Qualitative Valuation Methods for Patent Portfolios

Number of Patents Versus the Value of Each Patent Valuation methods, both relative and financial, create a continuum of values. When one plots the “Number of Patents Versus the Value of Each Patent” one gets a lognormal distribution as shown in the figure. As mentioned in previous chapters, for most unmanaged portfolios, 1% [...]


Valuation of Software IP

Valuation of Software IP A unique class of asset that is subject to intellectual property protection is software. The central constructs for software valuation are the identification of the software inventory components, possession by the corporation, and statements of ownership to the components. These are the primary constructs to keep in mind for [...]


Qualitative Valuation Methods for Individual Patents

The above three general methods for valuing patents are aimed at putting a financial or dollar value on each. Once doing so the relative value of those patents can then be determined by simple rank ordering of these financial values. Given the complexity of the above analyses it is oftentimes more useful for [...]


Comparison of Approaches

Accuracy Versus Cost of Valuing Patents Each of the three major methods for valuing patents has their own strengths and weaknesses. In the “Accuracy Versus Cost of Valuing Patents” figure the trade-off between the two can be seen. Although the X scale for time may be accurate for organizations with lots of valuation [...]


Patent Auction, Capital Market and Monopoly Values

PATENT AUCTIONS Another form of market-based valuation is to use comparable values derived from patent auctions. These became popular in the early 2000s, but the large public auctions have fallen into disuse because although there were plenty of patents offered, there were not many bids. CAPITAL MARKET VALUE Yet another form of market [...]


Commodity Royalty Rate Approach

COMMODITY ROYALTY RATE APPROACH This approach is easiest to apply when one gets lucky enough to have the technology and/or product under consideration already being licensed or sold to others at known rates. Utilizing such comparable royalty rates is a standard practice in the industry. Using such royalty rates is typical for a [...]


Value Matrix Approach

Value Matrix In order to fine tune the analysis to arrive at a specific reasonable comparable royalty rate, a value matrix is constructed as shown in the “Value Matrix” figure. Patents describing products very close to the patent under evaluation are pairwise placed on the matrix (shown as yellow dots). Once the pairwise [...]


Market Approach

The MARKET APPROACH is based on the economic principle that in a free market system the supply and demand factors will drive the price of any good to point of equilibrium. Intangible assets are valued by reference to transactions involving similar assets that have occurred recently in similar markets. The market-based valuation method [...]

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