Patents have known finite terms. Conventional methods using income theory to value a patent analyze micro economic data to determine the anticipated economic benefit of owning the patent. This micro economic data includes market data indicating the gross sales and net income derived from the sale of products attributable to the patent, and any revenue derived from licensing the patent. Applying income theory to micro economic data to value a patent is labor intensive, costly, and complex. A micro economic analysis can be used to prove damages in patent infringement litigation. Do you allocate all value to the first patent? Patents 1, 2 and 3 each cover the first product. Patents 1, 2, and 4 cover a second product. Patents 2 and 5 cover the third product. V. The PatentValuePredictor Theory for Valuing PatentsNow let me tell you about the PatentValuePredictor model for valuing patents. How does the PatentValuePredictor model work? The model generates a nominal annual sales covered by the patent based solely upon measurable properties of the patent document and the value of the Gross Domestic Product (GDP). Finally, as the size of an evaluated patent portfolio grows, the PatentValuePredictor model's portfolio valuation becomes statistically more accurate. That explains why the PatentValuePredictor model determines an average value of enforceable patents is only about $2.8 million. The chart below shows the currently ten most valuable patents and their technology area.TEN CURRENTLY MOST VALUABLE PATENTS (AS OF 3/11/2004)Patent Issued Current Value ($) Assignee Technology 6,517,866 2/11/2003 1,797,722,689 Pfizer Inc. Pharma/Bio 6,500,987 12/31/2002 1,570,968,527 Teva Pharmaceutical Industries Ltd. Pharma/Bio 6,566,344 5/20/2003 1,481,848,538 Idenix Pharmaceuticals, Inc. Pharma/Bio 6,465,496 10/15/2002 1,408,931,126 Teva Pharmaceutical Industries, Ltd. Pharma/Bio 6,452,054 9/17/2002 1,220,308,695 Teva Pharmaceutical Industries, Ltd. Pharma/Bio 6,221,640 4/24/2001 1,194,927,644 Cubist Pharmaceuticals, Inc. Pharma/Bio 6,071,970 6/6/2000 1,107,999,343 NPS Pharmaceuticals, Inc. Pharma/Bio 6,319,919 11/20/2001 1,081,784,355 Davis; Bonnie (Syosset, NY) Pharma/Bio 5,610,034 3/11/1997 1,071,288,767 Alko Group Ltd. Pharma/Bio 6,022,716 2/8/2000 1,069,310,287 Genset SA Pharma/Bio While the Pharma/Bio tech area has held the lead for most valuable patents, the relative value of the most valuable patents has been increasing for decades. Note in the sequence of three charts below the trend of the relative value to increase over the decades.TEN MOST VALUABLE PATENTS ISSUED IN 1983Patent Issued Relative Value When Issued Assignee Technology 4,399,282 8/16/1983 1,343 Kabushiki Kaisha Yakult Honsha Pharma/Bio 4,375,514 3/1/1983 1,256 Schering, Aktiengesellschaft Pharma/Bio 4,372,948 2/8/1983 974 Kureha Kagaku Kogyo Kabushiki Kaisha Pharma/Bio 4,374,829 2/22/1983 661 Merck ; Co., Inc. Pharma/Bio 4,396,617 8/2/1983 660 Duphar International B.V. Pharma/Bio 4,399,276 8/16/1983 605 Kabushiki Kaisha Yakult Honsha Pharma/Bio 4,369,189 1/18/1983 551 Union Carbide Corporation Pharma/Bio 4,410,537 10/18/1983 507 Burroughts Wellcome Co. Pharma/Bio 4,399,148 8/16/1983 499 Union Carbide Corporation Pharma/Bio 4,372,953 2/8/1983 490 Otsuka Pharmaceutical Company, Limited Pharma/Bio TEN MOST VALUABLE PATENTS ISSUED IN 1993Patent Issued Relative Value When Issued Assignee Technology 5,252,474 10/12/1993 1,696 Merck ; Co., Inc. Pharma/Bio 5,256,558 10/26/1993 969 The Trustees of Rockefeller University Pharma/Bio 5,258,502 11/2/1993 868 Massachusetts Institute of Technology Pharma/Bio 5,268,273 12/7/1993 824 Phillips Petroleum Company Pharma/Bio 5,182,263 1/26/1993 823 Hoffmann-La Roche Inc. Pharma/Bio 5,187,241 2/16/1993 763 International Business Machines Corporation Pharma/Bio 5,262,568 11/16/1993 756 State of Oregon Pharma/Bio 5,198,563 3/30/1993 695 Phillips Petroleum Company Chem/Polymer 5,227,405 7/13/1993 690 Duke University Pharma/Bio 5,196,524 3/23/1993 679 Eli Lilly and Company Pharma/Bio MOST VALUABLE PATENTS ISSUED IN 2003Patent Issued Relative Value When Issued Assignee Technology 6,517,866 2/11/2003 3,374 Pfizer Inc. Pharma/Bio 6,566,344 5/20/2003 2,646 Idenix Pharmaceuticals, Inc. Pharma/Bio 6,602,861 8/5/2003 1,252 Research Corporation Technologies, Inc. Pharma/Bio 6,531,282 3/11/2003 1,225 Oligotrail, LLC Pharma/Bio 6,605,606 8/12/2003 1,109 Miravant Pharmaceuticals, Inc. Pharma/Bio 6,665,641 12/16/2003 884 ScanSoft, Inc. Software 6,602,503 8/5/2003 861 Biogen, Inc. Pharma/Bio 6,596,332 7/22/2003 841 Nestec S.A. Foods products 6,602,499 8/5/2003 824 The General Hospital Corporation Pharma/Bio RE038073 4/8/2003 804 Research Corporations Technologies, Inc. Pharma/Bio VI. ConclusionConventional valuation models are not generally applicable to patents.
Sunday, 25 December 2011
Patent Valuation From a Practical View Point, and Some Interesting Patent Value Statistics From the Patentvaluepredictor Model
Patents have known finite terms. Conventional methods using income theory to value a patent analyze micro economic data to determine the anticipated economic benefit of owning the patent. This micro economic data includes market data indicating the gross sales and net income derived from the sale of products attributable to the patent, and any revenue derived from licensing the patent. Applying income theory to micro economic data to value a patent is labor intensive, costly, and complex. A micro economic analysis can be used to prove damages in patent infringement litigation. Do you allocate all value to the first patent? Patents 1, 2 and 3 each cover the first product. Patents 1, 2, and 4 cover a second product. Patents 2 and 5 cover the third product. V. The PatentValuePredictor Theory for Valuing PatentsNow let me tell you about the PatentValuePredictor model for valuing patents. How does the PatentValuePredictor model work? The model generates a nominal annual sales covered by the patent based solely upon measurable properties of the patent document and the value of the Gross Domestic Product (GDP). Finally, as the size of an evaluated patent portfolio grows, the PatentValuePredictor model's portfolio valuation becomes statistically more accurate. That explains why the PatentValuePredictor model determines an average value of enforceable patents is only about $2.8 million. The chart below shows the currently ten most valuable patents and their technology area.TEN CURRENTLY MOST VALUABLE PATENTS (AS OF 3/11/2004)Patent Issued Current Value ($) Assignee Technology 6,517,866 2/11/2003 1,797,722,689 Pfizer Inc. Pharma/Bio 6,500,987 12/31/2002 1,570,968,527 Teva Pharmaceutical Industries Ltd. Pharma/Bio 6,566,344 5/20/2003 1,481,848,538 Idenix Pharmaceuticals, Inc. Pharma/Bio 6,465,496 10/15/2002 1,408,931,126 Teva Pharmaceutical Industries, Ltd. Pharma/Bio 6,452,054 9/17/2002 1,220,308,695 Teva Pharmaceutical Industries, Ltd. Pharma/Bio 6,221,640 4/24/2001 1,194,927,644 Cubist Pharmaceuticals, Inc. Pharma/Bio 6,071,970 6/6/2000 1,107,999,343 NPS Pharmaceuticals, Inc. Pharma/Bio 6,319,919 11/20/2001 1,081,784,355 Davis; Bonnie (Syosset, NY) Pharma/Bio 5,610,034 3/11/1997 1,071,288,767 Alko Group Ltd. Pharma/Bio 6,022,716 2/8/2000 1,069,310,287 Genset SA Pharma/Bio While the Pharma/Bio tech area has held the lead for most valuable patents, the relative value of the most valuable patents has been increasing for decades. Note in the sequence of three charts below the trend of the relative value to increase over the decades.TEN MOST VALUABLE PATENTS ISSUED IN 1983Patent Issued Relative Value When Issued Assignee Technology 4,399,282 8/16/1983 1,343 Kabushiki Kaisha Yakult Honsha Pharma/Bio 4,375,514 3/1/1983 1,256 Schering, Aktiengesellschaft Pharma/Bio 4,372,948 2/8/1983 974 Kureha Kagaku Kogyo Kabushiki Kaisha Pharma/Bio 4,374,829 2/22/1983 661 Merck ; Co., Inc. Pharma/Bio 4,396,617 8/2/1983 660 Duphar International B.V. Pharma/Bio 4,399,276 8/16/1983 605 Kabushiki Kaisha Yakult Honsha Pharma/Bio 4,369,189 1/18/1983 551 Union Carbide Corporation Pharma/Bio 4,410,537 10/18/1983 507 Burroughts Wellcome Co. Pharma/Bio 4,399,148 8/16/1983 499 Union Carbide Corporation Pharma/Bio 4,372,953 2/8/1983 490 Otsuka Pharmaceutical Company, Limited Pharma/Bio TEN MOST VALUABLE PATENTS ISSUED IN 1993Patent Issued Relative Value When Issued Assignee Technology 5,252,474 10/12/1993 1,696 Merck ; Co., Inc. Pharma/Bio 5,256,558 10/26/1993 969 The Trustees of Rockefeller University Pharma/Bio 5,258,502 11/2/1993 868 Massachusetts Institute of Technology Pharma/Bio 5,268,273 12/7/1993 824 Phillips Petroleum Company Pharma/Bio 5,182,263 1/26/1993 823 Hoffmann-La Roche Inc. Pharma/Bio 5,187,241 2/16/1993 763 International Business Machines Corporation Pharma/Bio 5,262,568 11/16/1993 756 State of Oregon Pharma/Bio 5,198,563 3/30/1993 695 Phillips Petroleum Company Chem/Polymer 5,227,405 7/13/1993 690 Duke University Pharma/Bio 5,196,524 3/23/1993 679 Eli Lilly and Company Pharma/Bio MOST VALUABLE PATENTS ISSUED IN 2003Patent Issued Relative Value When Issued Assignee Technology 6,517,866 2/11/2003 3,374 Pfizer Inc. Pharma/Bio 6,566,344 5/20/2003 2,646 Idenix Pharmaceuticals, Inc. Pharma/Bio 6,602,861 8/5/2003 1,252 Research Corporation Technologies, Inc. Pharma/Bio 6,531,282 3/11/2003 1,225 Oligotrail, LLC Pharma/Bio 6,605,606 8/12/2003 1,109 Miravant Pharmaceuticals, Inc. Pharma/Bio 6,665,641 12/16/2003 884 ScanSoft, Inc. Software 6,602,503 8/5/2003 861 Biogen, Inc. Pharma/Bio 6,596,332 7/22/2003 841 Nestec S.A. Foods products 6,602,499 8/5/2003 824 The General Hospital Corporation Pharma/Bio RE038073 4/8/2003 804 Research Corporations Technologies, Inc. Pharma/Bio VI. ConclusionConventional valuation models are not generally applicable to patents.
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