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Image source: RPX.

Patent trolls are an unfortunate fact of life for tech companies, but RPX (NASDAQ:RPXC) wants to make things easier for its clients. By taking proactive measures to prevent and defend against patent claims, RPX has brought some big-name companies into its fold, but coming into Tuesday's fourth-quarter financial report, investors believe that RPX is likely to see its earnings shrink from year-ago levels. Unless RPX can establish its ability to keep its bottom line moving higher, it could be hard for the stock to follow suit. Let's take a closer look at what investors should focus on from RPX this quarter.

Stats on RPX

Analyst EPS Estimate

$0.14

Change From Year-Ago EPS

(42%)

Revenue Estimate

$69.21 million

Change From Year-Ago Revenue

2.2%

Earnings Beats in Past 4 Quarters

4

Data source: Yahoo! Finance.

What's next for RPX earnings?
In recent months, analysts have generally been neutral on RPX earnings, cutting fourth-quarter estimates by $0.01 per share but raising their first-quarter projections by the same penny. The stock has been under pressure, falling 18% since late October.

RPX's third-quarter earnings report gave investors a good sense of the challenges that the patent company has dealt with lately. Growth slowed dramatically from past quarters, with revenue climbing just 4%. Adjusted net income came in much weaker, falling by more than 25% and producing similar declines in earnings per share. RPX continued to see new clients come in, boosting its client count to 245 and spending more on patent assets in order to build out its overall portfolio. Yet RPX's guidance wasn't particularly strong going forward, and some investors seem to remain skeptical about the company's overall strategy in trying to reduce patent litigation risk.

To foster growth, RPX has made a number of moves in recent months. The company released a new type of insurance that it calls volatility risk coverage, which is essentially litigation insurance for companies that want to control their patent litigation costs. RPX hopes that the insurance product will appeal to companies that want to budget and plan for anticipated expenses related to patent claims but that face ups and downs in the number of claims made and the costs involved in handling them.

RPX has also put substantial amounts of money behind its growth efforts, announcing in December that it would acquire discovery management specialist Inventus Solutions for $232 million in cash. By adding services that will assist corporate legal departments handle the internal workload involved in dealing with patent litigation, RPX believes it can be a complete solution provider for more of its clients and enable some customers to turn over much of the responsibility for putting together effective responses to lawsuits.

Finally, RPX continues to build out its portfolio of patent properties, saying in December that it would spend more than $100 million to obtain licensing rights from patent-licensing specialist Round Rock Research LLC for more than 20 of its clients. Round Rock has had a close relationship with memory chip manufacturer Micron Technology (NASDAQ:MU), and it holds a number of Micron patents related to semiconductor manufacturing and circuit technology. By bringing together clients and patent owners, RPX seeks to avoid litigation entirely and facilitate agreements in a way that will benefit everyone -- and earn RPX a fee in the process.

In the RPX earnings report, investors need to look beyond the numbers to see if the company has successfully built a long-term business model that will work to reduce the exposure of its clients to patent claims. Unless the efforts that RPX makes survive eventual battle-testing, what started out as a promising idea could quickly lose its value for clients and investors.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends RPX. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.