Patent Valuation WIPO

Valuation of Patents  December 28, 2011 – 09:51 pm
Source: http://.wipo.int/

Author: Alok Samal

With the growing significance of Intellectual Property Rights, the IPR management has experienced an unprecedented growth in last two decades. Today, with almost every nation on the planet being a member of WIPO and TRIPS, there is a massive globalization going on in the IPRs. This has changed the way we used to value firms and today IP takes a centre stage in many technology intensive industries (the best example is the $12.5 billion deal of Google for Motorola of which the patent portfolio of 17000 patents constitutes a major chunk). Now, every firm with their limited resources wishes to maximize value through effective usage intellectual properties. While the big players tend to develop their own needs in their backyards through massive spending on R&D, the medium and smaller ones need innovations in choosing and valuing the right set of patents in the pool to maximize value in a given portfolio.

The biggest fish in the pond is the cost of infringement of Intellectual property which everyone tries to avoid. Medtronic, the world’s largest medical technology company paid $ 1.35 billion in 2005 to a Los Angeles surgeon for infringing on a patent. The next big fish is value from the sales of individual  patents which has crossed the $100 million mark followed by Freedom to Operate (FTO) seeking (costs in the range of $1, 50, 000) and ‘patent preparation’ (costs nearly $ 20000) . In this context, the greatest skill of IP managers lie in forming an efficient portfolio or pool patents that can get the optimum risk to return figures. What I will be focussing here is not the sophisticated valuation methods (e.g. the cost, time, market condition, uncertainty, changing risk based methods) but rather the objective criteria that is employed by an IP manager to screen and value patents. So let’s leave the economic- analysis to the quant guys, and see how we can value any patent at hand.

Source: Innovation and Intellectual Property

Springer Real Options and Intellectual Property: Capital Budgeting Under Imperfect Patent Protection (Lecture Notes in Economics and Mathematical Systems)
Book (Springer)

You might also like:

News Roundtable with Sean Percival and Paige Craig - TWiST #179
News Roundtable with Sean Percival and Paige Craig - TWiST #179
News Panel with Ryan Block and Peter Horan - TWiST #250
News Panel with Ryan Block and Peter Horan - TWiST #250
Penny Stock Picks of the Week
Penny Stock Picks of the Week

A few thoughts

I'm not sure I understand exactly what you're contemplating, but you might find this useful or interesting:
1. People have understood the importance of IP (and patents, specifically) to a company's bottom line for a while. Perhaps the most stark example of this is an investment bank called OceanTomo. Among other IP-centric things, they have a few index funds based on patents. See for an ex... it, but it doesn't really do you any good.
But the guys putting together the portfolio were smart guys, to be sure. They were a bunch of zillionaire Wall Street types with a few fancy patent attorneys thrown in. Although I don't necessarily hold that crowd in high esteem, these guys were smart. So either they're bonkers or I am. And that's enough for me to say that valuation is tricky. :)

Does RIM's Patent Shelf Life Affect its Valuation?  — Trefis
Given RIM's own price per patent valuation at a similar multiple as the Nortel deal, and a 27% premium over the Motorola Mobility deal, Envision IP calculated the remaining patent terms of each patent portfolio to understand one of the reasons why RIM …

6 Ways to Work More Effectively in the US Patent System  — Law.com
Finally, participants recognized the increasingly important relationship between data sets and patent valuation, litigation strategy, risk management, and investment, and therefore found that working with third-party advisory sources could be useful in …

Research In Motion May Burn Close To $1B Cash On BB10  — Seeking Alpha
If you assume that the entire handset business including all inventories is worth $1B, coupled with a decreased network value of $1B, and a very conservative patent valuation of $2B, RIMM is still worth $10. The only scenario that matches a $6 …

Product Design Process with Systematic Innovation
Product Design Process with Systematic Innovation
Haverfords Smith Says Stock Valuations Are `Compelling
Haverfords Smith Says Stock Valuations Are `Compelling
Apple vs Kodak - Bankruptcy?
Apple vs Kodak - Bankruptcy?

Related posts:

  1. Din patent Valuation
  2. Patent Valuation course
  3. Patent Valuation Tools
  4. Patent valuation