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Delaware
(State or Other Jurisdiction of Incorporation or Organization)
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One Market Plaza, Suite 1100
San Francisco, California 94105
(Address of Principal Executive Offices and Zip Code)
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26-2990113
(I.R.S. Employer Identification No.)
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(866) 779-7641
(Registrant's telephone number, including area code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.0001 Par Value
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The NASDAQ Stock Market LLC
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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Item 1.
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Business.
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•
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Patents Provide a Limited Monopoly
– In exchange for public disclosure of an invention, a patent owner is granted a monopoly over the use of a patented invention for a specified period, typically 20 years from the filing of the patent application.
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•
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Patents Confer Negative Rights
– Patent rights are negative rights, meaning that they generally enable a patent owner to exclude others from commercial exploitation of a patented invention, regardless of whether the patent owner has the resources to manufacture or commercialize the invention. As the owner of a negative right, a patent owner has recourse through litigation to prevent others from using, making, offering for sale or selling the patented invention. Even when the patented invention is only a component of a broader product or service, the negative right can be enforced against any product or service that practices the claims of the patented invention.
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•
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Patents May Be Licensed and are Infinitely Divisible
– A patent owner can authorize the use of the patented invention by one or more parties, typically in exchange for licensing fees. There is no legal limit to the amount of licenses a patent owner can provide to market participants.
|
•
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Patents Are Assets That Can Be Transferred
– A patent can be sold, in which case the negative right and monopoly associated with the patented invention are transferred to the buyer. When a patent is sold, the buyer’s negative rights may be constrained by licenses granted by previous owners.
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•
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Improved Search Capabilities
– The entire database of United States patents is searchable on the Internet, enabling patent investors to quickly identify patents and their owners. The Internet also makes it much easier for patent owners to identify and research products and services that may practice the claims of their patented inventions.
|
•
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Increasing Rate of Issuance of Technology Patents
– Patents issued with class code identifiers that we classify as technology-related patents have nearly doubled in the past 10 years.
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•
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Overlap of Technology Patents
– Because inventors can patent incremental improvements to existing inventions, multiple patents can apply to individual components of a product or service. Consequently, multiple patent owners may seek to extract license fees related to a single product or service. One example of this overlap of patents is semiconductor technology known as DRAM. Today, there are several thousand issued United States patents with “DRAM” specifically listed as a claim element. These DRAM patents span design, fabrication, testing and component technology including dies, capacitors, memory cells, transistors, integrated circuits, substrates and packaging. Each of those aspects may be covered by multiple patents that could be infringed by a DRAM semiconductor device or downstream product. Potential infringement of these patents could occur by anyone who designs, makes, uses or sells a product using this technology.
|
•
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Technology Convergence
– Complex products, such as smartphones, incorporate numerous technology components, and a constantly expanding set of features and services, including touchscreens, Internet access, streaming video, media playback, app downloads, and Wi-Fi, Bluetooth, and other connectivity options. The addition of features and services often exposes these products to additional claims of patent infringement.
|
•
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Technology Diffusion
– As the costs of certain technologies decline — especially computing and communications technologies — these technologies are often integrated into previously discrete products. For example, it is increasingly common to find Internet connectivity embedded into devices such as thermostats, security cameras, and garage door openers. The diffusion of new, patented technologies into these products may expose these products to claims of patent infringement.
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•
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More Companies Employing Patented Technologies
– A growing number of companies, including non-technology companies, make, use and sell products or services that utilize patented inventions. For example, consumer banks now offer online and mobile banking and bill pay as a standard feature, which rely on numerous complex technologies that may be subject to many patents.
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•
|
Specialized Appellate Court for Patent Cases
– The United States Court of Appeals for the Federal Circuit was created in 1982 to serve as the central appellate venue for patent-related cases. We believe this centralization of patent-related appeals has resulted in a more uniform application of patent law. In addition, various federal district courts have adopted patent-specific rules of procedure to facilitate patent litigation. These factors have created a more attractive environment for patent assertions.
|
•
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Reduced Risk of Patent Litigation
– Clients reduce their exposure to patent litigation because we continuously assess patent assets available for sale or license and acquire many that are being or may be asserted against our clients or potential clients. Our clients have no litigation risk related to the patents that we own.
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•
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Cost-Effective Licenses
– Our annual subscription fee is typically based on a client’s historical financial results or a fixed fee which is risk-adjusted for the client's general patent risk profile, which provides predictability for us and our clients. We believe our approach is different than the pricing strategies of traditional patent licensing businesses, which generally negotiate license fees based on the perceived relevance of their various patent portfolios to each licensee.
We believe our approach to pricing also provides clients with non-exclusive license rights to our large and growing portfolio of patent assets at a lower cost than they would have paid if these patent assets were owned by other entities.
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•
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Reduced Patent Risk Management Costs
– Clients can reduce their ongoing patent risk management costs by supplementing their internal resources with our database of information and extensive transaction experience relating to the patent market. We actively monitor the patent market to understand the availability of patent assets for sale or license, the identity of the owners and licensors of these assets, the terms by which they may be available and the technologies to which these assets apply. We also track relevant litigation activity and identify key participants and trends in the patent market. As part of their subscription, our clients have access to this information through our proprietary web portal and through discussions with our client services team.
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•
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Data Collection and Forensics -
We offer multiple collection platforms and techniques aimed at harvesting potentially relevant data in the most cost effective ways. We have trained internal experts and partners available to perform data collection in conformance with country-specific data protection laws.
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•
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Data Processing and Analytics -
We offer advanced data filtering techniques and processing services using various sophisticated third-party software, data analytics, and technology assisted review.
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•
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Data Hosting -
Clients have access to technology-enabled document review software.
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•
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Project Management -
Internal subject matter experts trained in discovery procedures and protocols are available to assist clients with project setup and configuration, and to help clients navigate and utilize industry best practices. Our project management experts have a unique combination of legal acumen and technical expertise to deliver the most efficient services to our clients.
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•
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Production -
We offer high volume data production capacity and printing, copying, and scanning services.
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•
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Document Review Services -
We utilize a variable workforce model to manage and staff the activities required to review large document collections in legal matters. These tasks include sourcing qualified legal professionals for project-based work, developing appropriate review protocols and quality control procedures, and providing guidance to outside counsel throughout the various stages of the complex discovery process.
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•
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Reduced Cost of Litigation
– Clients reduce their litigation costs by using our technology-enabled services to eliminate redundant data and organize it in a manner that reduces the number of responsive documents that need to be reviewed by attorneys, which is typically the single largest cost of most legal matters. In addition, our technology allows the client to repurpose previously processed data from individual custodians that may be responsive to multiple matters, thereby compounding cost savings and administration time.
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•
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Increased Visibility into the Discovery Process
– We use a managed service model to offer our proprietary discovery services management platform, which adds clarity, visibility, and efficiency to our clients' legal discovery process. Seamless integration with industry-leading third-party applications helps our clients focus on critical information early in the litigation life cycle through efficient access to important data.
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•
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Secure Hosting of Data
– Our clients' electronic data is stored in a secure, monitored environment. We maintain strict security standards and procedures to protect our clients' sensitive, and often confidential, information.
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•
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Access to Support Services
– Our global network of trained experts help our clients maximize their use of our software tools. We have experienced personnel in major markets across the country and internationally in order to provide localized support that is responsive to our clients' needs.
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•
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Growing Our Client Network
– We intend to grow our client network by developing relationships with companies that have experienced patent litigation, often initiated by NPEs, or the need for discovery services, and continuing to demonstrate the value of our services.
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•
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Acquiring Additional Patent Assets
– We intend to continue to acquire patent assets that are being or may be asserted against current and prospective clients and to increase our role and expertise in the patent market. We believe our disciplined approach to valuing and acquiring patent assets will allow us to continue to deploy our capital in an efficient and effective manner to maximize the patent risk management benefits to our clients.
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•
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Focusing on Client Services
– We intend to deliver the highest levels of service and support to our clients to build and maintain trusted relationships and high levels of client retention.
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•
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Developing Proprietary Technology Services for Our Clients
– We intend to continue to enhance our proprietary web portal to provide our clients with the most current intelligence and data on patent acquisition opportunities, relevant litigation activity and key market participants and trends that affect their patent risk exposure. We also continually improve our discovery services to maximize throughput and improve analytical capabilities.
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•
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Syndicated Transactions
– On certain occasions, clients ask us to acquire patent assets that we would not otherwise purchase using our capital (due to the size or limited applicability of the portfolio). In these instances, we facilitate 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. Transaction participants may pay a fee to RPX for structuring, negotiating and executing the transactions.
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•
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Offering Patent Infringement Litigation Insurance
– We offer insurance policies for businesses interested in management of their exposure to patent infringement claims.
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•
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Deterring Abusive Patent Assertion Practices
- We believe we can improve the efficiency of the patent market, lower unnecessary costs, and deter abusive patent assertion practices by performing systematic, high quality prior art searches on asserted patents, challenging the validity of low quality patents at the United States Patent and Trademark Office, and performing other activities to improve patent quality.
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•
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Enhancing Our Capabilities Through Complementary Acquisitions
–
We occasionally evaluate the potential acquisition of businesses and technologies in adjacent markets that can enhance our capabilities and offerings to our clients.
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•
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Expand Our International Operations
–
We will continue to investigate expansionary efforts for our patent risk management and discovery services to allow us to help our current and future clients manage litigation risks and legal costs internationally.
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•
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our alignment of interest and strong relationships with our clients resulting from our pricing structure and guarantee never to assert our patent assets against our clients;
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•
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our ability to reduce the costs associated with patent market transactions by engaging in more transparent negotiations based on the economic value of patent assets rather than discussions involving litigation or the threat of litigation;
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•
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our ability to increase efficiency and expand our role in the patent market as our client network and capital available for patent asset acquisitions grows;
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•
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our access to data regarding our analysis of the patent market and patent litigation; and
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•
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our extensive patent market expertise, relationships, and transaction experience.
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Item 1A.
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Risk Factors.
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•
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changes in our subscription fee rates or changes in our own pricing and discounting policies or those of our competitors;
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•
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decreases in our clients’ and prospective clients’ costs of litigating patent infringement claims;
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•
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changes in the accounting treatment associated with how we recognize revenue under subscription agreements;
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•
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the emergence of commercially successful new technology sectors with exposure to patents; the availability of patent portfolios that apply to these products and services; and the aggressiveness of NPEs and other licensors in monetizing their portfolios;
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•
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our inability to effectively develop and implement new services that meet client requirements in a timely manner;
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•
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the addition or loss of discovery services clients and projects which are difficult to predict and may result in material changes in quarterly revenue and costs, and in particular a decrease in revenue during 2018;
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•
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non-renewals from existing clients for any reason;
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•
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changes in patent law and regulations and other legislation, as well as United States Patent and Trademark Office procedures or court rulings, that reduce the value of our services to our existing and potential clients;
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•
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our expansion into new international markets;
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•
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lower subscription fees from clients whose annual subscription fees decrease due to declining operating income or revenue of such clients, the effects of changes in foreign exchange rates, or decreased NPE risk;
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•
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changes in the accounting treatment associated with our acquisitions of patent assets and how we amortize those patent assets;
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•
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our inability to acquire patent assets that are being asserted or may be asserted against our clients due to lack of availability, unfavorable pricing terms or otherwise;
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•
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our lengthy and unpredictable membership sales cycle, including delays in potential clients’ decisions whether to subscribe to our patent risk management services;
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•
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our acquisition of patent assets with a shorter estimated useful life that increases our near-term patent asset amortization expense and decreases our earnings;
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•
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loss of clients, including through acquisitions or consolidations;
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•
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losses incurred as a result of claims made on insurance policies underwritten or assumed by us;
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•
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our inability to retain key personnel;
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•
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increases in operating expenses, including those attributable to additional headcount, or the costs of new business initiatives, and our acquisition of Inventus;
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•
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other matters related to our acquisition of Inventus and the expansion of our business into discovery services;
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•
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any significant changes in the competitive dynamics of our markets, including new competitors or substantial discounting of services that are viewed by our target markets as competitive to ours;
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•
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increases in the prices we need to pay to acquire patent assets;
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•
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gains or losses realized as a result of our sale of patents, including upon the exercise by any of our clients of their limited right to purchase certain of our patent assets for defensive purposes in the event of a patent infringement suit brought against such client by a third party; and
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•
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adverse economic conditions in the industries that we serve, particularly as they affect the intellectual property risk management and/or litigation budgets of our existing or potential clients.
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•
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reduced assertions from non-practicing entities ("NPEs") or decreased patent licensing fees owed to NPEs;
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•
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limitations on the ability of NPEs to bring patent claims or limitations on the potential damages recoverable from such claims;
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•
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reduced cost to our clients of defending patent assertion claims;
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•
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uncertainty about our ability to significantly reduce patent litigation costs for a particular company;
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•
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lack of perceived relevance and value in our existing patent asset portfolio by existing or potential clients;
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•
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concerns by existing or potential clients about our future ability to obtain rights to patent assets that are being or may be asserted against them;
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•
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reduced incentives to renew memberships if clients have vested into perpetual licenses in all patent assets that they believe are materially relevant to their businesses;
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•
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lack of sufficient interest by mid- and small-size companies in our patent risk management or insurance offerings;
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•
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lack of expansion of technology and patent risk to markets that previously have not incorporated, but are currently incorporating, technology into businesses;
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•
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reduced incentive for companies to become clients because we do not assert our patent assets in litigation;
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•
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concerns that we might change our current business model and assert our patent assets in litigation;
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•
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budgetary limitations for existing or potential clients; and
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•
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the belief that adequate coverage for the risks and expenses we attempt to reduce is available from alternative products or services.
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•
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difficulties in integrating operations, technologies, services and personnel;
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•
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the need to integrate the operations, systems (including accounting, management, information, human resources and other administrative systems), technologies, products, and personnel of each acquired company, which is an inherently risky and potentially lengthy and costly process;
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•
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the need to implement or improve controls, procedures, and policies appropriate for a public company at companies that prior to our acquisition may have lacked such controls, procedures, and policies or whose controls, procedures, and policies did not meet applicable legal and other standards;
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•
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our dependence on the accounting, financial reporting, operating metrics and similar systems, controls and processes of an acquired business, and the risk that errors or irregularities in those systems, controls, and processes will lead to errors in our consolidated financial statements or make it more difficult to manage the acquired business;
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•
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the potential loss of key customers, vendors, and other business partners of the companies we acquire following the announcement of our transaction plans;
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•
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the inefficiencies and lack of control that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise as a result;
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•
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derivative lawsuits resulting from the acquisition;
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•
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risks associated with our expansion into new international markets;
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•
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unanticipated costs or liabilities associated with the acquisition;
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•
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incurrence of acquisition-related costs;
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•
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incurrence of acquisition-related charges; for example, in connection with the preparation of our financial results for the fourth quarter of 2017, we recorded an impairment loss of $89.0 million relating to our discovery services goodwill;
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•
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diversion of management’s attention from other business concerns;
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•
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potential loss of key employees;
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•
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additional legal, financial and accounting challenges and complexities in areas such as tax planning and cash management;
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•
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use of resources that are needed in other parts of our business; and
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•
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use of substantial portions of our available cash to consummate the acquisition.
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•
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the need to localize and adapt our services for specific countries, including translation into foreign languages and associated expenses;
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•
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data privacy laws that require customer data to be stored and processed in a designated territory;
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•
|
difficulties in staffing and managing foreign operations and working with foreign partners;
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•
|
different pricing environments, longer sales cycles and longer accounts receivable payment cycles and collections issues;
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•
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new and different sources of competition;
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•
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weaker protection for intellectual property and other legal rights than in the United States and practical difficulties in enforcing intellectual property and other rights outside of the United States;
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•
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laws and business practices favoring local competitors;
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•
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compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including employment, tax, privacy and data protection laws and regulations;
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•
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increased financial accounting and reporting burdens and complexities;
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•
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restrictions on the transfer of funds;
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•
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fluctuations in currency exchange rates, which could increase the price of our services outside of the United States, increase the expenses of our international operations and expose us to foreign currency exchange rate risk;
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•
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adverse tax consequences; and
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•
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unstable regional and economic political conditions.
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•
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variations in our financial condition and operating results;
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•
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the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
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•
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changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our common stock;
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•
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addition or loss of significant clients;
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•
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adoption or modification of laws, regulations, policies, procedures or programs applicable to our business, including those related to the enforcement of patent claims;
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•
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announcements of technological innovations, new products and services, acquisitions, strategic alliances or significant agreements by us or by our competitors;
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•
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factors regarding the previously-announced process to explore and evaluate strategic alternatives to maximize shareholder value;
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•
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recruitment or departure of members of our Board of Directors, management team or other key personnel;
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•
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market conditions in our industry;
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•
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the impact of macroeconomic, market, and political factors and trends, including in light of Brexit, and other recent political developments;
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•
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price and volume fluctuations in the overall stock market or resulting from inconsistent trading volume levels of our shares;
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•
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lawsuits threatened or filed against us;
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•
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any change in our quarterly dividend or stock repurchase program;
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•
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sales of our common stock by us or our stockholders; and
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•
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the opening or closing of our employee trading window.
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•
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authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to thwart a takeover attempt;
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•
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establish a classified Board of Directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;
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•
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require that directors only be removed from office for cause and only upon a majority stockholder vote;
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•
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provide that vacancies on our Board of Directors, including newly created directorships, may be filled only by a majority vote of directors then in office;
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•
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limit who may call special meetings of stockholders;
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•
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prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders;
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•
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do not provide stockholders with the ability to cumulate their votes;
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•
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require supermajority stockholder voting to effect certain amendments to our amended and restated certificate of incorporation and amended and restated bylaws; and
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•
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require advance notification of stockholder nominations and proposals.
|
Item 1B.
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Unresolved Staff Comments.
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Item 2.
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Properties.
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Item 3.
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Legal Proceedings.
|
Item 4.
|
Mine Safety Disclosures.
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
|
|
High
|
|
Low
|
||||
For the year ended December 31, 2016:
|
|
|
|
|
||||
First Quarter
|
|
$
|
11.66
|
|
|
$
|
9.41
|
|
Second Quarter
|
|
11.48
|
|
|
8.71
|
|
||
Third Quarter
|
|
11.31
|
|
|
9.10
|
|
||
Fourth Quarter
|
|
11.35
|
|
|
9.28
|
|
||
For the year ended December 31, 2017:
|
|
|
|
|
||||
First Quarter
|
|
$
|
12.38
|
|
|
$
|
10.49
|
|
Second Quarter
|
|
14.22
|
|
|
11.97
|
|
||
Third Quarter
|
|
14.25
|
|
|
12.34
|
|
||
Fourth Quarter
|
|
14.23
|
|
|
12.57
|
|
Period Ended
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Programs
|
|
Maximum Dollar Value that May Yet be Purchased Under the Programs
(1)
|
||||||
October 31, 2017
|
|
51,895
|
|
|
$
|
13.40
|
|
|
51,895
|
|
|
$
|
56,399,777
|
|
November 30, 2017
|
|
74,809
|
|
|
12.90
|
|
|
74,809
|
|
|
55,434,742
|
|
||
December 31, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55,434,742
|
|
||
|
|
126,704
|
|
|
|
|
126,704
|
|
|
|
Item 6.
|
Selected Consolidated Financial Data.
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2017
(1)
|
|
2016
(2)
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
(in thousands, except per share data)
|
||||||||||||||||||
Revenue
|
|
$
|
330,457
|
|
|
$
|
333,107
|
|
|
$
|
291,881
|
|
|
$
|
259,335
|
|
|
$
|
237,504
|
|
Cost of revenue
|
|
203,709
|
|
|
197,262
|
|
|
148,858
|
|
|
124,435
|
|
|
110,771
|
|
|||||
Selling, general and administrative expenses
|
|
90,507
|
|
|
100,457
|
|
|
77,428
|
|
|
71,679
|
|
|
62,525
|
|
|||||
Impairment losses
|
|
94,051
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
(Gain) loss on sale of patent assets, net
|
|
—
|
|
|
—
|
|
|
(592
|
)
|
|
(707
|
)
|
|
126
|
|
|||||
Operating income (loss)
|
|
(57,810
|
)
|
|
35,388
|
|
|
66,187
|
|
|
63,928
|
|
|
64,082
|
|
|||||
Interest and other income (expense), net
|
|
(1,255
|
)
|
|
(3,079
|
)
|
|
(688
|
)
|
|
354
|
|
|
213
|
|
|||||
Income (loss) before provision for income taxes
|
|
(59,065
|
)
|
|
32,309
|
|
|
65,499
|
|
|
64,282
|
|
|
64,295
|
|
|||||
Provision for income taxes
|
|
20,078
|
|
|
14,074
|
|
|
26,077
|
|
|
24,941
|
|
|
23,512
|
|
|||||
Net income (loss)
|
|
$
|
(79,143
|
)
|
|
$
|
18,235
|
|
|
$
|
39,422
|
|
|
$
|
39,341
|
|
|
$
|
40,783
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) available to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
(79,143
|
)
|
|
$
|
18,235
|
|
|
$
|
39,422
|
|
|
$
|
39,341
|
|
|
$
|
40,763
|
|
Diluted
|
|
$
|
(79,143
|
)
|
|
$
|
18,235
|
|
|
$
|
39,422
|
|
|
$
|
39,341
|
|
|
$
|
40,763
|
|
Net income (loss) available to common stockholders per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
(1.61
|
)
|
|
$
|
0.36
|
|
|
$
|
0.72
|
|
|
$
|
0.74
|
|
|
$
|
0.78
|
|
Diluted
|
|
$
|
(1.61
|
)
|
|
$
|
0.36
|
|
|
$
|
0.71
|
|
|
$
|
0.72
|
|
|
$
|
0.76
|
|
Weighted-average shares used in computing net income (loss) available to common stockholders per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
49,240
|
|
|
50,462
|
|
|
54,432
|
|
|
53,444
|
|
|
51,956
|
|
|||||
Diluted
|
|
49,240
|
|
|
51,001
|
|
|
55,410
|
|
|
54,818
|
|
|
53,652
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends declared per common share
|
|
$
|
0.05
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2017
(1)
|
|
2016
(2)
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Cash, cash equivalents, and short-term investments
|
|
$
|
157,165
|
|
|
$
|
190,988
|
|
|
$
|
325,998
|
|
|
$
|
317,533
|
|
|
$
|
290,722
|
|
Patent assets, net
|
|
163,048
|
|
|
212,999
|
|
|
254,560
|
|
|
236,349
|
|
|
219,954
|
|
|||||
Total assets
|
|
550,830
|
|
|
735,289
|
|
|
658,561
|
|
|
642,064
|
|
|
588,801
|
|
|||||
Deferred revenue, including current portion
|
|
106,868
|
|
|
130,408
|
|
|
115,652
|
|
|
136,209
|
|
|
137,743
|
|
|||||
Notes payable and other deferred payment obligations, including current portion
|
|
—
|
|
|
—
|
|
|
2,383
|
|
|
—
|
|
|
500
|
|
|||||
Long-term debt, including current portion
|
|
—
|
|
|
94,584
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total liabilities
|
|
141,075
|
|
|
261,008
|
|
|
142,082
|
|
|
157,019
|
|
|
163,878
|
|
|||||
Total stockholders’ equity
|
|
409,755
|
|
|
474,281
|
|
|
516,479
|
|
|
485,045
|
|
|
424,923
|
|
•
|
the review and analysis of patents offered for sale, including analysis of patent quality, validity, and commercial significance;
|
•
|
defensive patent acquisition, by which we acquire patents and patent rights on behalf of all of our patent risk management clients;
|
•
|
facilitation of syndicated transactions;
|
•
|
prior art searches;
|
•
|
proprietary periodic analysis and publication of patent market trends;
|
•
|
the tracking of all US patent applications and issuances, patent litigation activity, and associated parties; and
|
•
|
publication and provision of patent-related data to governmental and regulatory bodies to inform public policy discussion about patent reform and trends.
|
•
|
Persuasive evidence of an arrangement exists.
All subscription fees are supported by an executed subscription agreement.
|
•
|
Delivery has occurred or services have been rendered.
The subscription agreement calls for us to provide our patent risk management services over a specific term commencing on the agreement effective date. Because services are not on an individualized basis (i.e., we generally perform our services on behalf of all of our clients as opposed to each client individually), delivery occurs automatically with the passage of time. Consequently, we recognize subscription revenue ratably.
|
•
|
Seller’s price to the buyer is fixed or determinable.
Each client’s annual subscription fee is based either on a rate card in effect at the time of the client’s initial agreement or through a fixed fee which is risk-adjusted based on the client's specific patent risk profile. A client’s subscription fee on rate card is generally determined using its rate card and its normalized operating income, which is defined as the greater of (i) the average of its operating income for the three most recently reported fiscal years and (ii) 5% of its revenue for the most recently reported fiscal year. The fee for the first year of the agreement is typically determined and invoiced at the time of contract execution. The fee for each subsequent year of the agreement is generally calculated and invoiced in advance prior to each anniversary date of the agreement.
|
•
|
Collectability is reasonably assured.
Subscription fees are generally collected on or near the effective date of the agreement and again at or near each anniversary date thereof. We do not recognize revenue in instances where collectability is not reasonably assured. Generally, our subscription agreements state that all fees paid are non-refundable.
|
•
|
the entity to grant the license of the patent(s) is generally viewed as the primary obligor in the arrangement, given that it owns and controls the underlying patent(s) and thus has the absolute authority to grant and deliver any release from past damages and dismissal from litigation, and typically determines the general terms of the license(s) granted;
|
•
|
our inventory risk in the transaction, which is typically mitigated, as our clients often enter into contractual obligations with us prior to or contemporaneous with entering into a contractual obligation with the seller;
|
•
|
we have pricing latitude as we negotiate client contributions, however, this latitude is often limited as the economics of the transaction ultimately depend on the sales price set by the seller;
|
•
|
we are not involved in the determination of the product or service specification and has no ability to change the product or perform any part of the service in connection with these transactions, as the seller owns the underlying patent(s); and
|
•
|
our credit risk taken on the transaction, which is generally limited as each respective client has a contractually binding obligation, such clients are generally of high credit quality and in some instances, we collect the client contribution prior to making a payment to the seller.
|
•
|
List price, which represents the rates listed on our annual rate card. We publish a standard rate card annually. Each client’s subscription fee is typically calculated using the applicable rate card and its normalized operating income, which is defined as the greater of (i) 5% of the client’s most recently reported fiscal year’s revenue, and (ii) the average of the three most recently reported fiscal years’ operating income of the client. Each client’s annual subscription fee is reset annually based on its normalized operating income for its most recently completed fiscal years.
|
•
|
Actuarially determined factors. Although we sell our insurance product both on a standalone basis and as a component of a multiple-element arrangement, the pricing is not affected by the subscription to our patent risk management services. We use an actuarial model that calculates an individual client’s insurance premium based on its projected annual frequency (i.e., number of claims during the policy term) and severity (i.e., the amount which we expect to settle a claim).
|
•
|
data hosting fees based on data stored and number of users;
|
•
|
fees for month-to-month delivery of services, such as data processing (conversion of data into organized, searchable electronic database), project management and data collection services;
|
•
|
document review services which assist clients in the manual review of data responsive to a legal matter; and
|
•
|
printing and binding services (paper-based services).
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
|
|
|
|
|
|
||||||
Patent risk management
|
|
$
|
252,253
|
|
|
$
|
266,995
|
|
|
$
|
291,881
|
|
Discovery services
|
|
78,204
|
|
|
66,112
|
|
|
—
|
|
|||
Total revenue
|
|
330,457
|
|
|
333,107
|
|
|
291,881
|
|
|||
Cost of revenue
|
|
|
|
|
|
|
||||||
Patent risk management
|
|
161,409
|
|
|
163,865
|
|
|
148,858
|
|
|||
Discovery services
|
|
42,300
|
|
|
33,397
|
|
|
—
|
|
|||
Total cost of revenue
|
|
203,709
|
|
|
197,262
|
|
|
148,858
|
|
|||
Selling, general and administrative expenses
|
|
|
|
|
|
|
||||||
Patent risk management
|
|
63,795
|
|
|
76,467
|
|
|
77,428
|
|
|||
Discovery services
|
|
26,712
|
|
|
23,990
|
|
|
—
|
|
|||
Total selling, general and administrative expenses
|
|
90,507
|
|
|
100,457
|
|
|
77,428
|
|
|||
Impairment losses
|
|
|
|
|
|
|
||||||
Patent risk management
|
|
5,016
|
|
|
—
|
|
|
—
|
|
|||
Discovery services
|
|
89,035
|
|
|
—
|
|
|
—
|
|
|||
Total impairment losses
|
|
94,051
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of patent assets, net
|
|
—
|
|
|
—
|
|
|
(592
|
)
|
|||
Operating income (loss)
|
|
|
|
|
|
|
||||||
Patent risk management
|
|
22,033
|
|
|
26,663
|
|
|
66,187
|
|
|||
Discovery services
|
|
(79,843
|
)
|
|
8,725
|
|
|
—
|
|
|||
Total operating income (loss)
|
|
(57,810
|
)
|
|
35,388
|
|
|
66,187
|
|
|||
Interest and other income (expense), net
|
|
(1,255
|
)
|
|
(3,079
|
)
|
|
(688
|
)
|
|||
Income (loss) before provision for income taxes
|
|
(59,065
|
)
|
|
32,309
|
|
|
65,499
|
|
|||
Provision for income taxes
|
|
20,078
|
|
|
14,074
|
|
|
26,077
|
|
|||
Net income (loss)
|
|
$
|
(79,143
|
)
|
|
$
|
18,235
|
|
|
$
|
39,422
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
Revenue
|
|
|
|
|
|
|
|||
Patent risk management
|
|
76
|
%
|
|
80
|
%
|
|
100
|
%
|
Discovery services
|
|
24
|
|
|
20
|
|
|
—
|
|
Total revenue
|
|
100
|
|
|
100
|
|
|
100
|
|
Cost of revenue
|
|
|
|
|
|
|
|||
Patent risk management
|
|
49
|
|
|
49
|
|
|
51
|
|
Discovery services
|
|
13
|
|
|
10
|
|
|
—
|
|
Total cost of revenue
|
|
62
|
|
|
59
|
|
|
51
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
|||
Patent risk management
|
|
19
|
|
|
23
|
|
|
27
|
|
Discovery services
|
|
8
|
|
|
7
|
|
|
—
|
|
Total selling, general and administrative expenses
|
|
27
|
|
|
30
|
|
|
27
|
|
Impairment losses
|
|
|
|
|
|
|
|||
Patent risk management
|
|
2
|
|
|
—
|
|
|
—
|
|
Discovery services
|
|
27
|
|
|
—
|
|
|
—
|
|
Total impairment losses
|
|
29
|
|
|
—
|
|
|
—
|
|
Gain on sale of patent assets, net
|
|
—
|
|
|
—
|
|
|
—
|
|
Operating income (loss)
|
|
|
|
|
|
|
|||
Patent risk management
|
|
7
|
|
|
8
|
|
|
23
|
|
Discovery services
|
|
(24
|
)
|
|
3
|
|
|
—
|
|
Total operating income (loss)
|
|
(17
|
)
|
|
11
|
|
|
23
|
|
Interest and other income (expense), net
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
Income (loss) before provision for income taxes
|
|
(18
|
)
|
|
10
|
|
|
22
|
|
Provision for income taxes
|
|
6
|
|
|
4
|
|
|
9
|
|
Net income (loss)
|
|
(24
|
)%
|
|
6
|
%
|
|
13
|
%
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Revenue
|
|
|
|
|
||||
Subscription revenue
|
|
$
|
246,845
|
|
|
$
|
255,433
|
|
Fee-related revenue
|
|
5,408
|
|
|
11,562
|
|
||
Total patent risk management revenue
|
|
252,253
|
|
|
266,995
|
|
||
Discovery services
|
|
78,204
|
|
|
66,112
|
|
||
Total revenue
|
|
$
|
330,457
|
|
|
$
|
333,107
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Revenue
|
|
|
|
|
||||
Subscription revenue
|
|
$
|
255,433
|
|
|
$
|
269,674
|
|
Fee-related revenue
|
|
11,562
|
|
|
22,207
|
|
||
Total patent risk management revenue
|
|
266,995
|
|
|
291,881
|
|
||
Discovery services
|
|
66,112
|
|
|
—
|
|
||
Total revenue
|
|
$
|
333,107
|
|
|
$
|
291,881
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net income (loss)
|
|
$
|
(79,143
|
)
|
|
$
|
18,235
|
|
|
$
|
39,422
|
|
Provision for income taxes
|
|
20,078
|
|
|
14,074
|
|
|
26,077
|
|
|||
Interest and other expense, net
|
|
1,255
|
|
|
3,079
|
|
|
688
|
|
|||
Impairment losses
|
|
94,051
|
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation, including related taxes
|
|
14,988
|
|
|
18,568
|
|
|
18,015
|
|
|||
Depreciation and amortization
|
|
168,143
|
|
|
171,623
|
|
|
145,835
|
|
|||
Non-GAAP adjusted EBITDA
|
|
219,372
|
|
|
225,579
|
|
|
230,037
|
|
|||
Net patent spend
|
|
(106,010
|
)
|
|
(117,429
|
)
|
|
(160,665
|
)
|
|||
Non-GAAP adjusted EBITDA less net patent spend
|
|
$
|
113,362
|
|
|
$
|
108,150
|
|
|
$
|
69,372
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net cash provided by operating activities
|
$
|
181,478
|
|
|
$
|
187,256
|
|
|
$
|
173,223
|
|
Purchases of property and equipment
|
(1,316
|
)
|
|
(3,667
|
)
|
|
(2,163
|
)
|
|||
Acquisitions of patent assets
|
(106,343
|
)
|
|
(116,742
|
)
|
|
(132,834
|
)
|
|||
Free cash flow
|
$
|
73,819
|
|
|
$
|
66,847
|
|
|
$
|
38,226
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net cash provided by operating activities
|
$
|
181,478
|
|
|
$
|
187,256
|
|
|
$
|
173,223
|
|
Net cash used in investing activities
|
(36,487
|
)
|
|
(213,475
|
)
|
|
(134,868
|
)
|
|||
Net cash provided by (used in) financing activities
|
(107,086
|
)
|
|
32,049
|
|
|
(21,391
|
)
|
|||
Foreign-currency effect on cash and cash equivalents
|
694
|
|
|
(702
|
)
|
|
—
|
|
|||
Net increase in cash and cash equivalents
|
$
|
38,599
|
|
|
$
|
5,128
|
|
|
$
|
16,964
|
|
|
|
Less Than
1 Year
|
|
1 to 3
Years
|
|
3 to 5
Years
|
|
More Than
5 Years
|
|
Total
|
||||||||||
Operating lease commitments
(1)
|
|
$
|
3,402
|
|
|
$
|
3,197
|
|
|
$
|
459
|
|
|
$
|
379
|
|
|
$
|
7,437
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk.
|
Item 8.
|
Consolidated Financial Statements and Supplementary Data.
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
138,710
|
|
|
$
|
100,111
|
|
Short-term investments
|
|
18,455
|
|
|
90,877
|
|
||
Restricted cash
|
|
249
|
|
|
500
|
|
||
Accounts receivable, net
|
|
51,544
|
|
|
64,395
|
|
||
Prepaid expenses and other current assets
|
|
25,687
|
|
|
4,524
|
|
||
Total current assets
|
|
234,645
|
|
|
260,407
|
|
||
Patent assets, net
|
|
163,048
|
|
|
212,999
|
|
||
Property and equipment, net
|
|
5,090
|
|
|
6,948
|
|
||
Intangible assets, net
|
|
49,087
|
|
|
56,050
|
|
||
Goodwill
|
|
70,756
|
|
|
151,322
|
|
||
Restricted cash, less current portion
|
|
968
|
|
|
965
|
|
||
Other assets
|
|
3,664
|
|
|
8,337
|
|
||
Deferred tax assets
|
|
23,572
|
|
|
38,261
|
|
||
Total assets
|
|
$
|
550,830
|
|
|
$
|
735,289
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
2,225
|
|
|
$
|
3,197
|
|
Accrued liabilities
|
|
15,736
|
|
|
16,798
|
|
||
Deferred revenue
|
|
105,150
|
|
|
118,856
|
|
||
Current portion of long-term debt
|
|
—
|
|
|
6,474
|
|
||
Other current liabilities
|
|
1,485
|
|
|
1,484
|
|
||
Total current liabilities
|
|
124,596
|
|
|
146,809
|
|
||
Deferred revenue, less current portion
|
|
1,718
|
|
|
11,552
|
|
||
Deferred tax liabilities
|
|
3,657
|
|
|
4,023
|
|
||
Long-term debt, less current portion
|
|
—
|
|
|
88,110
|
|
||
Other liabilities
|
|
11,104
|
|
|
10,514
|
|
||
Total liabilities
|
|
141,075
|
|
|
261,008
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Common stock, $0.0001 par value — 200,000 shares authorized; 49,627 and 48,776 issued and outstanding as of December 31, 2017 and 2016, respectively
|
|
5
|
|
|
5
|
|
||
Additional paid-in capital
|
|
376,793
|
|
|
360,462
|
|
||
Retained earnings
|
|
39,411
|
|
|
130,249
|
|
||
Accumulated other comprehensive loss
|
|
(6,454
|
)
|
|
(16,435
|
)
|
||
Total stockholders’ equity
|
|
409,755
|
|
|
474,281
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
550,830
|
|
|
$
|
735,289
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
|
$
|
330,457
|
|
|
$
|
333,107
|
|
|
$
|
291,881
|
|
Cost of revenue
|
|
203,709
|
|
|
197,262
|
|
|
148,858
|
|
|||
Selling, general and administrative expenses
|
|
90,507
|
|
|
100,457
|
|
|
77,428
|
|
|||
Impairment losses
|
|
94,051
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of patent assets, net
|
|
—
|
|
|
—
|
|
|
(592
|
)
|
|||
Operating income (loss)
|
|
(57,810
|
)
|
|
35,388
|
|
|
66,187
|
|
|||
Interest and other income (expense), net:
|
|
|
|
|
|
|
||||||
Interest income
|
|
1,063
|
|
|
506
|
|
|
740
|
|
|||
Interest expense
|
|
(4,540
|
)
|
|
(3,015
|
)
|
|
—
|
|
|||
Other income (expense), net
|
|
2,222
|
|
|
(570
|
)
|
|
(1,428
|
)
|
|||
Total interest and other income (expense), net
|
|
(1,255
|
)
|
|
(3,079
|
)
|
|
(688
|
)
|
|||
Income (loss) before provision for income taxes
|
|
(59,065
|
)
|
|
32,309
|
|
|
65,499
|
|
|||
Provision for income taxes
|
|
20,078
|
|
|
14,074
|
|
|
26,077
|
|
|||
Net income (loss)
|
|
$
|
(79,143
|
)
|
|
$
|
18,235
|
|
|
$
|
39,422
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
(1.61
|
)
|
|
$
|
0.36
|
|
|
$
|
0.72
|
|
Diluted
|
|
$
|
(1.61
|
)
|
|
$
|
0.36
|
|
|
$
|
0.71
|
|
Weighted-average shares used in computing net income (loss) per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
49,240
|
|
|
50,462
|
|
|
54,432
|
|
|||
Diluted
|
|
49,240
|
|
|
51,001
|
|
|
55,410
|
|
|||
|
|
|
|
|
|
|
||||||
Dividends declared per common share
|
|
$
|
0.05
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income (loss)
|
$
|
(79,143
|
)
|
|
$
|
18,235
|
|
|
$
|
39,422
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Unrealized gains (losses) on available-for-sale investments:
|
|
|
|
|
|
||||||
Unrealized holding gains (losses) arising during the period
|
145
|
|
|
97
|
|
|
(572
|
)
|
|||
Less: reclassification adjustment for losses included in net income
|
—
|
|
|
—
|
|
|
429
|
|
|||
Net unrealized gains (losses) on available-for-sale investments, net of tax
|
145
|
|
|
97
|
|
|
(143
|
)
|
|||
Foreign currency translation adjustments
|
9,836
|
|
|
(16,281
|
)
|
|
—
|
|
|||
Comprehensive income (loss)
|
$
|
(69,162
|
)
|
|
$
|
2,051
|
|
|
$
|
39,279
|
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total
Stockholders’
Equity
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance at December 31, 2014
|
|
54,062
|
|
|
$
|
5
|
|
|
$
|
326,280
|
|
|
$
|
158,868
|
|
|
$
|
(108
|
)
|
|
$
|
485,045
|
|
Components of comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,422
|
|
|
—
|
|
|
39,422
|
|
|||||
Unrealized loss on available-for-sale investments, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(143
|
)
|
|
(143
|
)
|
|||||
Issuance of common stock upon exercise of stock options, vesting of restricted stock units and other common stock issuances
|
|
1,420
|
|
|
—
|
|
|
5,013
|
|
|
—
|
|
|
—
|
|
|
5,013
|
|
|||||
Repurchase of common stock
|
|
(1,993
|
)
|
|
—
|
|
|
—
|
|
|
(26,175
|
)
|
|
—
|
|
|
(26,175
|
)
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
17,728
|
|
|
—
|
|
|
—
|
|
|
17,728
|
|
|||||
Tax benefit of equity award deductions
|
|
—
|
|
|
—
|
|
|
686
|
|
|
—
|
|
|
—
|
|
|
686
|
|
|||||
Tax withholdings related to net share settlements of restricted stock units
|
|
—
|
|
|
—
|
|
|
(5,097
|
)
|
|
—
|
|
|
—
|
|
|
(5,097
|
)
|
|||||
Balance at December 31, 2015
|
|
53,489
|
|
|
5
|
|
|
344,610
|
|
|
172,115
|
|
|
(251
|
)
|
|
516,479
|
|
|||||
Components of comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,235
|
|
|
—
|
|
|
18,235
|
|
|||||
Unrealized gain on available-for-sale investments, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
97
|
|
|
97
|
|
|||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,281
|
)
|
|
(16,281
|
)
|
|||||
Issuance of common stock upon exercise of stock options, vesting of restricted stock units and other common stock issuances
|
|
1,211
|
|
|
—
|
|
|
3,778
|
|
|
—
|
|
|
—
|
|
|
3,778
|
|
|||||
Repurchase of common stock
|
|
(5,924
|
)
|
|
—
|
|
|
—
|
|
|
(60,101
|
)
|
|
—
|
|
|
(60,101
|
)
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
18,378
|
|
|
—
|
|
|
—
|
|
|
18,378
|
|
|||||
Tax benefit of equity award deductions
|
|
—
|
|
|
—
|
|
|
(2,119
|
)
|
|
—
|
|
|
—
|
|
|
(2,119
|
)
|
|||||
Tax withholdings related to net share settlements of restricted stock units
|
|
—
|
|
|
—
|
|
|
(4,185
|
)
|
|
—
|
|
|
—
|
|
|
(4,185
|
)
|
|||||
Balance at December 31, 2016
|
|
48,776
|
|
|
5
|
|
|
360,462
|
|
|
130,249
|
|
|
(16,435
|
)
|
|
474,281
|
|
|||||
Components of comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(79,143
|
)
|
|
—
|
|
|
(79,143
|
)
|
|||||
Unrealized gain on available-for-sale investments, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
145
|
|
|
145
|
|
|||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,836
|
|
|
9,836
|
|
|||||
Issuance of common stock upon exercise of stock options, vesting of restricted stock units and other common stock issuances
|
|
1,551
|
|
|
—
|
|
|
5,964
|
|
|
—
|
|
|
—
|
|
|
5,964
|
|
|||||
Repurchase of common stock
|
|
(700
|
)
|
|
—
|
|
|
—
|
|
|
(8,290
|
)
|
|
—
|
|
|
(8,290
|
)
|
|||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,482
|
)
|
|
—
|
|
|
(2,482
|
)
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
14,642
|
|
|
—
|
|
|
—
|
|
|
14,642
|
|
|||||
Cumulative-effect adjustment from adoption of ASU 2016-09
|
|
—
|
|
|
—
|
|
|
1,408
|
|
|
(923
|
)
|
|
—
|
|
|
485
|
|
|||||
Tax withholdings related to net share settlements of restricted stock units
|
|
—
|
|
|
—
|
|
|
(5,683
|
)
|
|
—
|
|
|
—
|
|
|
(5,683
|
)
|
|||||
Balance at December 31, 2017
|
|
49,627
|
|
|
$
|
5
|
|
|
$
|
376,793
|
|
|
$
|
39,411
|
|
|
$
|
(6,454
|
)
|
|
$
|
409,755
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(79,143
|
)
|
|
$
|
18,235
|
|
|
$
|
39,422
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
168,143
|
|
|
171,623
|
|
|
145,835
|
|
|||
Stock-based compensation
|
14,599
|
|
|
18,275
|
|
|
17,594
|
|
|||
Excess tax benefit from stock-based compensation
|
—
|
|
|
(103
|
)
|
|
(1,593
|
)
|
|||
Gain on sale of patent assets, net
|
—
|
|
|
—
|
|
|
(592
|
)
|
|||
Amortization of premium and discount on investments
|
1,273
|
|
|
2,247
|
|
|
6,666
|
|
|||
Deferred taxes
|
14,451
|
|
|
(13,951
|
)
|
|
(13,010
|
)
|
|||
Unrealized foreign currency (gain) loss
|
(1,957
|
)
|
|
2,689
|
|
|
—
|
|
|||
Fair value adjustments on deferred payment obligations
|
—
|
|
|
(1,920
|
)
|
|
(3,887
|
)
|
|||
Gain on extinguishment of deferred payment obligation
|
—
|
|
|
(463
|
)
|
|
(3,000
|
)
|
|||
Impairment losses
|
94,051
|
|
|
—
|
|
|
5,096
|
|
|||
Realized loss on exchange of short-term investments
|
—
|
|
|
290
|
|
|
3,444
|
|
|||
Other
|
1,792
|
|
|
2,457
|
|
|
(60
|
)
|
|||
Changes in assets and liabilities, net of business acquired:
|
|
|
|
|
|
||||||
Accounts receivable
|
14,136
|
|
|
(39,737
|
)
|
|
10,888
|
|
|||
Prepaid expenses and other assets
|
(21,168
|
)
|
|
10,344
|
|
|
(17,651
|
)
|
|||
Accounts payable
|
(1,080
|
)
|
|
923
|
|
|
724
|
|
|||
Accrued and other liabilities
|
(80
|
)
|
|
1,693
|
|
|
4,631
|
|
|||
Deferred revenue
|
(23,539
|
)
|
|
14,654
|
|
|
(21,284
|
)
|
|||
Net cash provided by operating activities
|
181,478
|
|
|
187,256
|
|
|
173,223
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Purchases of investments
|
(39,491
|
)
|
|
(70,980
|
)
|
|
(273,853
|
)
|
|||
Maturities of investments
|
107,115
|
|
|
60,143
|
|
|
254,360
|
|
|||
Sales of investments
|
3,300
|
|
|
145,925
|
|
|
21,650
|
|
|||
Business acquisition, net of cash acquired
|
—
|
|
|
(228,452
|
)
|
|
(425
|
)
|
|||
Decrease in restricted cash
|
248
|
|
|
298
|
|
|
247
|
|
|||
Purchases of property and equipment
|
(1,316
|
)
|
|
(3,667
|
)
|
|
(2,163
|
)
|
|||
Acquisitions of patent assets
|
(106,343
|
)
|
|
(116,742
|
)
|
|
(132,834
|
)
|
|||
Proceeds from sale of patent assets
|
—
|
|
|
—
|
|
|
650
|
|
|||
Acquisition of other assets
|
—
|
|
|
—
|
|
|
(2,500
|
)
|
|||
Net cash used in investing activities
|
(36,487
|
)
|
|
(213,475
|
)
|
|
(134,868
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Repayments of principal on deferred payment obligations
|
—
|
|
|
—
|
|
|
(2,935
|
)
|
|||
Proceeds from deferred payment obligations
|
—
|
|
|
—
|
|
|
6,270
|
|
|||
Proceeds from issuance of term debt
|
—
|
|
|
100,000
|
|
|
—
|
|
|||
Payment of debt issuance costs
|
—
|
|
|
(2,003
|
)
|
|
—
|
|
|||
Repayment of principal on term debt
|
(96,250
|
)
|
|
(3,750
|
)
|
|
—
|
|
|||
Deferred acquisition payment
|
—
|
|
|
(1,320
|
)
|
|
—
|
|
|||
Proceeds from exercise of stock options
|
5,964
|
|
|
3,766
|
|
|
4,953
|
|
|||
Taxes paid related to net-share settlements of restricted stock units
|
(5,683
|
)
|
|
(4,185
|
)
|
|
(5,097
|
)
|
|||
Excess tax benefit from stock-based compensation
|
—
|
|
|
103
|
|
|
1,593
|
|
|||
Payments of capital leases
|
(345
|
)
|
|
(461
|
)
|
|
—
|
|
|||
Payments of dividends to stockholders
|
(2,482
|
)
|
|
—
|
|
|
—
|
|
|||
Repurchase of common stock
|
(8,290
|
)
|
|
(60,101
|
)
|
|
(26,175
|
)
|
|||
Net cash provided by (used in) financing activities
|
(107,086
|
)
|
|
32,049
|
|
|
(21,391
|
)
|
|||
Foreign-currency effect on cash and cash equivalents
|
694
|
|
|
(702
|
)
|
|
—
|
|
|||
Net increase in cash and cash equivalents
|
38,599
|
|
|
5,128
|
|
|
16,964
|
|
|||
Cash and cash equivalents at beginning of period
|
100,111
|
|
|
94,983
|
|
|
78,019
|
|
|||
Cash and cash equivalents at end of period
|
$
|
138,710
|
|
|
$
|
100,111
|
|
|
$
|
94,983
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
2,874
|
|
|
$
|
2,571
|
|
|
$
|
—
|
|
Cash paid for income taxes
|
7,905
|
|
|
15,078
|
|
|
23,969
|
|
|||
|
|
|
|
|
|
||||||
Non-cash investing and financing activities
|
|
|
|
|
|
||||||
Change in patent assets purchased and accrued but not paid
|
$
|
333
|
|
|
$
|
(333
|
)
|
|
$
|
—
|
|
Change in fixed assets purchased and accrued but not paid
|
—
|
|
|
565
|
|
|
—
|
|
|||
Patent assets and intangible assets received in barter transactions
|
—
|
|
|
381
|
|
|
2,203
|
|
|||
Nonmonetary exchange for investments
|
—
|
|
|
—
|
|
|
5,935
|
|
1.
|
Nature of Business
|
•
|
the assumptions and methods used in deriving the fair value of goodwill and long-lived assets;
|
•
|
the estimated economic useful lives of patent assets;
|
•
|
the fair value of assets acquired and liabilities assumed for business combinations;
|
•
|
recognition and measurement of current and deferred income taxes, any related valuation allowances, and uncertain tax positions;
|
•
|
the fair value of stock awards issued;
|
•
|
the assumptions and methods used in deriving the fair value of deferred payment obligations;
|
•
|
the determination of a best estimated selling price of a subscription and patent infringement liability insurance;
|
•
|
the estimated reserves for known and incurred but not reported claims; and
|
•
|
trade receivable allowance for doubtful accounts.
|
•
|
Persuasive evidence of an arrangement exists.
All subscription fees are supported by an executed subscription agreement.
|
•
|
Delivery has occurred or services have been rendered.
The subscription agreement calls for the Company to provide its patent risk management services over a specific term commencing on the agreement effective date. Because services are not on an individualized basis (i.e., the Company generally performs its services on behalf of all of its clients as opposed to each client individually), delivery occurs automatically with the passage of time. Consequently, the Company recognizes subscription revenue ratably.
|
•
|
Seller’s price to the buyer is fixed or determinable.
Each client’s annual subscription fee is based either on a rate card in effect at the time of the client’s initial agreement or through a fixed fee which is risk-adjusted based on the client's specific patent risk profile. A client’s subscription fee on rate card is generally determined using its rate card and its normalized operating income, which is defined as the greater of (i) the average of its operating income for the three most recently reported fiscal years and (ii)
5%
of its revenue for the most recently reported fiscal year. The fee for the first year of the agreement is typically determined and invoiced at the time of contract execution. The fee for each subsequent year of the agreement is generally calculated and invoiced in advance prior to each anniversary date of the agreement.
|
•
|
Collectability is reasonably assured.
Subscription fees are generally collected on or near the effective date of the agreement and again at or near each anniversary date thereof. The Company does not recognize revenue in instances where collectability is not reasonably assured. Generally, the Company's subscription agreements state that all fees paid are non-refundable.
|
•
|
the entity to grant the license of the patent(s) is generally viewed as the primary obligor in the arrangement, given that it owns and controls the underlying patent(s) and thus has the absolute authority to grant and deliver any release from past damages and dismissal from litigation, and typically determines the general terms of the license(s) granted;
|
•
|
the Company's inventory risk in the transaction, which is typically mitigated, as its clients often enter into contractual obligations with the Company prior to or contemporaneous with the Company entering into a contractual obligation with the seller;
|
•
|
the Company has pricing latitude as it negotiates client contributions, however, this latitude is often limited as the economics of the transaction ultimately depend on the sales price set by the seller;
|
•
|
the Company is not involved in the determination of the product or service specification and has no ability to change the product or perform any part of the service in connection with these transactions, as the seller owns the underlying patent(s); and
|
•
|
the Company's credit risk taken on the transaction, which is generally limited as each respective client has a contractually binding obligation, such clients are generally of high credit quality and in some instances, the Company collects the client contribution prior to making a payment to the seller.
|
•
|
List price, which represents the rates listed on our annual rate card. The Company publishes a standard rate card annually. Each client’s subscription fee is typically calculated using the applicable rate card and its normalized operating income, which is defined as the greater of (i) 5% of the client’s most recently reported fiscal year’s revenue, and (ii) the average of the three most recently reported fiscal years’ operating income of the client. Each client’s annual subscription fee is reset annually based on its normalized operating income for its most recently completed fiscal years.
|
•
|
Actuarially determined factors. Although the Company sells its insurance product both on a standalone basis and as a component of a multiple-element arrangement, the pricing is not affected by the subscription to our patent risk management services. The Company uses an actuarial model that calculates an individual client’s insurance premium based on its projected annual frequency (i.e., number of claims during the policy term) and severity (i.e., the amount which it expects to settle a claim).
|
•
|
data hosting fees based on data stored and number of users;
|
•
|
fees for month-to-month delivery of services, such as data processing (conversion of data into organized, searchable electronic database), project management and data collection services;
|
•
|
document review services which assist clients in the manual review of data responsive to a legal matter; and
|
•
|
printing and binding services (paper-based services).
|
3.
|
Net Income (Loss) Per Share
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income (loss) per share:
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(79,143
|
)
|
|
$
|
18,235
|
|
|
$
|
39,422
|
|
Denominator:
|
|
|
|
|
|
||||||
Basic shares:
|
|
|
|
|
|
||||||
Weighted-average shares used in computing basic net income (loss) per share
|
49,240
|
|
|
50,462
|
|
|
54,432
|
|
|||
Diluted shares:
|
|
|
|
|
|
||||||
Weighted-average shares used in computing basic net income (loss) per share
|
49,240
|
|
|
50,462
|
|
|
54,432
|
|
|||
Dilutive effect of stock options and restricted stock units using treasury-stock method
|
—
|
|
|
539
|
|
|
978
|
|
|||
Weighted-average shares used in computing diluted net income (loss) per share
|
49,240
|
|
|
51,001
|
|
|
55,410
|
|
|||
Net income (loss) per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(1.61
|
)
|
|
$
|
0.36
|
|
|
$
|
0.72
|
|
Diluted
|
$
|
(1.61
|
)
|
|
$
|
0.36
|
|
|
$
|
0.71
|
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Weighted-average:
|
|
|
|
|
|
|||
Stock options outstanding
|
901
|
|
|
—
|
|
|
663
|
|
Restricted stock units outstanding
|
740
|
|
|
2
|
|
|
263
|
|
4.
|
Financial Instruments
|
|
December 31, 2017
|
||||||||||||||||||||||
|
Amortized Cost
|
|
Unrealized
|
|
Estimated Fair Value
|
|
Level 1
|
|
Level 2
|
||||||||||||||
|
|
Gains
|
|
Losses
|
|
|
|
||||||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial paper
|
$
|
13,035
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,035
|
|
|
$
|
—
|
|
|
$
|
13,035
|
|
Corporate bonds
|
1,205
|
|
|
—
|
|
|
—
|
|
|
1,205
|
|
|
—
|
|
|
1,205
|
|
||||||
Money market funds
|
52,267
|
|
|
—
|
|
|
—
|
|
|
52,267
|
|
|
52,267
|
|
|
—
|
|
||||||
Municipal bonds
|
13,060
|
|
|
—
|
|
|
—
|
|
|
13,060
|
|
|
—
|
|
|
13,060
|
|
||||||
U.S. government and agency securities
|
13,101
|
|
|
—
|
|
|
—
|
|
|
13,101
|
|
|
—
|
|
|
13,101
|
|
||||||
|
$
|
92,668
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
92,668
|
|
|
$
|
52,267
|
|
|
$
|
40,401
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial paper
|
$
|
1,994
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,994
|
|
|
$
|
—
|
|
|
$
|
1,994
|
|
Corporate bonds
|
3,074
|
|
|
—
|
|
|
(3
|
)
|
|
3,071
|
|
|
—
|
|
|
3,071
|
|
||||||
Municipal bonds
|
11,888
|
|
|
—
|
|
|
(3
|
)
|
|
11,885
|
|
|
—
|
|
|
11,885
|
|
||||||
U.S. government and agency securities
|
1,508
|
|
|
—
|
|
|
(3
|
)
|
|
1,505
|
|
|
—
|
|
|
1,505
|
|
||||||
|
$
|
18,464
|
|
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
$
|
18,455
|
|
|
$
|
—
|
|
|
$
|
18,455
|
|
|
December 31, 2016
|
||||||||||||||||||||||
|
Amortized Cost
|
|
Unrealized
|
|
Estimated Fair Value
|
|
Level 1
|
|
Level 2
|
||||||||||||||
|
|
Gains
|
|
Losses
|
|
|
|
||||||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
30,286
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30,286
|
|
|
$
|
30,286
|
|
|
$
|
—
|
|
Municipal bonds
|
3,070
|
|
|
—
|
|
|
—
|
|
|
3,070
|
|
|
—
|
|
|
3,070
|
|
||||||
|
$
|
33,356
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33,356
|
|
|
$
|
30,286
|
|
|
$
|
3,070
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial paper
|
$
|
4,296
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
4,293
|
|
|
$
|
—
|
|
|
$
|
4,293
|
|
Corporate bonds
|
10,856
|
|
|
—
|
|
|
(13
|
)
|
|
10,843
|
|
|
—
|
|
|
10,843
|
|
||||||
Equity securities
|
123
|
|
|
—
|
|
|
(78
|
)
|
|
45
|
|
|
45
|
|
|
—
|
|
||||||
Municipal bonds
|
55,723
|
|
|
—
|
|
|
(65
|
)
|
|
55,658
|
|
|
—
|
|
|
55,658
|
|
||||||
U.S. government and agency securities
|
20,033
|
|
|
9
|
|
|
(4
|
)
|
|
20,038
|
|
|
20,038
|
|
|
—
|
|
||||||
|
$
|
91,031
|
|
|
$
|
9
|
|
|
$
|
(163
|
)
|
|
$
|
90,877
|
|
|
$
|
20,083
|
|
|
$
|
70,794
|
|
5.
|
Patent Assets, Net
|
|
December 31, 2016
|
|
Additions
|
|
Disposals
|
|
December 31, 2017
|
||||||||
Patent assets
|
$
|
932,283
|
|
|
$
|
106,010
|
|
|
$
|
(7,857
|
)
|
|
$
|
1,030,436
|
|
Accumulated amortization
|
(719,284
|
)
|
|
(155,592
|
)
|
|
7,488
|
|
|
(867,388
|
)
|
||||
Patent assets, net
|
$
|
212,999
|
|
|
|
|
|
|
$
|
163,048
|
|
|
December 31, 2015
|
|
Additions
|
|
Disposals
|
|
December 31, 2016
|
||||||||
Patent assets
|
$
|
824,258
|
|
|
$
|
117,457
|
|
|
$
|
(9,432
|
)
|
|
$
|
932,283
|
|
Accumulated amortization
|
(569,698
|
)
|
|
(158,814
|
)
|
|
9,228
|
|
|
(719,284
|
)
|
||||
Patent assets, net
|
$
|
254,560
|
|
|
|
|
|
|
$
|
212,999
|
|
2018
|
$
|
103,088
|
|
2019
|
48,232
|
|
|
2020
|
11,728
|
|
|
Total estimated future amortization expense
|
$
|
163,048
|
|
6.
|
Property and Equipment, Net
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Internal-use software
|
$
|
8,530
|
|
|
$
|
7,827
|
|
Leasehold improvements
|
2,098
|
|
|
2,169
|
|
||
Computer, equipment and software
|
5,960
|
|
|
5,204
|
|
||
Furniture and fixtures
|
755
|
|
|
935
|
|
||
Construction-in-progress
|
21
|
|
|
183
|
|
||
Total property and equipment, gross
|
17,364
|
|
|
16,318
|
|
||
Less: Accumulated depreciation and amortization
|
(12,274
|
)
|
|
(9,370
|
)
|
||
Total property and equipment, net
|
$
|
5,090
|
|
|
$
|
6,948
|
|
7.
|
Business Combinations
|
|
Estimated Fair Value
|
|
Estimated useful life
|
||
Current assets
|
$
|
19,357
|
|
|
|
Intangible assets:
|
|
|
|
||
Customer relationships
|
58,000
|
|
|
9 - 10 years
|
|
Trademarks
|
3,200
|
|
|
1 - 6 years
|
|
Developed technology
|
6,400
|
|
|
3 years
|
|
Goodwill
|
145,984
|
|
|
|
|
Property, plant, equipment and other long term assets
|
3,347
|
|
|
|
|
Deferred tax asset
|
10,595
|
|
|
|
|
Current liabilities
|
(7,280
|
)
|
|
|
|
Deferred tax liability
|
(5,477
|
)
|
|
|
|
Other long term liabilities
|
(826
|
)
|
|
|
|
Cash purchase consideration paid
|
$
|
233,300
|
|
|
|
|
Year Ended December 31,
|
|||
|
|
2016
|
||
Discovery Services
|
|
|
||
Revenue
|
|
$
|
66,112
|
|
Cost of revenue
|
|
33,397
|
|
|
Selling, general and administrative expenses
|
|
23,990
|
|
|
Impairment losses
|
|
—
|
|
|
Operating income
|
|
$
|
8,725
|
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Revenue
|
$
|
330,457
|
|
|
$
|
336,047
|
|
Net income (loss)
|
(79,143
|
)
|
|
18,824
|
|
||
Basic net income (loss) per share
|
(1.61
|
)
|
|
0.37
|
|
||
Diluted net income (loss) per share
|
(1.61
|
)
|
|
0.37
|
|
8.
|
Goodwill
|
|
Patent Risk Management
|
|
Discovery Services
|
|
Total
|
||||||
Balance as of December 31, 2016
|
$
|
19,978
|
|
|
$
|
131,344
|
|
|
$
|
151,322
|
|
Impairment losses
|
—
|
|
|
(89,035
|
)
|
|
(89,035
|
)
|
|||
Foreign currency translation adjustments
|
—
|
|
|
8,469
|
|
|
8,469
|
|
|||
Balance as of December 31, 2017
|
$
|
19,978
|
|
|
$
|
50,778
|
|
|
$
|
70,756
|
|
9.
|
Intangible Assets, Net
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||
|
Weighted-Average Life (years)
|
|
Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
Customer relationships
|
9.4
|
|
$
|
56,688
|
|
|
$
|
(11,764
|
)
|
|
$
|
44,924
|
|
|
$
|
55,719
|
|
|
$
|
(6,323
|
)
|
|
$
|
49,396
|
|
Trademarks
|
6.0
|
|
2,900
|
|
|
(938
|
)
|
|
1,962
|
|
|
4,879
|
|
|
(2,439
|
)
|
|
2,440
|
|
||||||
Developed technology
|
3.0
|
|
6,237
|
|
|
(4,036
|
)
|
|
2,201
|
|
|
5,802
|
|
|
(1,978
|
)
|
|
3,824
|
|
||||||
Covenant not to compete
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,900
|
|
|
(1,604
|
)
|
|
296
|
|
||||||
Proprietary data and models
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,100
|
|
|
(2,006
|
)
|
|
94
|
|
||||||
|
|
|
$
|
65,825
|
|
|
$
|
(16,738
|
)
|
|
$
|
49,087
|
|
|
$
|
70,400
|
|
|
$
|
(14,350
|
)
|
|
$
|
56,050
|
|
2018
|
$
|
8,562
|
|
2019
|
6,644
|
|
|
2020
|
6,523
|
|
|
2021
|
6,523
|
|
|
2022
|
6,069
|
|
|
Thereafter
|
14,766
|
|
|
Total estimated future amortization expense
|
$
|
49,087
|
|
10.
|
Accrued Liabilities
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Accrued payroll-related expenses
|
$
|
10,669
|
|
|
$
|
11,516
|
|
Accrued other expenses
|
5,067
|
|
|
5,282
|
|
||
Total accrued liabilities
|
$
|
15,736
|
|
|
$
|
16,798
|
|
11.
|
Debt
|
12.
|
Commitments and Contingencies
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Rent expense
|
$
|
6.0
|
|
|
$
|
5.9
|
|
|
$
|
4.1
|
|
Sublease income
|
1.1
|
|
|
0.7
|
|
|
0.6
|
|
|||
Rent expense, net of sublease income
|
$
|
4.9
|
|
|
$
|
5.2
|
|
|
$
|
3.5
|
|
2018
|
$
|
4,528
|
|
2019
|
3,619
|
|
|
2020
|
654
|
|
|
2021
|
227
|
|
|
2022
|
232
|
|
|
Thereafter
|
379
|
|
|
Future non-cancelable minimum operating lease payments
|
9,639
|
|
|
Less: minimum payments to be received from non-cancelable subleases
|
(2,202
|
)
|
|
Total future non-cancelable minimum operating lease payments, net
|
$
|
7,437
|
|
13.
|
Stockholder's Equity
|
|
|
|
Options Outstanding
|
||||||||||||
|
Shares Available for Grant
|
|
Number of Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life in Years
|
|
Aggregate Intrinsic Value
|
||||||
Balance - December 31, 2016
|
3,586
|
|
|
1,768
|
|
|
$
|
11.63
|
|
|
|
|
|
||
Shares authorized
|
1,000
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Options exercised
|
—
|
|
|
(690
|
)
|
|
8.64
|
|
|
|
|
|
|||
Options forfeited
|
99
|
|
|
(99
|
)
|
|
16.16
|
|
|
|
|
|
|||
Restricted stock units granted
|
(2,006
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Restricted stock units forfeited
|
1,597
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Restricted stock units withheld related to net share settlement of restricted stock units
|
452
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Balance - December 31, 2017
|
4,728
|
|
|
979
|
|
|
13.29
|
|
|
2.6
|
|
$
|
2,396
|
|
|
Vested and exercisable - December 31, 2017
|
|
|
979
|
|
|
13.29
|
|
|
2.6
|
|
2,396
|
|
|||
Vested and expected to vest - December 31, 2017
|
|
|
979
|
|
|
13.29
|
|
|
2.6
|
|
2,396
|
|
|
Number of Shares
|
|
Weighted-Average Grant Date Fair Value
|
|
Aggregate Intrinsic Value
|
|||||
Non-vested units - December 31, 2016
|
3,424
|
|
|
$
|
11.53
|
|
|
|
||
Granted
|
2,006
|
|
|
11.86
|
|
|
|
|||
Vested
|
(1,313
|
)
|
|
12.23
|
|
|
|
|||
Forfeited
|
(1,597
|
)
|
|
10.73
|
|
|
|
|||
Non-vested units - December 31, 2017
|
2,520
|
|
|
11.95
|
|
|
$
|
33,874
|
|
|
|
Year Ended December 31,
|
||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||
Dividend yield
|
|
—
|
|
|
—
|
|
|
n/a
|
||
Risk free rate
|
|
1.03
|
%
|
|
1.08
|
%
|
|
n/a
|
||
Expected volatility
|
|
32
|
%
|
|
38
|
%
|
|
n/a
|
||
Grant date fair value
|
|
$
|
11.95
|
|
|
$
|
6.28
|
|
|
n/a
|
|
Shares Repurchased
|
|
Average Price per Share
|
|
Value of Shares Repurchased
|
|||||
Cumulative shares repurchased as of January 1, 2017
|
7,917
|
|
|
$
|
10.90
|
|
|
$
|
86,276
|
|
Repurchase of shares of common stock
|
700
|
|
|
11.84
|
|
|
8,290
|
|
||
Cumulative shares repurchased as of December 31, 2017
|
8,617
|
|
|
$
|
10.97
|
|
|
$
|
94,566
|
|
14.
|
Income Taxes
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Domestic
|
|
$
|
(8,078
|
)
|
|
$
|
28,536
|
|
|
$
|
65,445
|
|
International
|
|
(50,987
|
)
|
|
3,773
|
|
|
54
|
|
|||
Total income (loss) before provision for income taxes
|
|
$
|
(59,065
|
)
|
|
$
|
32,309
|
|
|
$
|
65,499
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
3,886
|
|
|
$
|
(12,400
|
)
|
|
$
|
(23,456
|
)
|
State
|
|
207
|
|
|
(4,038
|
)
|
|
(2,790
|
)
|
|||
Foreign
|
|
(9,743
|
)
|
|
(11,097
|
)
|
|
(12,406
|
)
|
|||
Total current provision for income taxes
|
|
(5,650
|
)
|
|
(27,535
|
)
|
|
(38,652
|
)
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
(15,354
|
)
|
|
11,596
|
|
|
12,022
|
|
|||
State
|
|
238
|
|
|
1,097
|
|
|
553
|
|
|||
Foreign
|
|
688
|
|
|
768
|
|
|
—
|
|
|||
Total deferred benefit (expense) for income taxes
|
|
(14,428
|
)
|
|
13,461
|
|
|
12,575
|
|
|||
Total provision for income taxes
|
|
$
|
(20,078
|
)
|
|
$
|
(14,074
|
)
|
|
$
|
(26,077
|
)
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Deferred revenue
|
|
$
|
2,687
|
|
|
$
|
1,843
|
|
Reserves and other
|
|
4,016
|
|
|
6,292
|
|
||
Stock-based compensation
|
|
2,643
|
|
|
5,682
|
|
||
Depreciation and amortization
|
|
10,516
|
|
|
14,050
|
|
||
Net operating loss carryforwards
|
|
1,768
|
|
|
7,246
|
|
||
Foreign tax credits
|
|
1,095
|
|
|
—
|
|
||
Total deferred tax assets
|
|
22,725
|
|
|
35,113
|
|
||
Valuation allowance
|
|
(2,810
|
)
|
|
(875
|
)
|
||
Net deferred tax assets
|
|
$
|
19,915
|
|
|
$
|
34,238
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Tax at statutory federal rate
|
|
$
|
(20,673
|
)
|
|
$
|
11,307
|
|
|
$
|
22,939
|
|
State tax – net of federal benefit
|
|
(1,649
|
)
|
|
1,674
|
|
|
1,459
|
|
|||
Permanent differences
|
|
6,138
|
|
|
1,000
|
|
|
663
|
|
|||
Foreign tax
|
|
27,164
|
|
|
8,969
|
|
|
12,370
|
|
|||
Foreign tax credits
|
|
(7,571
|
)
|
|
(9,191
|
)
|
|
(12,370
|
)
|
|||
Foreign income not taxed at federal rate
|
|
—
|
|
|
—
|
|
|
3
|
|
|||
Change in valuation allowance
|
|
2,944
|
|
|
(222
|
)
|
|
1,097
|
|
|||
Rate differential impact from Tax Cuts and Jobs Act
|
|
14,557
|
|
|
—
|
|
|
—
|
|
|||
Other
|
|
(832
|
)
|
|
537
|
|
|
(84
|
)
|
|||
Total provision for income taxes
|
|
$
|
20,078
|
|
|
$
|
14,074
|
|
|
$
|
26,077
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance as of January 1,
|
|
$
|
8,300
|
|
|
$
|
5,315
|
|
|
$
|
3,707
|
|
Gross increase related to current period tax positions
|
|
597
|
|
|
1,567
|
|
|
1,606
|
|
|||
Gross increase related to prior period tax positions
|
|
—
|
|
|
1,841
|
|
|
2
|
|
|||
Gross decrease related to prior period tax positions
|
|
(1,236
|
)
|
|
(423
|
)
|
|
—
|
|
|||
Balance as of December 31,
|
|
$
|
7,661
|
|
|
$
|
8,300
|
|
|
$
|
5,315
|
|
15.
|
Related-Party Transactions
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
|
$
|
7.4
|
|
|
$
|
9.8
|
|
|
$
|
9.3
|
|
Selling, general and administrative expenses
|
|
0.5
|
|
|
0.8
|
|
|
0.3
|
|
16.
|
Segment Reporting
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Patent Risk Management
|
|
|
|
||||
Revenue
|
$
|
252,253
|
|
|
$
|
266,995
|
|
Cost of revenue
|
161,409
|
|
|
163,865
|
|
||
Selling, general and administrative expenses
|
63,795
|
|
|
76,467
|
|
||
Adjusted operating income
|
27,049
|
|
|
26,663
|
|
||
Stock-based compensation, including related taxes
|
13,197
|
|
|
17,633
|
|
||
Depreciation and amortization
|
158,297
|
|
|
162,262
|
|
||
Adjusted EBITDA
|
$
|
198,543
|
|
|
$
|
206,558
|
|
|
|
|
|
||||
Discovery Services
|
|
|
|
||||
Revenue
|
$
|
78,204
|
|
|
$
|
66,112
|
|
Cost of revenue
|
42,300
|
|
|
33,397
|
|
||
Selling, general and administrative expenses
|
26,712
|
|
|
23,990
|
|
||
Adjusted operating income
|
9,192
|
|
|
8,725
|
|
||
Stock-based compensation, including related taxes
|
1,791
|
|
|
935
|
|
||
Depreciation and amortization
|
9,846
|
|
|
9,361
|
|
||
Adjusted EBITDA
|
$
|
20,829
|
|
|
$
|
19,021
|
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
|
|
|
||||
Subtotal segment adjusted EBITDA
|
$
|
219,372
|
|
|
$
|
225,579
|
|
Depreciation and amortization
|
(168,143
|
)
|
|
(171,623
|
)
|
||
Stock-based compensation, including related taxes
|
(14,988
|
)
|
|
(18,568
|
)
|
||
Impairment losses
|
(94,051
|
)
|
|
—
|
|
||
Interest and other expense, net
|
(1,255
|
)
|
|
(3,079
|
)
|
||
Provision for income taxes
|
(20,078
|
)
|
|
(14,074
|
)
|
||
Net income (loss)
|
$
|
(79,143
|
)
|
|
$
|
18,235
|
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
|
|
|
||||
Subtotal segment adjusted operating income
|
$
|
36,241
|
|
|
$
|
35,388
|
|
Impairment losses
|
(94,051
|
)
|
|
—
|
|
||
Operating income (loss)
|
$
|
(57,810
|
)
|
|
$
|
35,388
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Patent risk management
|
$
|
388,559
|
|
|
$
|
501,540
|
|
Discovery services
(1)
|
162,271
|
|
|
233,749
|
|
||
Total assets
|
$
|
550,830
|
|
|
$
|
735,289
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
United States
|
$
|
196,454
|
|
|
59
|
%
|
|
$
|
194,196
|
|
|
58
|
%
|
|
$
|
186,439
|
|
|
64
|
%
|
Japan
|
34,844
|
|
|
11
|
|
|
37,200
|
|
|
11
|
|
|
36,195
|
|
|
12
|
|
|||
Korea
|
18,414
|
|
|
6
|
|
|
25,288
|
|
|
8
|
|
|
28,319
|
|
|
10
|
|
|||
Rest of world
|
80,745
|
|
|
24
|
|
|
76,423
|
|
|
23
|
|
|
40,928
|
|
|
14
|
|
|||
Total revenue
|
$
|
330,457
|
|
|
100
|
%
|
|
$
|
333,107
|
|
|
100
|
%
|
|
$
|
291,881
|
|
|
100
|
%
|
17.
|
Selected Quarterly Financial Information (Unaudited)
|
|
|
Three Months Ended
|
|||||||||||||||
|
|
March 31,
2017 |
|
June 30,
2017 |
|
September 30,
2017 |
|
December 31,
2017 |
|||||||||
Revenue
|
|
$
|
82,512
|
|
|
$
|
80,434
|
|
|
$
|
85,702
|
|
|
$
|
81,809
|
|
|
Cost of revenue
|
|
51,298
|
|
|
51,142
|
|
|
52,282
|
|
|
48,987
|
|
|||||
Selling, general and administrative expenses
|
|
21,121
|
|
|
23,124
|
|
|
22,517
|
|
|
23,745
|
|
|||||
Impairment losses
(1)
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
94,051
|
|
||||
Operating income (loss)
|
|
10,093
|
|
|
6,168
|
|
|
10,903
|
|
|
(84,974
|
)
|
|||||
Interest and other income (expense), net
(2)
|
|
(533
|
)
|
|
427
|
|
|
88
|
|
|
(1,237
|
)
|
|||||
Income (loss) before provision for income taxes
|
|
9,560
|
|
|
6,595
|
|
|
10,991
|
|
|
(86,211
|
)
|
|||||
Provision for income taxes
|
|
3,567
|
|
|
2,403
|
|
|
4,625
|
|
|
9,483
|
|
|||||
Net income (loss)
|
|
$
|
5,993
|
|
|
$
|
4,192
|
|
|
$
|
6,366
|
|
|
$
|
(95,694
|
)
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) per share
(3)
:
|
|
|
|
|
|
|
|
|
|||||||||
Basic
|
|
$
|
0.12
|
|
|
$
|
0.09
|
|
|
$
|
0.13
|
|
|
$
|
(1.93
|
)
|
|
Diluted
|
|
$
|
0.12
|
|
|
$
|
0.08
|
|
|
$
|
0.13
|
|
|
$
|
(1.93
|
)
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other Data:
|
|
|
|
|
|
|
|
|
|||||||||
Deferred revenue, including current portion
|
|
$
|
136,227
|
|
|
$
|
114,561
|
|
|
$
|
102,939
|
|
|
$
|
106,868
|
|
|
Stock-based compensation expense
|
|
$
|
2,734
|
|
|
$
|
4,343
|
|
|
$
|
3,798
|
|
|
$
|
3,724
|
|
|
|
Three Months Ended
|
||||||||||||||
|
|
March 31,
2016 |
|
June 30,
2016 |
|
September 30,
2016 |
|
December 31,
2016 |
||||||||
Revenue
|
|
$
|
79,735
|
|
|
$
|
83,109
|
|
|
$
|
88,461
|
|
|
$
|
81,802
|
|
Cost of revenue
|
|
47,666
|
|
|
49,070
|
|
|
50,830
|
|
|
49,696
|
|
||||
Selling, general and administrative expenses
|
|
26,895
|
|
|
25,904
|
|
|
23,615
|
|
|
24,043
|
|
||||
Operating income
|
|
5,174
|
|
|
8,135
|
|
|
14,016
|
|
|
8,063
|
|
||||
Interest and other income (expense), net
(2)
|
|
1,805
|
|
|
(1,549
|
)
|
|
(1,250
|
)
|
|
(2,085
|
)
|
||||
Income before provision for income taxes
|
|
6,979
|
|
|
6,586
|
|
|
12,766
|
|
|
5,978
|
|
||||
Provision for income taxes
|
|
2,742
|
|
|
2,436
|
|
|
4,651
|
|
|
4,245
|
|
||||
Net income
|
|
$
|
4,237
|
|
|
$
|
4,150
|
|
|
$
|
8,115
|
|
|
$
|
1,733
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share
(3)
:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.16
|
|
|
$
|
0.04
|
|
Diluted
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.16
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other Data:
|
|
|
|
|
|
|
|
|
||||||||
Deferred revenue, including current portion
|
|
$
|
139,992
|
|
|
$
|
123,133
|
|
|
$
|
102,691
|
|
|
$
|
130,408
|
|
Stock-based compensation expense
|
|
$
|
4,929
|
|
|
$
|
4,899
|
|
|
$
|
4,269
|
|
|
$
|
4,178
|
|
18.
|
Subsequent Event
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accounting Fees and Services.
|
Item 15.
|
Exhibits and Consolidated Financial Statement Schedules.
|
1.
|
Consolidated Financial Statements
|
2.
|
Consolidated Financial Statement Schedules
|
3.
|
Exhibits
|
Item 16.
|
Form 10-K Summary.
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit
Number |
|
Exhibit Title
|
|
Form
|
|
File No.
|
|
Exhibit
No. |
|
Filing
Date |
|
Provided
Herewith |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amended and Restated Certificate of Incorporation of RPX Corporation
|
|
S-1
|
|
333-171817
|
|
3.2
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amended and Restated Bylaws of RPX Corporation
|
|
8-K
|
|
001-35146
|
|
3.1
|
|
12/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reference is made to Exhibits 3.1 and 3.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Common Stock Certificate evidencing shares of common stock of the Registrant
|
|
S-1/A
|
|
333-171817
|
|
4.2
|
|
4/29/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Indemnification Agreement between the Registrant and each officer and director
|
|
S-1
|
|
333-171817
|
|
10.1
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment Offer Letter by and between the Registrant and John Amster, dated as of August 9, 2008
|
|
S-1
|
|
333-171817
|
|
10.2
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment Offer Letter by and between the Registrant and Mallun Yen, dated as of October 25, 2010
|
|
S-1
|
|
333-171817
|
|
10.7
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 Stock Plan, as amended
|
|
S-1
|
|
333-171817
|
|
10.8
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Notice of Stock Option Grant (Early Exercise) and Stock Option Agreement under 2008 Stock Plan
|
|
S-1
|
|
333-171817
|
|
10.9
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Notice of Stock Option Grant and Stock Option Agreement under 2008 Stock Plan
|
|
S-1
|
|
333-171817
|
|
10.10
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Notice of Stock Option Exercise (Early Exercise) under 2008 Stock Plan
|
|
S-1
|
|
333-171817
|
|
10.11
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Notice of Stock Option Exercise under 2008 Stock Plan
|
|
S-1
|
|
333-171817
|
|
10.12
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 Equity Incentive Plan
|
|
S-1/A
|
|
333-171817
|
|
10.25
|
|
3/7/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Notice of Stock Option Grant and Stock Option Agreement under 2011 Equity Incentive Plan
|
|
S-1/A
|
|
333-171817
|
|
10.32
|
|
4/29/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Notice of Stock Option Grant (Non-Employee Directors) and Stock Option Agreement (Non-Employee Directors) under 2011 Equity Incentive Plan
|
|
S-1/A
|
|
333-171817
|
|
10.33
|
|
4/29/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Notice of Stock Unit Award and Stock Unit Agreement under 2011 Equity Incentive Plan
|
|
S-1/A
|
|
333-171817
|
|
10.34
|
|
4/29/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sublease by and between Registrant and Sedgwick, Detert, Moran & Arnold LLP, dated as of September 29, 2009
|
|
S-1
|
|
333-171817
|
|
10.23
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office Lease Agreement between Registrant and PPF Paramount One Market Plaza Owner, L.P., dated as of July 28, 2010
|
|
S-1
|
|
333-171817
|
|
10.24
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Amendment to Lease between Registrant and PPF Paramount One Market Plaza Owner, L.P., dated as of March 9, 2012
|
|
10-K
|
|
001-35146
|
|
10.31
|
|
3/26/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Amendment to Lease between Registrant and PPF Paramount One Market Plaza Owner, L.P. dated as of May 31, 2012
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Amendment to Lease between Registrant and PPF Paramount One Market Plaza Owner, L.P. dated as of June 26, 2017
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Purchase Agreement (Redacted), dated December 22, 2014, by and among Rockstar Consortium US LP, Rockstar Consortium LLC, Bockstar Technologies LLC, Constellation Technologies LLC, MobileStar Technologies LLC, NetStar Technologies LLC, RPX Clearinghouse LLC, and the Registrant
|
|
8-K/A
|
|
001-35146
|
|
10.1
|
|
4/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment Offer Letter by and between the Registrant and Robert Heath, dated as of March 15, 2011
|
|
10-K
|
|
001-35146
|
|
10.29
|
|
3/2/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agreement and Plan of Merger entered into on December 13, 2015
|
|
8-K
|
|
001-35146
|
|
2.1
|
|
1/28/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agreement, dated May 25, 2016, by and among RPX Corporation, the Mangrove Partners Master Fund, Ltd. and Mangrove Partners
|
|
8-K
|
|
001-35146
|
|
10.1
|
|
5/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment Offer Letter by and between the Registrant and Trevor Campion, dated as of January 21, 2016
|
|
10-Q
|
|
001-35146
|
|
10.1
|
|
5/10/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Agreement, dated as of February 26, 2016, by and among RPX Corporation, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the lenders party thereto
|
|
8-K
|
|
001-35146
|
|
10.1
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment Offer Letter by and between the Registrant and Steven Swank, dated as of June 7, 2010
|
|
10-Q
|
|
001-35146
|
|
10.1
|
|
5/4/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPX Corporation Compensation Program for Non-Employee Directors, as Amended May 23, 2017
|
|
10-Q
|
|
001-35146
|
|
10.1
|
|
8/3/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment Offer Letter by and between the Registrant and David Anderson, dated as of October 12, 2010
|
|
10-Q
|
|
001-35146
|
|
10.2
|
|
8/3/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation Agreement by and between the Registrant and Steven S. Swank dated as of February 1, 2018
|
|
8-K
|
|
001-35146
|
|
10.1
|
|
2/5/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment Offer Letter by and between the Registrant and Martin Roberts, dated as of September 17, 2010
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
List of subsidiaries of the Registrant
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Power of Attorney (Included in Signature Page)
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certification of Chief Executive Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certification of Chief Financial Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
RPX CORPORATION
|
||
|
|
(Registrant)
|
||
|
|
|
||
March 5, 2018
|
|
By:
|
|
/s/ MARTIN E. ROBERTS
|
|
|
|
|
Martin E. Roberts
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ MARTIN E. ROBERTS
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
March 5, 2018
|
Martin E. Roberts
|
|
|
|
|
|
|
|
|
|
/s/ DAVID J. ANDERSON
|
|
Chief Financial Officer (Principal Financial and Accounting Officer)
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March 5, 2018
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David J. Anderson
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/s/ SHELBY W. BONNIE
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Chairman of the Board of Directors
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March 5, 2018
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Shelby W. Bonnie
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/s/ ANDREW D. AFRICK
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Director
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March 5, 2018
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Andrew D. Africk
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/s/ FRANK E. DANGEARD
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Director
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March 5, 2018
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Frank E. Dangeard
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/s/ STEVEN L. FINGERHOOD
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Director
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March 5, 2018
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Steven L. Fingerhood
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/s/ GILBERT S. PALTER
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Director
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March 5, 2018
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Gilbert S. Palter
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/s/ SANFORD R. ROBERTSON
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Director
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March 5, 2018
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Sanford R. Robertson
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/s/ MALLUN YEN
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Director
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March 5, 2018
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Mallun Yen
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/s/ MAGDALENA YESIL
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Director
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March 5, 2018
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Magdalena Yesil
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A.
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Landlord and Tenant are parties to that certain lease dated July 28, 2010 (the “
Original Lease
”), as amended by that certain First Amendment to Lease dated as of March 9, 2012 (the “
First Amendment
”), pursuant to which Tenant has agreed to lease from Landlord space which, following the Reduction Date (defined in the First Amendment) will consist of 67,059 rentable square feet on the seventh (7th), eighth (8th), tenth (10th) and eleventh (11th) floors of the Steuart Tower in the building commonly known as One Market Plaza, located at One Market Street, San Francisco, California (the “
Building
”).
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B.
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The First Amendment failed to include a reference to Suite 1005 on the tenth (10th) floor of the Steuart Tower as being part of the 10th Floor Space, and Landlord and Tenant wish to correct this oversight and to correct two other typographical errors in the First Amendment.
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A.
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Landlord and Tenant are parties to that certain Office Lease dated as of July 28, 2010 (the “
Original Lease
”), which Original Lease has been previously amended by that certain First Amendment to Lease dated as of March 9, 2012 (the “
First Amendment
”) and by that certain Second Amendment to Lease dated as of May 31, 2012 (the “
Second Amendment
”) (the Original Lease, as so amended, being referred to herein as the “
Lease
”), pursuant to which Landlord leases to Tenant space (the “
Premises
”) Steuart Tower in the building commonly known as One Market, located at One Market Street, San Francisco, California (the “
Building
”), as follows:
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(i)
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Suite 700, on the seventh (7th) floor of the Building, comprised of 14,265 rentable square feet (“
RSF
”) (“
Suite 700
”);
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(ii)
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Suite 800, located on the eighth (8th) floor of the Steuart Tower, containing 17,598 RSF (“
Suite 800
”);
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(iii)
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certain space located on the tenth (10th) floor of the Steuart Tower defined in the First Amendment as the “10th Floor Space” comprised of 17,598 RSF(“
Suite 1000
”); and
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(iv)
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Suite 1100, on the eleventh (11th) floor of the Building, comprised of 17,598 RSF (“
Suite 1100
”) (i.e., an aggregate Premises RSF of 67,059 RSF)
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B.
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Tenant desires to surrender Suite 800 to Landlord (17,598 RSF) (the Current Premises, less Suite 800, is referred to herein as the “
Remaining Premises
”), and Landlord is willing to accept such surrender on the following terms and conditions.
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Period
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Annual Rate
Per RSF |
Monthly
Base Rent |
August 16, 2017 - April 30, 2018
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$62.00
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$73,702.50
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May 1, 2018 - April 30, 2019
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$63.00
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$74,891.25
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May 1, 2019 - October 31, 2019
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$64.00
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$76,080.00
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Period
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Annual Rate
Per RSF |
Monthly
Base Rent |
August 16, 2017 - April 30, 2018
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$64.00
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$93,856.00
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May 1, 2018 - April 30, 2019
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$65.00
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$95,322.50
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May 1, 2019 - October 31, 2019
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$66.00
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$96,789.00
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Period
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Annual Rate
Per RSF |
Monthly
Base Rent |
August 16, 2017 - April 30, 2018
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$64.00
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$93,856.00
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May 1, 2018 - April 30, 2019
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$65.00
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$95,322.50
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May 1, 2019 - October 31, 2019
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$66.00
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$96,789.00
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Exhibit 21.1
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List of Subsidiaries of RPX Corporation
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Legal Name
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Jurisdiction
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Inventus, LLC
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Texas
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Inventus Holdings UK Ltd.
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United Kingdom
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Inventus Solutions, Inc.
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Delaware
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Inventus Solutions GMBH
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Germany
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Inventus Solutions HK Limited
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Hong Kong
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RPX Asia Corporation
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Japan
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RPX Clearinghouse LLC
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Delaware
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RPX Consulting LLC
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Delaware
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RPX Freedom Corporation
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Delaware
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RPX Insurance Services, LLC
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Delaware
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RPX Reinsurance LLC
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Hawaii
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1.
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I have reviewed this Annual Report on Form 10-K of RPX Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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March 5, 2018
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/s/ MARTIN E. ROBERTS
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Martin E. Roberts
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Chief Executive Officer
(Principal Executive Officer)
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1.
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I have reviewed this Annual Report on Form 10-K of RPX Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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March 5, 2018
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/s/ DAVID J. ANDERSON
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David J. Anderson
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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Date:
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March 5, 2018
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/s/ MARTIN E. ROBERTS
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Martin E. Roberts
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Chief Executive Officer
(Principal Executive Officer)
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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March 5, 2018
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/s/ DAVID J. ANDERSON
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David J. Anderson
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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