Construction Elements Consumer Products 11 11 2 2

424: Drug, Bio-affecting and Body Treating Compositions Biotech and Pharma 10 -4 12 -5

463: Amusement Devices: Games E-commerce and Software 10 -4 28 -58

52: Static Structures (e.g. buildings) Consumer Products 10 8 13 11

702: Data Processing: Measuring, Calibrating, or Testing E-commerce and Software 10 -3 13 -55

Other Classes (128 in total) 373

482: Exercise Devices Consumer Products 9 9 21 21

356: Optics: Measuring and Testing Mobile Communications and Devices 9 7 15 14

711: Electrical Computers and Digital Processing Systems: Memory Consumer Electronics and PCs 7 -19 13 -49


48

12

27 30

81

136

82

110 106

183

71 76

57

42 45 41

53

38

20

31

12 5 5

1 0

32

9

30

39 33

89

127 134

167

150

159 151

138 146

118

127

93

132

90 92

75

51

34

4 0

<=1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

NPE Operating Company

<= 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Patent Details

Chart 49: Priority Date of Asserted Patents in 2015

Table 10: Mean / Median Priority Date of Asserted Patents by Year of Assertion

2010 2011 2012 2013 2014 2015

Mean Year NPE 1997 1997 1998 1998 1999 2000Operating Company 1998 1999 2000 2001 2002 2003

Median Year NPE 1997 1997 1998 1998 1999 2000Operating Company 1999 2000 2000 2002 2002 2002

Methodology Note: Priority date is based on filing date of earliest-filed family member.

Operating CompanyNPE


Litigation Volume

Patent Marketplace Report

629 689

830

660 676

7,43

7

7,871

11,37

0

11,46

2

11,61

5

138 145

185 161 149

173 201

166

222 222 225

161 160

208

146 146

206 184 172

114

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

1,643 1,754

2,354

1,686 2,156

1,880 2,269

1,566

2,343

3,316 3,638

2,073 1,917

2,644

4,210

2,691 2,267

3,579 3,237

2,532

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

Portfolios Offered to RPX Steady

Chart 1: Portfolios OfferedA steady volume of portfolios has been offered to RPX year to year, with a slight bump in 2013 (20% over the five-year average).

Chart 2: Patents OfferedThe number of patents offered to RPX in the last three years has markedly increased (+50%).

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

2011 2012 2013 2014 2015

2011 2012 2013 2014 2015

7,437 7,871

11,370 11,462 11,615

Quarterly

Quarterly

Annually

Annually



2 2 3

4 4

12 11

14

17 17

2 2 4

2 3 2 3 2 2 2 3 4 4 4 5 4 4 4 6

4

12 12 13 10

14 11 11

9 11

15 16 13 12 13

29

18

11

19 19 22

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

Bigger Average Portfolio Size Steady

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4 2011 2012 2013 2014 2015Quarterly Annually

Chart 3: Average Patent Portfolio Sizes by Offer DatePatent portfolio size has increased somewhat in the last few years. This is also reflected in the charts above that show steady portfolio offerings and higher patent offerings. That said, large individual offerings can move the overall average significantly, especially quarter to quarter.

Average Patent Portfolio SizeMedian Patent Portfolio Size


Broad Mix of Primary Market Sectors on Open Market

44.5 34.2

45.4 45.8

30.1

18.6

21.4

16.6 11.0

14.7

5.8

9.1

13.9

9.2

15.8

9.9 13.2

9.6

12.1

6.6

11.5 13.3 8.3

13.7

16.1

5.5 4.1 3.5

4.4

3.3 4.3 4.8 9.5

2011 2012 2013 2014 2015

16.9 17.7 21.6 22.7 14.6

21.5 18.4 16.5 17.3

18.0

25.3 28.2 28.0 24.4

23.4

11.8 11.6 10.6 12.1

11.2

12.4 11.5 9.2 12.6

12.3

6.4 7.5 7.0 4.7

7.8

3.0 4.9 3.5 9.9

2011 2012 2013 2014 2015

Larger Semiconductor Portfolios Offered on Open Market

Chart 4: Portfolios Offered by Primary Market Sector (Percent)RPX continues to see a mix of technology offerings, about a quarter of which come from E-commerce and Software.

Chart 5: Patents Offered by Primary Market Sector (Percent)Because Semiconductor portfolio offerings are larger on average, offerings at the patent level are more concentrated in that sector.

2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

Semiconductors E-commerce and Software Consumer Electronics and PCs Financial Services

Mobile Communications and Devices Networking Media Content and Distribution Other


Initial Seller Asking Price: Volatile Average, Steady Median

Methodology Note:Note that a small number of portfolios with large asking prices can drive up the average in a given quarter. Approximately 20% of all portfolios offered to RPX do not have an initial seller asking price. Portfolios without pricing guidance are not taken into account for analyses of initial seller asking prices.

Chart 6: Average Initial Seller Asking Price per Portfolio Offered ($000)Average initial seller asking prices have fluctuated quarter-to-quarter and year-to-year. Median prices have varied between $900 thousand and $2 million, but were more stable in 2015.

Average Initial Asking PriceMedian Initial Asking Price

$1,000

$1,50

0

$1,50

0

$4,034

$3,789

$3,833

2013 2014 2015

182 189 178 140 138 183 124 130 172 151 140 93 689 575 556Number of Portfolios

Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4 2013 2014 2015Quarterly Annually

$1,000 $900 $1,325 $1,500

$2,000

$1,000

$1,500 $1,100

$1,500 $1,400 $1,375 $1,500

$3,918

$5,834

$3,047 $3,011

$2,799 $3,181

$5,346

$4,212

$2,705

$6,035

$3,288 $3,163

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

2

$4,034

$1,000

$3,789

$1,500 $1,500

$3,833


Even Mix of Asking Prices, but Most Under $2 Million

Chart 7: Mix of Portfolios Offered in 2013 – 2015 by Initial Seller Asking Price ($000)Most portfolios offered had an initial asking price under $2 million.

19% (<$500)

26% ($500-1,000 )

13% ($1,000-2,000 )

24% ($2,000-5,000 )

18% (>$5,000)

Asking Price per Portfolio, $000


Table 8: Top Ten Highest Volume Brokers—Last Three YearsThe top ten brokers by volume of portfolios offered accounted for 26% of all portfolios offered in the last three years.

Table 9: Top Ten Highest Volume Brokers—Last 12 MonthsThe top ten brokers last year accounted for 25% of all portfolios offered in 2015.

Broker Portfolios Offered

Iceberg Innovation 108

IPInvestments Group 78

Global IP Law Group, LLC 62

IPOfferings LLC 62

Tynax Inc. 51

Adapt IP Ventures, LLC 50

Munich Innovation Group GmbH 44

Quinn Pacific 44

ICAP-oceantomo 39

Red Chalk Group 33

Top Ten Broker Total 571

Overall Total 2166

Broker Portfolios Offered

Iceberg Innovation 24

IPInvestments Group 24

IPOfferings LLC 20

Global IP Law Group, LLC 18

Adapt IP Ventures, LLC 17

Reliance Capital 16

Munich Innovation Group GmbH 14

IP Pioneer Group 13

TechInsights 13

Quinn Pacific 12

Top Ten Broker Total 171

Overall Total 676


Year 2002: Average Priority of Portfolios Offered in 2015

Chart 10: Average Priority Year of Offered Portfolios by Market SectorThe priority years of offered patents continued to inch forward in 2015. Most portfolios offered continue to come from the late 1990s or early 2000s, though RPX typically sees older patents from some technology sectors (Semiconductor) than from others (Media).

Methodology Note:For each portfolio, the minimum priority year of patents offered is considered. For example, if Portfolio A had five patents with Priority Years 2000, 2001, 2002, 2003, and 2004, the portfolio priority year is 2000.

Market Sector 2011 2012 2013 2014 2015

Consumer Electronics and PCs 2000 2000 2000 2002 2002

E-commerce and Software 2001 2002 2002 2002 2003

Financial Services 2001 2002 2002 2002 2003

Media Content and Distribution 1999 2001 2003 2003 2003

Mobile Communications and Devices 1999 2000 2001 2003 2003

Networking 2000 2000 2000 1999 2001

Semiconductors 1997 1999 1999 1999 2001

Overall Average 1999 2000 2001 2001 2002

Overall Median 2000 2000 2000 2001 2003

Year Portfolio Offered


55 61 94

53 41 56 63 51 56 51 42 31 23 28 8 7 8 5 2 2

83 84

91

108 108

117 138

115

166 171 183

130 137

180

138 139

198 179 170

112

138 145

185 161

149 173

201

166

222 222 225

161 160

208

146 146

206 184

172

114

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

Transacted Portfolios (Record Date of Feb. 16, 2016 or earlier)

Chart 11: Transacted Portfolios by Offer Date2013 shows a lower transaction rate (22%) than 2011 – 2012 (31 – 42%). However, transactions typically take at least six months to a year to complete, and many take longer (Charts 14 and 15). This might affect some straggling 2013 offerings, though most of those would have transacted by now, if at all.

2014 – 2015 offerings, on the other hand, are more recent; their ostensibly low transaction rate is largely an artifact of the lag for marketing, transaction, and recordation, rather than the signal of a broad decrease in patent transaction activity.

263 211 180 66 17

365 476 651

595 662

629 689

830

660 676

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015


40 42 51 33 28 32 31 31 25 23 19 19 14 13 5 5 4 3 1 2 42 31 22 10 3

Percent Transacted Portfolios

Non-transacted Portfolios Transacted Portfolios (Record date of 02.16.16 or earlier)


Transacted Patents

Non-transacted Patents Transacted Patents (Record date of 02.16.16 or earlier)

Chart 12: Transacted Patents by Offer DatePatent offerings followed a similar transaction pattern: a decrease in transaction rate for 2013, though some offers might be straggling.

As for portfolios, lower transaction rates for recent patent-level offerings likely result from the lag for marketing, transaction, and recordation rather than from a broad decrease in patent transaction activity.

Methodology Note:Transacted patents are generally attributed to a specific portfolio offering, although they might appear in multiple offerings.

7,437 7,871

11,370

11,462

11,615

1,643 1,754

2,354

1,686

2,156 1,880

2,269

1,566

2,343

3,316 3,638

2,073 1,917

2,644

4,210

2,691

2,267

3,579 3,237

2,532

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

Transacted Patents (Record Date of Feb. 16, 2016 or earlier)

Non-transacted Patents

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015


7,437

2,433

36384 445 448

7,871

1,711

869377 107

11,370

1,438

913

256496 47

11,462

719

267632

222 93

11,615

433

393 117328 331


Chart 13: Average Initial Seller Asking Prices, Transacted PortfoliosThe average initial seller asking prices of transacted portfolios dipped in the latter half of 2014 and in 2015. But again, 2014 and 2015 offerings are too recent for the transaction rate to have fully matured. Future reports will likely show movement in these averages.

Methodology Note:Due to small N, we do not report initial asking prices by quarter for transacted portfolios that were offered in 2015.

l Seller Asking Price (Non-‐Transacted)

$3,904

$3,797

$3,848

$4,444

$3,720

$3,18

5

2013 2014 2015

0

$4,160 $5,522

$2,960 $2,727 $2,474

$3,231 $5,291

$4,348

$2,656

$6,107

$3,309 $3,198

$3,312

$6,778

$3,368 $4,099

$4,513

$2,866

$6,264

$1,408

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

Q12013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4 2013 2014 2015

$4,444

$3,904

$3,797

$3,720

$3,848

$3,185

Quarterly Annually

52 130

47 142

38 140

29 111

22 116

25 158

7 117

6 124

166

147

139

91

166 523

60 515

13 543

TransactedNon-trans

TransactedNon-trans

Average Asking Price Transacted Portfolios Average Asking Price Non-transacted Portfolios


Aggregate Transaction Latency of Portfolios: Six Months to One Year

dation (in Days)

on to Record)

57

34

78

55 39 35

52 49

72 74

40 41 39 36 39

18

46 49

16 0

254

183

206

275

227 223 235

275 266

209

252

153 158

246

207

107

226 209

168

110

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

Quarter Offered to RPX

Chart 14: Average Elapsed Times from Portfolio Offering to Execution to Recordation (in Days)Portfolios offered in 2011 – 2013 took an average of 230 days to transact. The average decreased in more recent years, but the decrease reflects the shorter passage of time since more recent portfolios were offered.

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

Overall Average: 209 Days

Overall Average: 43 Days

Average Time from Offer Date to Execution Date Average Time from Execution Date to Record Date

Quarter Offered to RPX


d Time Before 2014 Report (June 30, 2014)

0

1

2

3

4

5

6

7

Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul

Max Elapsed Time Before 2015 Report (March 11, 2016) Transacted Portfolio Max Elapsed Time Before 2014 Report (June 30, 2014)

Chart 15: Elapsed Time from Portfolio Offering to ExecutionSeventy-nine percent of transacted portfolios were transacted in under one year, and 52% were transacted within six months of being offered to RPX.

In more recent years, the analysis window, by nature, can observe only faster transactions. Thus, this year’s analysis shows more transactions from 2012 – 2014 than were reflected in last year’s report. The graph illustrates both analysis windows—last year’s and this year’s—to show which transactions were newly observed.

Max Elapsed Time Before 2015 Report (March 11, 2016)

Max Elapsed Time Before 2014 Report (June 30, 2014)

Transacted Portfolio

Jan 2010

Jul Jan 2011

Jul Jan 2012

Jul Jan 2013

Jul Jan 2014

Jul Jan 2015

Jul

7

6

5

4

3

2

1

0

Year

s


Portfolio Transaction Latency by Sector

Chart 16: Average Elapsed Time from Date Offered to RPX Until Execution Date (in Days)Again, most transactions take six months to one year to complete. Transaction latency overall does not vary greatly from year to year, though it can vary by sector within a given year.

Market Sector 2011 2012 2013 2014 2015

Consumer Electronics and PCs 278 260 235 146 274

E-commerce and Software 217 223 237 189 232

Financial Services 240 356 191 383 214

Media Content and Distribution 212 218 219 134 92

Mobile Communications and Devices 242 251 273 144 120

Networking 268 227 182 147 221

Semiconductors 162 221 199 245 177

Other 240 389 242 62 196

Overall Average 225 240 227 196 201

Overall Median 147 169 196 156 177



Chart 17: Portfolios Contributing to NPE Campaigns by Offer DateSince 2011, a total of 212 unique NPE Campaigns affecting 2,423 campaign defendants have come from portfolios observed among open market offerings. Note that an additional latency between transaction date and assertion date accounts for lower litigation rates in more recent years.

Methodology Note:RPX considers a portfolio to result in an NPE Campaign if at least one patent offered in a portfolio is asserted. Please note that a single portfolio can result in multiple campaigns and that a single campaign can include asserted patents from multiple portfolios.

61 58

46

32

18

17

19

9

16

12

16 15 15 15

12 13

6 7

11

6

8

11

0

5

2

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015


Market Sector 2011 2012 2013 2014 2015 Overall

Unique NPE Campaigns from Portfolios 65 65 51 32 18 212

Total Unique Patents from Portfolios 107 117 84 55 37 377

Unique Defendants 404 448 359 256 163 1,137

Total Defendants 619 699 546 344 215 2,423



Life of the Average Transacted Patent Litigated by NPE

Chart 18: Average Time to Transaction (Execution Date) and First AssertionOn average, open market portfolios asserted by NPEs take a little less than a year to transact, and another year to be asserted in litigation. When dissected by assertion year, the average latency appears to show that more recent NPE assertions took longer to transact and then litigate. However, this is likely an artifact of the observation: RPX’s visibility into market offerings has increased in the last few years, and so our view into older assertions (e.g. 2011) is necessarily biased toward offerings with shorter latencies between offering, transaction, and assertion.

Methodology Note:RPX looked at 326 unique patents that resulted in 132 unique campaigns that met the following criteria:• offered to RPX in the open market;• transacted to an NPE; and• litigated after the transaction date with a first file date in the year illustrated.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Portfolio Offer Date

315 Days 327 Days

Portfolio Transaction to NPE

First Case in NPE Campaign Filed

Average Life of a Patent, Including Priority Year

Average Time to Transaction (Execution Date) and First Assertion

C D

A

A

A

A

A

B

B

B

B

B

D

D

D

D

D

C

C

C

C

C

B

B

A: Patent Priority Year B: Portfolio Offer Date C: Portfolio Transaction to NPE D: First Case in NPE Campaign Filed


106

122

179

150

99

2011 2012 2013 2014 2015

3,309

2,688

5,164 5,246

3,495

2011 2012 2013 2014 2015

131

22

14

37 33

26 26

37 33

38

59

46

36 39

56

30 25

30 26 26

17

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

684 780

1,004 841 827

613 722

526 609

1,695

2,110

750 875

1,385

2,331

655 753

876

1,475

391

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

Semiconductor Portfolios Offered to RPX

Chart 19: Portfolios Offered

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

2011 2012 2013 2014 2015

2011 2012 2013 2014 2015

Quarterly

Quarterly

Annually

Annually

Average: 33

Average: 995

Average: 131

Average: 3,980

Chart 20: Patents Offered

57Sector Views


Summary Statistics

Chart 21: Portfolios Transacted000000000000000

13 8

24

10 8 5 12 8 6 11 9 7 5

11 3 2 2 1

9 6

13

23 18 21

25 25 32

48

37 29 34

45

27 23 28 25 26

17

22

14

37 33

26 26

37 33

38

59

46

36 39

56

30 25

30 26 26

17

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

55 33 33 21 3

51 89

146

129

96

106 122

179

150

99

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3w Q4 Q1 2014

Q2 Q3 Q4 Q1 2015


2011 2012 2013 2014 2015

Average Patents per Portfolio Offered 31 22 29 35 35

Median Portfolio Size 12 6 8 9 16

Percent of Offered Portfolios Transacted 52 28 18 14 3

Average Elapsed Time from Offering to Transaction (Days) 162 221 199 245 177

Average Priority Date of Offered Portfolios (Year) 1997 1999 1999 1999 2001

Average Initial Seller Asking Price per Portfolio Offered ($000s) $2,775 $4,685 $4,866 $3,833 $3,295

Average Initial Seller Asking Price per Patent Offered ($000s) $313 $753 $456 $515 $495

Median Initial Seller Asking Price per Portfolio Offered ($000s) $2,000 $1,800 $1,700 $2,000 $2,000

Median Initial Seller Asking Price per Patent Offered ($000s) $280 $250 $150 $165 $129


Semiconductor Transaction Metrics


135 127

137

114 122

2011 2012 2013 2014 2015

127

21

39

48

27 28

34 36

29

38 39

26

34

28 27 31

28

36

25

43

18

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

1585

182

568 539

94

608

485

379

215

659

495

418

319

225 226

329

480 506

433

576

189

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

1,383

1,687

1,891

1,260

1,704

2011 2012 2013 2014 2015



Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

2011 2012 2013 2014 2015

2011 2012 2013 2014 2015

Quarterly

Quarterly

Annually

Annually

Average: 32

Average: 396

Average: 127

Average: 1,585

Mobile Communications and Devices Portfolios Offered to RPX


3

13 21

11 5

11 13 9

15 9

5 7 4 2 1 1 2

18

26

27

16 23

23 23

20

23 30

21

27

24 25 30 27

34

25

43

18

21

39

48

27 28

34 36

29

38 39

26

34

28 27 31

28

36

25

43

18

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

48 38 36

8 2

87 89 101

106 120

135 127

137

114 122

Chart 24: Portfolios Transacted

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3w Q4 Q1 2014

Q2 Q3 Q4 Q1 2015


Summary Statistics

2011 2012 2013 2014 2015








Median Initial Seller Asking Price per Portfolio Offered ($000s) $1,000 $2,000 $2,000 $1,675 $1,500



Mobile Communications and Devices Transaction Metrics


159

194

232

161 158

2011 2012 2013 2014 2015

429

716

1,576

1,058

1,831

2011 2012 2013 2014 2015

181

40 40 40 39 40

48

57

49

77

45

77

33 39

49 43

30

54

46

29 29

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

108 120 109 92 107 144

254 211

508

131

371

566

173 251

456

178

286

1,046

300

199

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4



Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

2011 2012 2013 2014 2015

2011 2012 2013 2014 2015

Quarterly

Quarterly

Annually

Annually

Average: 281

Average: 181

Average: 1,122

Average: 45

E-commerce and Software Portfolios Offered to RPX


21 17 18 12 11 15 17 13 14 16 13

7 7 5 2 1 2 1 1

19 23 22 27 29

33 40

36

63

29

64

26 32

44 41

29

52 45

29 28

40 40 40 39 40

48

57

49

77

45

77

33 39

49 43

30

54

46

29 29

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

68 56 50 15 4

91 138

182

146 154

159

194

232

161 158


Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3w Q4 Q1 2014

Q2 Q3 Q4 Q1 2015


Summary Statistics

2011 2012 2013 2014 2015







Average Initial Seller Asking Price per Patent Offered ($000s) $2,335 $1,411 $983 $886 $747

Median Initial Seller Asking Price per Portfolio Offered ($000s) $700 $1,250 $850 $925 $913



E-commerce and Software Transaction Metrics


74 80

88

80 76

2011 2012 2013 2014 2015

733

1,042 1,087

1,391

769

2011 2012 2013 2014 2015

17 18 20 19

15

21

27

17

27

12

25 24

14

29

16

21

14

25 25

12

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

203

127

291

112 130

464

342

106

213

317 348

209 180

324

388

499

92

328

230

119

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4



Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

2011 2012 2013 2014 2015

2011 2012 2013 2014 2015

Quarterly

Quarterly

Annually

Annually

Average: 20

Average: 80

Average: 251

Average: 1,004

Networking Portfolios Offered to RPX


28 26 25 9 3

46 54 63

71 73

74 80

88 80 76

2 8 10 8 5 7 10 4

9 2 8 6 3 4 1 1 1 2

15 10

10 11 10

14

17

13

18

10

17 18

11

25

15 20 14

24 23

12

17 18 20 19

15

21

27

17

27

12

25 24

14

29

16

21

14

25 25

12

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4


Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3w Q4 Q1 2014

Q2 Q3 Q4 Q1 2015


Summary Statistics

2011 2012 2013 2014 2015








Median Initial Seller Asking Price per Portfolio Offered ($000s) $883 $1,625 $1,250 $1,500 $1,000



Networking Portfolios Offered to RPX


78 79 76

83 83

2011 2012 2013 2014 2015

23

17 17

21 20 20

15

24

20

27

18

11

19

26

18 20

33

24

12 14

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4


Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015


Average: 20

Average: 80

856

1,050 940

1,567

1,874

2011 2012 2013 2014 2015

144 101 129

482

318

73

323 336

217

428

234

61

277 249

683

358 308

261

134

1,171

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4


Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015


Average: 314

Average: 1,257

Consumer Electronics and PCs Portfolios Offered to RPX


12 11 8 6 4 6 1

13

5 7 1 1 4 2 2

11

6 9 15

16 14

14

11

15

20

17

11

18

22

18 18

31

24

12 14

23

17 17

21 20 20

15

24

20

27

18

11

19

26

18 20

33

24

12 14

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

37 24

13 7 2

41 55

63 76 81

78 79 76 83 83


Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3w Q4 Q1 2014

Q2 Q3 Q4 Q1 2015



Summary Statistics

2011 2012 2013 2014 2015






Average Initial Seller Asking Price per Portfolio Offered ($000s) $613 $2,941 $3,923 $1,799 $2,795

Average Initial Seller Asking Price per Patent Offered ($000s) $473 $672 $1,549 $768 $517

Median Initial Seller Asking Price per Portfolio Offered ($000s) $600 $975 $775 $775 $1,450



Consumer Electronics and PCs Transaction Metrics


40

52

58

31

53

2011 2012 2013 2014 2015

411

326

394

245

510

2011 2012 2013 2014 2015

4

10

15

11 11

15 15

11 10

25

14

9

12

8

2

9

22

9

12 10

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

201

39

132

39 40

65 53

168

71

203

56 64

42 53

4

146

208

24

64

214

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4



Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

2011 2012 2013 2014 2015

2011 2012 2013 2014 2015

Quarterly

Quarterly

Annually

Annually

Average: 94

Average: 47

Average: 377

Average: 12

Media Content and Distribution Portfolios Offered to RPX


2 3

9

4 4

9 6

4 5 4 4 3 1 1 1 2

7

6

7 7

6 9

7 5

21

10

6 11 7

2

9

22

9 12 9 4

10

15

11 11

15 15

11 10

25

14

9

12

8

2

9

22

9

12 10

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

18 23

16 2 1

22

29 42

29

52

40

52

58

31

53


Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3w Q4 Q1 2014

Q2 Q3 Q4 Q1 2015


Summary Statistics

2011 2012 2013 2014 2015







Average Initial Seller Asking Price per Patent Offered ($000s) $1,377 $2,058 $559 $1,029 $767

Median Initial Seller Asking Price per Portfolio Offered ($000s) $975 $1,500 $1,500 $2,000 $1,500



Media Content and Distribution Transaction Metrics


19

16

19 18 18

2011 2012 2013 2014 2015

249

27

64

148

328

2011 2012 2013 2014 2015

7

4

3

5

4

5

6

1

3

4

8

4

6 6

2

4 4

6

5

3

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

115

9

110

15 5 10 11

1 17 9

21 17

109

11 9 19 22

243

44

19

Q1 2011

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4



Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3 Q4 Q1 2014

Q2 Q3 Q4 Q1 2015

Q2 Q3 Q4

2011 2012 2013 2014 2015

2011 2012 2013 2014 2015

Quarterly

Quarterly

Annually

Annually

Average: 5

Average: 41

Average: 18

Average: 163

Financial Services Portfolios Offered to RPX


2 2 1

3

1 1 1 1 1 1 1 1

5

4 1

4 1

4 6

1

2 4

7

3

5 5

1 4 4

5

5

3

7

4

3

5

4

5

6

1

3

4

8

4

6 6

2

4 4

6

5

3

Q1 2011

Q2 Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Q3

Q4

Q1 2015

Q2

Q3

Q4

5 4 3 3 1

14 12

16 15 17

19

16

19 18 18


Q1 2011

Q2 Q3 Q4 Q1 2012

Q2 Q3 Q4 Q1 2013

Q2 Q3w Q4 Q1 2014

Q2 Q3 Q4 Q1 2015



Summary Statistics

2011 2012 2013 2014 2015






Average Initial Seller Asking Price per Portfolio Offered ($000s) — $1,775 $2,847 $1,439 $2,283

Average Initial Seller Asking Price per Patent Offered ($000s) — $1,250 $1,000 $1,000 $515

Median Initial Seller Asking Price per Portfolio Offered ($000s) — $1,250 $1,000 $1,000 $900

Median Initial Seller Asking Price per Patent Offered ($000s) — $1,000 $500 $325 $250


Financial Services Transaction Metrics

NPE Cost Report

Charts and Highlights 72

4.6

6.4 6.9 7.8 8.2

7.4

2010 2011 2012 2013 2014 2015

Settlement or Judgment Cost

Legal Cost

Chart 1: Total Estimated Direct NPE Cost Per Year ($B)

NPEs Cost the Industry $7.4 Billion in 2015

RPX estimates that NPEs cost operating companies $7.4 billion in 2015. This figure is projected based on reported legal and settlement or judgment costs related to NPE assertions and litigation, and the total annual volume of NPE litigation. As more companies participate in this study, the quality of the sample (and thus, the projection) improves.

NPE cost estimates are lower this year, both in 2015 and historically. This is unsurprising: our sample has expanded, but also, new legal tools (Alice, IPRs) are giving defendants more effective means to combat low-quality assertions rather than settle at a nuisance payment. That said, the more credible assertions are less vulnerable to such attacks, and thus, the higher end of the market remains a persistent threat.

Methodology Note: The estimated total direct cost to industry of NPEs is a combination of legal cost (incurred during the case), settlement or judgment cost (payment to the plaintiff, if any), and non-litigation cost. Total legal costs to industry are estimated by calculating an average daily litigation cost from all clean resolved survey data, and multiplying that average by the total number of days of all NPE litigation occurring in a given year on a per-NPE-campaign-defendant basis. (A daily average is used to account for legal costs that naturally vary by case length.)Total settlement-or-judgment costs to industry are estimated by calculating an average settlement/judgment cost per case from all clean resolved survey data submitted, and multiplying the average by the total number of defendant terminations from NPE campaigns occurring in a given year.

Averages were not segregated by time window due to small sample size and non-uniform participation across time. This methodology was applied separately within each of four separate revenue tiers for participants/defendants ($0 – 100M, $100M – 1B, $1B – 10B, $10B+) to account for differences in the scale of litigation against small versus large companies. The resulting total litigation cost estimate was increased by the estimated amount of non-litigation cost in order to reach the total. Non-litigation cost was estimated by calculating the ratio of participants’ litigation cost to their non-litigation cost, where reported, and scaling up the total accordingly; non-litigation cost contributes approximately 30% of the total estimate.

N = 1,520 resolved litigations

2010 2011 2012 2013 2014 2015

Legal CostSettlement or Judgment Cost

73RPX Corporation | 2015 NPE Cost Report

69%

16%

15%

Chart 2: Components of Reported Direct NPE Cost To-date

Litigation Remains the Primary Expense of Dealing with NPEs

Although litigation is the most visible evidence of NPE activity, it is not the only NPE-related direct cost. Chart 2 breaks down NPE costs between litigation and non-litigation activity. The latter includes the cost of dealing with non-litigation assertions (e.g. demand letters) and other patent activity related to NPEs.

Litigation remains the largest portion of direct NPE costs. That said, other costs are significant, especially for larger companies; they tend to spend relatively more on non-litigation assertions and validity challenges.

Participants are increasingly filing validity challenges in tandem with litigation. For some participants, those costs would be included in the total cost of a litigation matter. Other companies track validity challenges as a separate cost. Where unclear, we conservatively assume that reported litigation costs already include the cost of related validity challenges, and do not separately add the cost of the challenge to the total cost. Thus, to a small extent, we may be underestimating that total.

Soft costs such as employee distraction,customer uncertainty, and product workarounds are not quantified inthis analysis.

Methodology Note: Includes the costs from both resolved and active litigations and assertions. Excludes companies that did not report non-litigation costs.

N = 78 companies

AssertionOther

Legal


In All but the Most Expensive Cases, Legal Costs Exceed Settlements

One of the primary costs to operating companies of all NPE activity is the cost of mounting a legal defense against NPE suits. Legal costs are high but grow somewhat predictably with the length and significance of the suit, while settlements vary from $0 to the hundreds of millions. Thus, legal defense cost is generally a more significant portion of total cost in less expensive suits, although cost ratios vary significantly among the suits reported in each category.

Chart 3 illustrates the distribution of total resolution costs between legal costs and settlement or judgment costs. For example, for suits costing between $100 thousand and $1 million to resolve, 57% of that cost was legal and 43% was settlement or judgment payments to NPEs.

Methodology Note: Based on resolution costs of reported NPE litigations. Excludes litigations with substantial indemnification, RPX involvement, or that were resolved at zero direct cost. Legal cost includes outside counsel (lead, local, and re-exam), experts, discovery, prior art searching, jury consultants, graphics, and other related costs. Excludes in-house legal costs. Settlement and judgment costs include the estimated present value of running royalties.

N = 201 companies, 2,125 resolved litigations

Chart 3: Proportion of Legal and Resolution Cost by Total Case Cost

93%

59% 57% 51%

37%

12%

7%

41% 43% 49%

63%

88%


234 367 882 504 107 31N =

0–$10K $10–100K $100K–1M $1M–10M $10M–50M $50M+


Chart 4B: Mean Resolution Cost for Reported NPE Suits, Excluding Cases > $10M ($M)

Chart 4C: Median Resolution Costs for Reported NPE Suits by Sector ($M)

Chart 4A: Mean Resolution Cost for Reported NPE Suits By Sector ($M)

More Expensive Suits Reported in Certain Technology Areas

NPE suits in some market sectors appearto result in higher total costs than in other sectors; however, the difference can be largely attributed to a few high-cost suits in those market sectors.

Chart 4A illustrates the mean total cost of resolution for reported NPE suits segmented by market sector. The categories refer to the accused products in the case, not necessarily the company’s primary market sector.

Because of the large variability of reported costs, a small number of exceptionally expensive suits skew the mean total costs upward.

To adjust for this, Chart 4B illustrates the same mean cost after excluding those cases having total costs greater than $10 million. Chart 4C shows the median cost of resolution for reported NPE suits.

Methodology Note: Based on reported cost of resolved NPE litigations. Excludes litigations with substantial indemnification, RPX involvement, or that were resolved at zero direct cost. Legal cost includes outside counsel (lead, local, and re-exam), experts, discovery, prior art searching, jury consultants, graphics, and other related costs. Excludes in-house legal costs. Settlement and judgment costs include the estimated present value of running royalties. Median costs cannot be split between legal and settlement.


lvement, or that were resolved at zero direct cost. Legal cost includes outside c

2.1 2.1 2.2 2.4

6.0

11.5 0.9 1.3 0.8 1.3 1.2 1.3

0.37 0.60 0.30 0.54 0.63 0.66




Litigation Costs Multiply as Parties Approach Trial

Average legal and settlement costs naturally increase as a case progresses, even doubling or tripling at key events in the litigation sequence.

Chart 5A illustrates the average costs for litigations that ended at the event shown. This gives a sense of what the incremental cost would be of pushing the litigation forward another stage before settling or terminating. For example, litigations that ended after a claim construction order, on average, cost $4.2 million. That number is considerably higher than the $3.1 million average for litigations ending after a Rule 26 conference, the previous key event. Total costs triple for cases that went to trial instead of ending at summary judgment.

Chart 5B illustrates that the average cost of a litigation reaching a particular event, but not necessarily ending there. (All cases are included in the “Complaint Filed” category and, from there, N decreases.)

This gives a sense of what the expected cost of a litigation might be after reaching a particular event, without knowing when it will end. Litigations that went at least as far as claim construction cost an average of $5.5 million as compared to an average of $3 million for litigations that went at least as far as the answer. This analysis should interest a defendant that has reached an event but does not know when a litigation might resolve. Defendants can look to these data for guidance about average future costs based on what past defendants have incurred.

Chart 5C illustrates that reaching a claim construction order markedly increases the average cost. Costs were nearly three times as much in litigations with claim construction orders ($5.5 million versus $2 million).

Note that not all cases follow this precise sequence. For examples, some cases reach summary judgment before a claim construction order issues.

Methodology Note: Analysis excludes litigations with substantial indemnification or RPX involvement. Legal cost includes outside counsel (lead, local and re-exam), experts, discovery, prior art searching, jury consultants, graphics, and other related costs. Excludes in-house legal costs.



Chart 5B: Mean Resolution Costs for Reported NPE Suits That Reached at Least the Given Stage ($M)

Chart 5C: Mean Resolution Costs for Suits with vs. without a Claim Construction Order ($M)

Chart 5A: Mean Resolution Costs for Reported NPE Suits That End at a Given Stage ($M)

0.8 0.7 1.1

2.0 2.0 2.4

7.1

0.3 0.5 0.6 1.1

2.2 2.8

9.5


1.4 1.5 1.7 2.3 2.5

3.4

7.1

1.0 1.1 1.3 1.7

3.0

4.0

9.5


1.2

0.8

2.5

3.0

Cases Without Claim Construction Order

(N = 1,334)

Cases with Claim Construction Order

(N = 139)




Complaint Filed

Complaint Served

Answer Filed

Rule 26 Scheduling

Conf.

Claim Constr. Order

Summary Judgment

Order

Trial Complaint Filed

Complaint Served

Answer Filed

Rule 26 Scheduling

Conf.

Claim Constr. Order

Summary Judgment

Order

Trial

Cases without Claim Contruction Order

Cases with Claim Construction Order

165 326 555 228 79 95 25 1,460 1,161 954 304 139 114 25

1,334 139

N = N =

N =

Chart 6: Range of Costs per IPR Petition (Cumulative, by Stage)

Wide Range of Costs to File IPRs

Chart 6 illustrates the median cost of an IPR petition that has reached the stage indicated, along with the variability in reported costs. Variability is indicated by illustrating the 10th and 90th percentiles of reported data. (For example, 90% of petitions reaching final decision were reported at costs less than $720 thousand.) In short, IPR petition costs are generally in

the six figures: $200 thousand on the low end, and $700 thousand on the high end, for those that reach a final decision. Much (40 – 60%) of that total cost is incurred in the first six months between filing the petition and institution. The range of costs to file a petition is narrower ($75 thousand to $250 thousand).

Methodology Note: Represents total cumulative costs (expert, legal, and filing) to a petitioner for a petition terminated or still pending at or after the indicated stage. Includes individual petitions and petitions filed within clusters. Clustered petitions are reported at the latest stage reached by any petition in the cluster. Excludes costs affected by party sharing.

N = 118 petitions

PTAB Costs

etitions filed within clusters. Clustered petitions are reported at the latest stage reached by any petition in the cl

10th %ile

90th %ile

$108

$154

$250

$0

$100

$200

$300

$400

$500

$600

$700

$800

Filed Instituted Decided

Thou

sand

s $U

SD T

hous

ands

800

700

600

500

400

300

200

100

0

78


ge is based on the latest stage reached by any petition in the campaign. Note that IPRs relating to a li

$133 $167

$340

$329

$579

$722

$0

$100

$200

$300

$400

$500

$600

$700

$800

l d d d d

Thou

sand

s

IPR Defense Strategy Often Requires Multiple Petitions

Chart 7 shows the average cumulative cost of petitions related to the same litigation campaign, both the per-petition cost and the total campaign cost. While individual petitions might be cheaper when filed as part of a single campaign, a full campaign is typically two to three times more expensive on average than a

solo petition reaching the same stage (Compare to Chart 6). Note that the average total cost of an IPR campaign reaching final decision is approximately equal to the most expensive of the individual petitions reported (90th percentile, Chart 6).

Methodology Note: An IPR “campaign” includes reported costs of all IPR petitions and clusters related to the same litigation campaign. IPR campaign stage is based on the latest stage reached by any petition in the campaign. Note that IPRs relating to a litigation campaign can be a mixture of individual petitions and clusters of petitions. Excludes costs affected by party sharing.

N = 40 campaigns, 109 petitions

Chart 7: Average Cost of an IPR Campaign

$USD

Tho

usan

ds

Per PetitionPer IPR Campaign

800

700

600

500

400

300

200

100

0

2.5 3.5 2.1Average Petitions per Campaign:


Over 80% of IPR Costs Go to Counsel

Chart 16 shows the ratio of the reported cost types for the petitions. Unsurprisingly, most of the cost is legal fees. Since filing fees are relatively fixed, they naturally comprise a slightly more significant share of the total in preliminary stages (12%) than in the final stage (5%).

Methodology Note: Includes individual petitions with separately reported fees to counsel, experts, and the PTO (for filing) at various stages. Excludes costs affected by party sharing or petition clustering. Ratio shown is the average of ratios at each stage (i.e. unweighted by sample size per stage).

N = 72 petitions

Chart 16: Ratio of IPR Petition Costs

rted fees to counsel, experts, and the PTO (for filing) at various stages

d sharing costs with another party. Frequency is shown among the r

84%

6%

10%

Cou

Exp

Filin

ExpertsFiling

Counsel

Methodology

RPX strives to continuously improve the accuracy and scope of its data and may make minor changes to methodology and underlying data presented in future analyses and reports. In addition, certain aspects of our methodology—such as the treatment of severances and consolidations, the identification of transactions based on recorded assignments—may result in slight changes as time passes.

General Methodologies

NPE Definition For the purposes of this report the following are considered NPEs:

1. Patent assertion entities (PAEs): entities believed to earn revenue predominantly through asserting patents

2. Universities and research institutions

3. Individual inventors

4. Non-competing entities (NCEs): operating companies asserting patents outside their areas of products or services

NPE Identification RPX identifies NPEs through a manual review process performed by experienced employees with sophisticated knowledge of the patent industry.

The process includes, among other things, searching for evidence of operating or patent monetization activities on the Internet including company websites; reviewing complaints, with a focus on accused products and allegations regarding products and/ or services sold by the patent owner; considering the outside counsel employed by the entity (e.g. whether outside counsel has a history of representing NPEs); reviewing public filings; reviewing corporate disclosure statements filed in litigation; and soliciting market intelligence from patent professionals.

While there are elements of subjectivity in this approach, we believe that the process is robust based on feedback from other patent professionals.

83RPX Corporation | 2015 Methodology

NPE Roll-up RPX’s proprietary litigation database rolls up certain related NPEs to a single NPE entity. RPX has manually identified these relationships by, among other things, reviewing corporate disclosures, patent assignment records, and RPX market intelligence. For example, Acacia has numerous subsidiaries that RPX has identified. These entities are all represented as Acacia in this report’s analyses concerning the most prolific NPEs.

Corporate Families RPX has developed a proprietary database of corporate families. All entities in a corporate family are generally treated as a single unique entity. Portfolio companies owned by private equity firms are a notable exception; they are treated as independent entities. To the extent multiple members of a corporate family are defendants in a lawsuit, RPX counts those entities as a single defendant. Corporate families may change over time. For example, M&A activity may result in consolidation of entities.

Cases (Cases Filed, Total Defendants Added, and Unique Defendants Added)

“Cases filed” refers to filed actions. A single case filed may include multiple defendants. The date for a case filed is the date that it was originally filed.

“Total defendants added” refers to the total number of case/defendant pairings added for a given criterion. New filings, as well as amended complaints that add a defendant, are taken into account in total defendants added.

“Unique defendants added” refers to the total number of entities that have been added as a defendant in a case (via original or amended complaint) for a given criterion. For example, if Company A has been added in seven cases in 2013, it still counts as one unique defendant added in 2013.

The date for determining total defendants added and unique defendants added is the date that a defendant was added to a case. This date may differ from the date the case was originally filed. For example, defendants added in amended complaints may be bucketed in a different time period than the period that applies for the case filed.

“NPE cases filed”, “total NPE defendants added”, and “unique NPE defendants added” have the same meaning as the above terms but are limited to cases filed by NPEs.

Campaigns (Campaign, New Campaigns Filed, Total Campaign Defendants, and Unique Campaign Defendants)

“Campaign” refers to all cases filed by the same plaintiff (inclusive of all members in the corporate family), where each case has at least one patent or family member of a patent in common with another case in the campaign.

“Campaigns filed” refers to unique campaigns. The date for a campaign filed is the filing date of the first case filed in the campaign. For example, if a campaign includes ten cases, there will be only one new campaign filed; the filing date for the campaign is established by the filing date of the first case filed in the campaign.

“Total campaign defendants added” refers to the total number of campaign/defendant pairings for a given criterion.

“Unique campaign defendants added” refers to the total number of entities that have been added in a campaign for a given criterion.

The date for determining total campaign defendants added and unique campaign defendants added is the date a defendant was first added to a campaign.

“NPE campaigns filed”, “total NPE campaign defendants added”, and “unique NPE campaign defendants added” have the same meaning as the above terms but are limited to campaigns filed by NPEs.

Market Sector Classifications RPX has created a proprietary list of market sectors. RPX manually categorizes each case filed into a market sector based on a review of the accused products, defendants, and asserted patents. In certain portions of this report, defendants are also classified into an RPX market sector. Classification of defendants is based on the type of NPE litigation that the defendant appears in most often. In certain portions of this report, portfolios are also classified into an RPX market sector.


Litigation Report

Litigation Data Set This report uses data from the RPX database as of Q1 2016. These data will be affected by the lag time between when cases are filed and when PACER makes case information available to the public. Thus, future analyses may shift, also due in part to any subsequent transfers, severances, and consolidations of cases from 2015 or earlier.

First-time Defendants First-time defendants are calculated on a normalized defendant basis based on the minimum defendant start date in a litigation.

Transfers, Severances, and Consolidations RPX takes into account transfers, severances, and consolidations as follows:

• When a case is transferred, RPX counts the original action and the new action as a single case filed. RPX considers the filing date of the original action to be the case filing date.

• When several cases are consolidated, RPX counts the consolidation as one case filed but multiple total defendants added. RPX considers the filing date of the earliest-filed consolidated case to be the case filing date.

• When a case is severed into multiple cases, RPX counts multiple cases filed. RPX considers the filing date of the original case to be the filing date of each of the severed cases.

• Consolidations and severances may happen after the year of filing; in such circumstances, RPX’s count of the number of cases filed for the year of filing will change as described above.

Declaratory Judgment Actions Declaratory judgment actions are excluded unless otherwise expressly noted.

Inter Partes Review and Covered Business Method Review IdentificationRPX has reviewed for inclusion in this report all inter partes reviews (IPR) and Covered Business Method reviews (CBM) made available through the Patent Trial and Appeal Board’s Patent Review Processing System (PRPS) with case numbers starting with “IPR” or “CBM”.

IPR and CBM Status RPX has assigned a “status” to each IPR or CBM proceeding based a review of key documents filed on the PTAB’s PRPS database. Petitions are assigned to one of the following categories as of the date of the analysis:

• Pending: The proceeding remains active, either pre-institution or in trial (after an Institution Decision).

• Institution Decision (Instituted or Denied): The PTAB issued a decision whether or not to institute review based on the petition. Note that petitions “Instituted” may be instituted as to all or merely some of the claims challenged.

• Joined: The PTAB procedurally joined two or more petitions into a single trial proceeding pursuant to a motion for joinder. RPX only counts joined petitions once when reporting outcomes, unless otherwise noted.

• Terminated: The PTAB administratively terminated the proceeding (i.e. without reaching a final written decision). Termination may occur pre- or post-institution. Note that termination frequently occurs pursuant to a settlement between the parties.

• Adverse Judgment: The PTAB entered adverse judgment against the requesting party. Adverse judgment may be entered pre- or post-institution.

• Final Decision: The PTAB has issued a final written decision on the merits of the petition. The proceeding may be resolved, or awaiting the result of an appeal.

IPR and CBM DecisionsRPX reports outcomes for PTAB proceedings based on a review of PTAB Institution Decisions and Final Written Decisions that have been identified from the PTAB’s PRPS database of filings. RPX manually reviews the decisions and identifies the number of claims instituted for review (at Institution) or ruled unpatentable (at Final Written Decision).


Marketplace Report

Marketplace Data Set The data in this report are limited to RPX’s experience in the open market. RPX believes that as one of the largest patent buyers in the world, it is offered the vast majority of portfolios in the open market. However, RPX may not be offered a limited number of portfolios on the open market, and those portfolios are not reflected in the analyses in this report.

Exclusions This report excludes portfolios offered through certain auctions due to historically low transaction rates for those auctions. RPX believes that excluding those auctions provides better insight into offered portfolios that have a reasonable chance of transacting. However, this report may not provide as much insight into patent auctions with low historical transaction rates.

Portfolio “Portfolio” refers to a distinct patent portfolio offered to RPX. A portfolio may contain one or more patents. A group of patents is considered one portfolio when marketed together to RPX.

Specific patents may be offered to RPX as part of different portfolios at different times. Accordingly, some patents may be counted multiple times as part of more than one portfolio.

Patents For the purposes of this report, “patents” refers to US granted patents. While US applications and foreign patents and applications are often offered in portfolios, they are not taken into account in the charts and tables in this report.

Portfolio and Patent Offer Dates A portfolio’s offer date is the date that a particular portfolio is first offered to RPX. The patents in a particular portfolio will share the same offer date. Patents are sometimes offered in multiple portfolios before transacting. But generally, they will be attributed to one portfolio opportunity.

Portfolio Execution and Record Dates A portfolio’s execution/record date is the earliest execution/record date of a transacted patent in the portfolio.

Transactions RPX considers a portfolio to have transacted if at least one patent from the portfolio transacted with a recorded execution date after RPX was offered the portfolio; and the transaction was to a third party (i.e. not a transfer between members of the same corporate family).

RPX considers a patent to have transacted 1) if the patent transacted with a recorded execution date after RPX was offered the patent; and 2) the transaction was to a third party (i.e. not a transfer between members of the same corporate family).

Use of Offer Date for Analyses Unless otherwise noted, analyses in this report are based on offer dates of a portfolio. For example, if Portfolio A was offered to RPX in Q1 2010 and later transacted with an execution date of Q2 2012, the transaction would be mapped to Q1 2010 in Chart 11 (page 16).

USPTO Record Date Limitation Transaction data is based on assignments recorded with the USPTO as of February 16, 2016. Transactions that occurred but were not recorded by then are not reflected in this report.

Initial Seller Asking Prices Initial seller asking price is the initial pricing guidance given to RPX by the patent seller. If the initial guidance is a pricing range, RPX translated the range in a consistent way for the analyses in this report. For example, if a seller communicated an expectation of “mid-six figures”, RPX used an initial seller asking price of $500,000.

Please note the following:

• Initial seller asking prices will often not reflect the actual transaction price of a portfolio, which is usually confidential.

• Asking prices are often updated as discussions progress. But to ensure consistency, this report includes only the initial asking price.

• Approximately 20% of all portfolios offered to RPX do not have an initial seller asking price. Portfolios without pricing guidance are not taken into account for analyses of initial seller asking prices.


Cost Report

Cost Report Data SetBetween May and December 2015, RPX invited companies to participate in a survey of NPE-related costs. Approximately 234 companies have participated to date and submitted data in time for publication of this report. Participants include both RPX members and non-members.

Beginning in 2014, RPX also invited participants to contribute the costs of filing petitions for inter partes review (IPR) or covered business method review (CBM) before the Patent Trial and Appeal Board. So far, 12 companies have separately reported data for 141 petitions.

Type of Data Collected Participants provided various statistics pertaining to NPE-related costs from 2005 through 2015. RPX required companies to provide comprehensive statistics on all NPE litigation costs (with a few minor exceptions). Thus, new participants provide data not just for the reporting year, but also for historical NPE litigation costs.

Participants in the PTAB portion of the study were asked to report legal fees, expert fees, and filing fees separately for each petition they filed, as well as the petition’s current procedural stage and status (e.g. pending, terminated, decision reached). A minority of participants were unable to itemize their per-petition costs.

Anonymous Participation To ensure the anonymity of participant companies and their data, we do not provide a list of participants nor report most statistics according to company sectors.

Market SectorsNPE litigations were tagged with market sectors according to the accused product and patents-in-suit. Litigations can have more than one tag. Various statistics were then aggregated based on these tags. Statistics are not shared for segments having fewer than four companies or nine litigations.

“Clean” Resolved Litigations To provide a more accurate picture of NPE costs, we include resolution cost statistics on “clean” resolved litigations. “Clean” resolved litigations exclude active litigations, litigations with indemnification, or litigations in which RPX was involved.

Descriptive Statistics Note that tables reporting median or percentile costs are not additive. For example, the median value of the medians of each of two or more equal-sized groups is not equal to the median for the combined groups.

Litigations Ending at a Given Event RPX defines a litigation as ending at a given event if the litigation does not reach a subsequent event. For the purposes of this analysis, RPX considered only a subset of events and considered those events in the order that a litigation generally (although not always) progresses: complaint filed, complaint served, answer filed, Rule 26 scheduling conference, claim construction order, summary judgment order, and trial. For example, a litigation that reaches a Rule 26 scheduling conference but that does not reach a claim construction order, summary judgment order, or trial, is counted as ending at a Rule 26 scheduling conference.

Litigations Reaching a Given Event RPX defines a litigation as reaching a given event if the given event has occurred, regardless of what other events have also occurred. For example, a litigation that reached a Rule 26 scheduling conference, claim construction order, and summary judgment order counts as having reached each of those events.

PTAB Petition Costs by StageParticipants in the PTAB portion of the study were asked to report total cumulative costs for PTAB petitions as of the last stage reached in the proceeding, and to indicate whether the proceeding was active or resolved. Petitions were grouped into the following categories for this analysis:

• Filed: Petitions that were filed but have not been instituted. (Petitions might be pending, terminated pre-institution, or denied institution.)

• Instituted: Petitions that were instituted but have not reached a final written decision. (Petitions might be pending or terminated.) Intermediate stages include Patent Owner’s Response, Petitioner’s Reply, and Oral Hearing.

• Decided: Petitions that have reached a final written decision. (Petitions might be resolved, or pending an appeal.)

For petitions reported in groups (by “cluster” or “campaign”), costs are reported as of the last stage reached by any petition in the group, unless otherwise noted.

PTAB Petition Cost GroupingsSome participants reported PTAB petition costs by individual matter, while others report a single total cost for several matters as a group. RPX refers to the latter as “clusters” of petitions; generally, such petitions are related in subject matter and/or involve the same counsel or experts, and thus, likely exhibit cost savings over individually managed petitions.

Because PTAB petitions are often filed in tandem with litigation, RPX is able to group all PTAB petitions that relate to the same district court litigation campaign. RPX thus refers to a PTAB “campaign” as the group of all petitions that are filed against the patents asserted against the petitioner within the same litigation campaign. A PTAB “campaign” therefore might include multiple individual petitions and/or petition clusters.


About RPX

RPX Corporation (NASDAQ: RPXC) provides market- based and technology solutions to help corporate legal departments reduce the risk and costs associated with both patent litigation and legal discovery services.

Our patent risk management services address NPE (non-practicing entity) patent litigation. Members of the RPX client network pay an annual fee that is calculated based on their net operating incomes. We then use this aggregated capital to acquire potentially problematic patents and rights from the pre-litigation market and out of active litigations before they can become a costly problem for our clients. RPX promises never to litigate or assert the patent assets it purchases.

In addition to our defensive patent acquisition service, RPX also facilitates syndicated transactions that include contributions from participating clients in addition to their annual subscription fees. Similar to other acquisitions, these syndicated deals are designed to efficiently share resources and collectively reduce litigation risk. And we offer unique NPE litigation insurance, written on A rated paper and backed by a Lloyd’s underwriting syndicate. Further, RPX provides clients with in-depth industry data, market intelligence, and patent advisory services.

RPX subsidiary Inventus is a leading international discovery management provider focused on reducing the costs and risks associated with the discovery process through the effective use of technology solutions. Inventus has been providing litigation support services to corporate legal departments, law firms, and government agencies since 1991.

RPX has invested over $2 billion to acquire more than 15,000 US and international patent assets and rights, achieved nearly 950 litigation dismissals, and prevented more than 4,000 NPE litigations from occurring. Since our founding in 2008, we have saved our clients more than $3.2 billion in avoided NPE legal and settlement costs.

The RPX network comprises more than 250 clients in sectors including automotive, consumer electronics and personal computing, E-commerce and software, financial services, media content and distribution, mobile communications, networking, and semiconductors.

ContactsIf you have questions about this report, please email [email protected] or contact your Client Relations or Client Development professional at RPX.

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