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Patent Valuation Techniques

David Drews

Director, Consor Intellectual Asset Management, La Jolla, CA, USA

There is no question that patents have become one of the leading drivers of wealth generation in the global business community. When managed properly, they serve to protect a firm’s business strategy by erecting formidable barriers to entry. They also prevent existing competitors from profiting from the firm’s research and development investments. Increasingly, a solid patent portfolio is the foundation for a company’s success in the marketplace. Understanding the value of your patents is an important part of successfully managing your resources effectively. There are a number of steps that are taken in a typical patent valuation. One of the first things determined when valuing patents is the reason for undertaking the analysis. The most obvious situations are those in which a third party has an interest in the value of the patents. For example, the tax authorities will want to know the basis of value if a portion of the purchase price is allocated to any patents included in the acquisition of another company.

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