What is patent Valuation?
Patent valuation herein refers to estimating value of a patented technology. A patent's value reflects the scope of its claims, and the demand for the claimed technology as an improvement over the prior art. Generally, patent property lives in a neighborhood of related patents. The closer a patent lives to its neighbors, including "free" space of non-patented technology, the less valuable it is, as its property is small, and hemmed in. The greater the distance from its neighbors broader is the scope of its claims and henceforth gets a larger lawn for potential valuation.

Why patent valuation is necessary?
The purpose of valuing a patent is to facilitate those managing them to know their value sufficiently accurately and objectively to make well-founded decisions concerning their management. Valuation is necessary for the purpose of licensing, assignment and to calculate compensation to for all economic losses that are reasonably attributable to infringement.

Our General Practice?
There is no fixed method or formula to value the patents. A great deal of detail study is required to get down to the base of the appropriate method for valuation. There are 18 to 20 broad parameters screened before actually zeroing the most appropriate valuation model. In general there are three traditional models for valuation, i.e., the cost method, the market value method, and the income method. However keeping in mind the complexities associated with valuation there are certain modern application methods like the real option valuation model and the simulation model which is used for the purpose of valuation of patents. However the application of these methods are subject to availability of detail information.

 

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