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Patent portfolio investing is not new; it’s just appears to be something new for the mainstream media to write about. The concept of buying patents for defensive and offensive purposes has been a legitimate business warfare weapon for the last couple of hundred years.

It is a tragedy that Nortel’s assets are being sold off in pieces but this step in the bankruptcy process is a natural next step in this part of the business recovery cycle.

That all being said. Purchasing patents for business offensive purposes is a way to make money. Licensing is a tremendous way of generating cash for the patent owners. Intellectual Ventures and InterDigital have been around a long time and know how to monetize patents. Patent houses like Intellectual Ventures and InterDigital are capable of taking (for example) a thousand patents that by themselves have insignificant value but pooled together can force a company like Intel to pay a pile of royalties for chip related patents they own because of the enormous leverage companies like Intellectual ventures and InterDigital bring to the table.

RPX is a fairly new company to me. Defensive patent purchasing is an old tactic most technology companies employ to protect their core patents and business. However, RPX is invested in by technology companies and private investors who are seeking to pool their monies in order to ward off technology companies and patent houses like Intellectual Ventures and InterDigital. I am wondering how RPX makes its money if it’s a defensive patent purchaser. What I mean is RPX makes money from its investors by collecting fees for their service but how do the investors get a return on investment for putting money into RPX? How do RPX’s investors make money from RPX?

As for the Chinese technology companies getting involved in the process, all I can say this may help them clean up their image as technology patent pirates. As for other players in the LTE business, I would be watching the Chinese technology companies carefully; they are not stupid or slow to action.

Apple bidding for these patents is expected. I give Apple a lot of credit, the company is finally getting how the telecom technology business works. I still do not like putting vendors on pedestals and having them wag the carrier by the tail. However, I give Apple credit for stirring the creative minds in the industry. Apple has also gotten aggressive in defending its technology position by suing other technology companies for patent infringement. Yes, Apple certainly has gotten the hang of the telecom business.

If I were an investor, I would keep an eye on what these companies will be doing with the patents.