March 21, 2024

patent valuation: don’t forget the technology

posted by Paul Boldt

Patent valuation is the holy grail of IP. Everyone wants to do it and many claim they can, but it is actually quite difficult. The quest to valuation is more entailed than a single “click” because it relies on knowledge of technology. Ignoring technology is at the valuator’s peril.

today’s baseline

The patent analytics vendors represent today’s baseline. They make valuation look easy and are often seen as the go to valuation source. Simply move the cursor over a “flag” in a patent landscape and a value for that patent appears. It is quick and it appears convincing because the process outputs a very specific number. Right or wrong the number sticks in your head.

Generally, they use a large equation that weights all sorts of data associated with a patent. This might include the number of citations, the word count of the Description, the word count of the Claims, the Inventor, filing trends in Classification Codes etc. It is all very complicated, but the power of data makes quick work of the task and a value pops out. But, is valuation that simple? Is the value all there in the data, ready for extraction?

the example

In the summer of 2022 I consumed marketing literature from one of these patent analytics vendors. More specifically, it was a brochure discussing how their services provide insights into the semiconductor industry. Nice, a field I know quite well. One table presented a well known integrated semiconductor manufacturer’s five most valuable patents. The second patent in this table was assigned a very precise value of $11,970,000. The table also indicated the patent would be alive for two years from that time i.e. it would expire in 2024.


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