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Where's the Beef. IPScore.
Ernst Max Nielsen continues his series on "Where's the Beef
This is the fourth in my series of articles about valuation methods. I have been half-mocking what I framed "American"-style economist methods. Now I have to take that back and call it "Danish"-style, as my compatriots from the Copenhagen Business School and the Danish Patent Office have developed a new software tool which will answer all our questions, it seems. In Patent Information News 1/2006 the European Patent Office reports on the tool and wishes to use it. Johannes Schaaf writes:
IPscore 2.0 was developed by the Danish Patent Office in co-operation with the Copenhagen Business School and industry. Similarly to the income theory, it analyses each patent using 40 different parameters relating to legal status, technology, market conditions, finance and alignment with overall business strategy. The results are illustrated using spider charts. Applied to a patent portfolio, it gives an overview of the opportunities (eg winning new markets)I will have a look and give you my opinion. This is the link: for IPScore
It's an interesting web site. It doesn't give you much information about the IPScore software. But you can pay 2,500€ to get it. But there are other ways to find information, as one of my later articles will show:
I Googled it and used the search string: site:.IPscore.dk filetype:pdf and found what I looked for: the Manual. The software asks the company and patent owner(s) to answer no less than 40 questions, of which a number are guestimates and the rest are qualitative. So in a way, IPScore seems to mix an approach developed by Warwick Ventures (called COAP: Commercial Appraisal of Opportunities, see later articles) with the economist's Net Present Value methods. IPScore's developers have then created a model where all these-now numerical- factors are brought together to create great
looking graphs, which could convince everyone that this must be right.
In my eyes, the level of secutiry in estimates, which are made up of 40 factors, and which are all assessed in an artful manner, is low. It mocks the user to believe in it, because it is numerical (and therefore "objective"). I fear that such software only serves to "quantify" all the biases and (mis)information of the assessor: where do you get the data from to support your assessments? Especially the future aspects cannot be derived from past performance.
Nevertheless, software such as IPScore serves a good function, namely to try to make an assessment, which could be the START of a real due diligence. And it does a great job of RECORDING your guestimates and assumptions. The faulty part is the attempt to model the future....
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