RPX has indicated that it is looking to target China in 2018 in response to continued drag on its core business in the US. On a quarterly call with analysts, CEO Marty Roberts, revealed that the company was focused on Chinese opportunities as one of three strategic initiatives designed to grow the business beyond its traditional core of NPE risk mitigation. On the call Roberts pointed to the significant progress made by the Chinese IP system, including the launch of three specialist IP courts in Beijing, Shanghai and Guangzhou.
In response to an analyst’s question he commented that the country's government is: “Trying to move itself from a manufacturing to an innovative economy and have put in place a number of intellectual property reforms that make it easier for companies to invest research money there and to expect that their IP rights will be respected by the government and enforceable in the courts.” He then added: “We’ve been looking at it for the last year and we expect in 2018 to put some more resources against it.”
Where exactly those resources might go is not clear. There is clearly increased interest from NPEs in bringing infringement lawsuits in China. Last year WiLAN brought a case against Sony in one of the first patent suits involving a foreign NPE, while Dominion Harbor and Longhorn IP have both formed partnerships with Beijing East IP as they seek to monetise assets in the country. But the degree to which there is appetite among local Chinese companies for a business offering protection against NPE lawsuits appears open to question - damages are low and there remain serious doubts as to whether domestic companies would ever prove to be fruitful NPE targets. Plus there is always the challenge of turning a profit in what remains a relatively embryonic IP market where businesses are not accustomed to paying for the kind of support services that have developed in the US.
To some extent RPX already offers its members overseas coverage as it typically acquires whole patent families, not just the US parts of them; establishing an on-the-ground presence, though, would represent a notable change of direction for the company. However, should China become the litigation hub that some expect, there may be a call among foreign businesses for greater defensive protection there. Alternatively, a global service tailored specifically for a Chinese clientele looking to secure freedom to operate in key jurisdictions including China might work - although pricing would be a major issue. As we have seen when it comes to royalties, Chinese companies are often insistent that the circumstances they face mean they should not be subject to the same charges that others have to pay.
This is not the first time that RPX has flagged its ambition to expand overseas. In 2015 former CEO John Amster told analysts that the company was keeping close tabs on Europe. At that time the prospect of NPE litigation shifting across the Atlantic, and to Germany in particular, appeared very real; and while that did happen to some extent, it has arguably not occurred at the kind of levels that some predicted. Plus Europe just doesn’t have the same volume of tech businesses that remain the core of RPX’s client base. But at a time when the traditional RPX business of reducing the risk its members face from NPE litigation in the US continues to slow, it is not surprising that the company is still looking overseas for growth.