In 2011, a group of five companies spent the remarkable sum of $4.5 billion to purchase thousands of patents from Nortel, a bankrupt Canadian telecom. Microsoft, Apple, Ericsson, Sony, and Blackberry formed "Rockstar Bidco," successfully keeping the patents out of the hands of Google.

After the sale, Rockstar became just another patent-holding company, albeit one with a lot of ammunition. A handful of engineers from Nortel stayed on in a small Ottawa office, working to dissect other companies' products and bolster infringement claims. Rockstar also opened a small office in Plano, a minimal presence that it used to try to keep lawsuits in its chosen venue, the Eastern District of Texas.

Now Rockstar is retiring from the stage. A group of more than 30 companies operating under the aegis of RPX, a defensive patent aggregator, paid $900 million to acquire the approximately 4,000 "patent assets," a phrase that includes both US and international patents, as well as patent applications. The group of buyers includes companies involved in active litigation with Rockstar: most notably, Cisco and Google. RPX itself paid $35 million of the purchase price.

RPX said the patents will be treated like the other patents in its portfolio: the company has pledged since its founding not to file lawsuits over, or otherwise assert, its patents. The consortium will pay a transaction fee to RPX, in addition to the $900 million; that sum isn't being disclosed at this time. Companies that want licenses to the Nortel patents will be offered them on "fair, reasonable and non-discriminatory terms."

The impending settlements from Google and Cisco reported last month are part of the RPX deal. Google's contribution hasn't been disclosed, while Cisco acknowledged it would be making a payment of $188 million.

Patent troll gets a haircut

There are a bunch of hunky-dory quotes in the press release: on the buyers' side, Cisco GC Mark Chandler hailed "a global consortium of unprecedented scale" that "came together willingly and reached a fair value for licensing patent rights." On the Rockstar owners' side, Microsoft Deputy GC Erich Andersen said it was "our patent system working to promote innovation." He continued: "We joined Rockstar to ensure that both Microsoft and our industry would have broad access to the Nortel patent portfolio, and we’re pleased to have accomplished that goal through this sale and our valuable license to the patents being sold."

It's damage control, being treated as business success. If anyone believes the Rockstar transactions are models of efficiency, I have some patents on a bridge in Brooklyn I'd like to sell them.

The Rockstar auction—and ensuing lawsuits—may end up as markers of a high point in the sheer wastefulness of the smartphone patent wars. The founders of the Rockstar group may get payments from other sources, but the $900 million in this deal is surely the bulk of their compensation. Conservatively speaking, at least half of the $4.5 billion of value in the Rockstar patents is up in smoke, nowhere to be seen.

That's not all the waste. The threat of endless patent war was a big factor in spurring Google to spend $12.5 billion on Motorola, only to sell it a few years later for less than $3 billion.

Of course, all parties involved are likely to say it wasn't that bad. Google still has its Motorola patents, and before sending Rockstar on its patent-trolling mission, the owners took about 2,000 of the 6,000 patents and moved them into their own portfolios. Valuing patents is a squishy science. The five companies behind Rockstar want it to look like they made a great decision and have an invaluable set of assets. Don't be fooled. The Rockstar companies already had thousands of patents covering a vast array of technology—more than enough to launch an assault against almost any competitor, existing or potential.

Regardless, the fact is that Rockstar is worth far less than it originally was. And if you think patent trolls hurt more than they help innovation, that's a good thing. The trolling business, at least the high-end kind that Rockstar hoped to do, has gotten a lot tougher in the past couple years. Patent defendants have new case law on their side, like this summer's Alice v. CLS Bank decision, as well as new tools like inter partes reviews at the patent office.