Valuation  


POSTED BY Rachael Schwartz AT 6:53 P.M. JUNE 9, 2009

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A valuation of a company’s patent portfolio or of a specific group of patents is important in helping the company to determine the value of its portfolio in a licensing transaction or in the sale of the company. It is important for companies to understand the drivers of value within their portfolios and to understand the strengths and weaknesses of the portfolios. Regarding valuations, many business executives have been asking us:

  1. How can our patent portfolio strength be evaluated? How much is it worth?
  2. Which are our strong patents and what is their potential value?
  3. Which patents are weak? Should weak patents be abandoned, to save us money?
  4. What is the value of our patents outside our industry?
  5. How can we convince others of the strength of our portfolio?
  6. Can our other IP, such as trade-secrets, patent provisionals, and IP that is in our dockets, be valued?

It is important to take a wide view of IP, to ensure full value of the portfolio, including patents, trade-secrets, dockets, and know-how. We identify the value of the market opportunity, through a market-down or a product-up approach. We then apply the tools and techniques that we have developed, to measure patent strength and to risk-adjust the portfolio for the risks specific to the IP. We develop a financial model that will help to determine a range of value, based on different market scenarios and product scenarios. Our practice has:

  1. Developed cost-based, income-based, and market-based financial models, to value the IP for specific markets;
  2. Developed an IP portfolio strength analysis, based upon well-known IP strength factors, as well as upon our own proprietary IP strength indicators;
  3. Developed methods for identifying the strongest patents to consider licensing
  4. Developed an approach to find weak IP that could be abandoned;
  5. Developed algorithms to identify, quickly and easily, the IP strength in non-core markets; and
  6. Developed a process for putting together the ipStorySM, including adding patents in process, trade secrets, enabled publications, and IP developed to invent around, invent on top of, or invent in the direction of, the financial transaction, to convince others of the value of the portfolio.

The process to value IP can be done cost effectively. Additionally, we can train companies in the process, which will allow them to update the model and repeat these processes in the future, so that they can have an understanding of the value of their IP and their strongest and weakest patents.


To obtain more information or discuss your unique challenges please contact us.


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