Understanding Exceptional Performance
In addition to comparing a company’s portfolio to be licensed-out to other portfolios, statistical measures of value can also be applied. The teachings of Edward Deming and the Quality movement are very helpful here. The “average plus three standard deviations” was often set as a limit to discern when a manufacturing process was statistically out of control and required immediate action.
In studying intellectual property portfolios, it has been found that the “average plus two standard deviations” is a useful commercial cutoff point for understanding when a portfolio has exceptional performance, versus being merely above average. These are the portfolio attributes that are worthy of special mention during the licensing negotiation process.