wtb10

I have participated in a number of discussions about patent valuation. Here is a novel approach by two US patent attorneys.

GOFFMAN MARTIN (US); NEIFELD RICHARD (US) filed a patent in 2002 and have built a company, web site and software which automates patent valuation.

Here is the Abstract of WO0075851 A computer system implementing a macro economic model based upon macroeconomic data and relative value characteristics data of patents that determines nominal values for (1) goods and services and (2) profits generated by sales that are covered by the rights of a patent, implements an income value theory to value the patent based upon the predicted values of profits or goods and services covered by the patent, determines patent terms from patent filing, publication, and issue dates, determines patent assignees from patent data, and uses the value of a company's patents, the patent issuance data and term date data, to determine trends versus time in: the number of a company's enforceable patents; the number of a company's patents obtained; the nominal value of net earnings and of goods and services sold that are covered by the company's patents; the nominal value of the sum of the company's patents, and provides comparisons of those trends between companies, regions, and economic sectors, providing the results of the analysis to users of the computer system. The computer system employs a user database enabling a novel electronic accounting model enabling payment by affiliates, programmed securities trading, and accrediting of investors.

HERE IS THE TEXT FROM THEIR WEB SITE:

This paragraph provides a SIMPLIFIED explanation of how we value patents and companies. Patents are a right to exclude others from making, using, or selling a product or service covered by the claims of the patent. Patents are awarded by the Federal Government for new and useful products or services. A good deal of the Gross Domestic Product (GDP) of any industrialized country, particularly the US, is covered by claims in patents. Why? Because every company knows that it is important to get patents covering new products to prevent competition, thereby resulting in a large profit margin. We model this situation by assuming a substantial fraction of GDP is covered by all patents, and then estimating the fraction of the GDP covered by each patent using sophisticated data analysis and additional modeling based upon macro economic data and financial data. We model the profit associated with a patent to be the fraction of the GDP covered by the patent (i.e., the nominal sales of product that our model predicts to be covered by the patent) times the profit margin. From that information we obtain the annual profit protected by the patent. Patents are each in force for a term of about 17 years. We calculate the current value of the patent to be value of the annual profit for the estimated remaining term of the patent. Adding up the valuations for patents owned by a company, we arrive at the company's current patent valuation. Based upon trends in the company's patent acquisition, we can extrapolate to their future patent valuations. We can compare a company's patent valuation to its sales to obtain a measure of how much of the company's sales are protected by its patents, - and therefore a measure of how well the company's profit margins are protected. We are or will shortly be able to provide all this information - and more - for all companies that own patents - and for companies that are listed on stock exchanges.