Richard Lloyd

Given the tough monetisation climate, particularly in the US, new NPEs bursting onto the scene have been few and far between. However, one that has emerged in recent months is Longhorn IP, a Texas-based entity helmed by a couple of Acacia alumni, which has been slowly acquiring assets from ZTE, AMD and AsusTek since it launched in August last year.

It now has a portfolio of almost 300 patents worldwide split between three portfolios: Lone Star Silicon Innovations, focused on the semiconductor sector, and L2 Mobile Technologies and Ox Mobile Technologies, both of which are focused on wireless technology. After launching six separate lawsuits against alleged infringers of former AMD patents in its Lone Star portfolio, Longhorn announced earlier this week that it had reached its first agreement with SanDisk and its parent Western Digital, bringing an end to the litigation between the two sides.

The terms of that agreement are confidential and Longhorn’s statement revealing the news was brief, but I took it as an opportunity to speak to the NPE’s founders, Chris Dubuc, formerly a senior vice president at Acacia who before that did stints at WiLAN and Nortel, and Khaled Fekih-Romdhane, who was previously vice president of engineering at Acacia and before that was with Conversant and Intellectual Ventures.

This blog has been keeping a close eye on Longhorn’s progress in recent months, particularly in relation to the package of assets that it picked up earlier this year from ZTE. As we noted at the time, that deal stood out because the Chinese tech giant has not exactly been in the habit of transferring assets to third party monetisers. In total, Longhorn has almost 50 US, European and Chinese former ZTE assets which now form its Ox Mobile portfolio.  

In an effort to distinguish Longhorn from other NPEs Fekih-Romdhane was quick to point out the founders’ technical backgrounds (both have engineering degrees), in contrast to many other licensing executives who have typically forged legal careers before turning to monetisation. That doesn’t make them unique, but is part of their pitch when they’re looking to acquire assets.

It’s clear that the founders have learned from their previous experience in the NPE sector as they stressed that they were focused on keeping their operation lean, with a current permanent staff of just three, and their portfolio relatively small (thereby saving large maintenance fees). “We’ve been in the business for quite some time and have seen what works and what doesn’t,” Dubuc commented. “There’s money to be made [in this sector] you just need to know what to do and how to execute.”

Having picked up assets from Taiwan’s Asus and ZTE, Longhorn’s portfolio is not as dominated by US assets as many other NPEs. That is likely to become a hallmark of licensing businesses that survive the current shakeout in the industry with an emphasis on picking up not just US patents but more from Europe and China, in particular.

“We’re looking at a lot of different possible venues for asserting our patents,” Dubuc revealed. “We’re quite aware of what has been happening in the US and so we’re diversifying our approach, looking at portfolios with good worldwide coverage.” Although they are yet to launch their first lawsuit in China, Fekih-Romdhane disclosed that “it might be very soon that you see some actions taken to protect our IP rights” there. He added that Longhorn had retained Beijing East IP, the law firm that was recently revealed to be working with Dominion Harbor on monetising a portfolio of former Kodak patents.

Despite that focus on newer markets there’s no doubt that the US remains central to the NPE’s monetisation strategy. Its first half a dozen lawsuits against alleged infringers of patents in its Lone Star portfolio of former AMD assets were all filed in the Eastern District of Texas, although most of those are now subject to transfer motions following the Supreme Court’s decision in TC Heartland

As well as seeing challenges over venue, Longhorn is also facing a series of inter partes reviews questioning the validity of its patents, with eight filed in June by Micron Technology. The prospect of lengthy lawsuits thanks to IPRs means that most NPEs now need to have exceedingly deep pockets. Neither Dubuc or Fekih-Romdhane would comment on their sources of funding although the latter insisted that they are “well funded to pursue the opportunities we have under management”.

They also wouldn’t comment on how the deals with AMD, ZTE and Asus have been structured, but given current trends it would be surprising if those companies did not retain some interest in any licensing returns made by Longhorn. The tough assertion climate is throwing up plenty of obstacles to licensors, but it is also presenting significant opportunities to those looking to pick up assets.  

“The environment is more difficult in the US but at the same time it represents a great opportunity for us as we have access to portfolios that we wouldn’t have had in the past, at the top of the market,” remarked Dubuc. “A lot of NPEs are running for the exit and while we would like the pendulum to swing back towards patent owners, right now we’re doing pretty well in this market.”

Whether that run continues might have just as much to do with conditions in China and Europe than in the US. For a much smaller NPE market Longhorn’s strategy points to where the future lies for most.