How Much is that Patent in the Window?
I've been shopping puppies this holiday season. Still, I shouldn't have given Mr. Thrifty sticker shock this morning when I told him the puppy in the window over at puppies & babies on the corner of Third and Kings retailed at $2K.
I don't know what makes one puppy garner two grand and another win a trip to the gas chamber at the local ASPCA, but I have located an expert who can value the patent in the window.
Coats and Bennett patent attorney Ed Green has a lot more letters after his name than "my" pedigreed puppy does and a lot to say about valuation that I know Mr. Thrifty would respect.
Because patent mediation -- which is a lot of what we do at IP ADR -- is all about valuing one's intellectual property rights and because Ed's an experienced and careful practitioner of the art, we'll be posting an interview with him on negotiating the resolution of patent infringement litigation really soon -- before Festivus.
To whet your appetite for more, we give you a bit of his wisdom on the topic culled from LinkedIn here.
[If you already have] a working knowledge of patents. . . so you know about the scope of the claims, perusing the prosecution history for the strength of the claims, how crowded the art is, the cost of designing around, etc.
The other side of the issue is the market: how many products or industries does the patent reach, what are their sales, who are the players, what are the consequence of an injunction, etc.?
It is impossible to value a patent the way one can, say, real estate. You have to put a patent lawyer and CPA together, both of whom know the technology and the market, and study the business issues on a case by case basis, and even then you'll only get an educated guess -- something to open negotiations with.
Other factors are whether the patent stands alone or is part of a family; the likelihood of litigation and the relative strength of the parties; whether the patent's validity has been tested by licensing or litigation; whether the technology it covers is in a standard or regulation; whether the deep pockets are direct or contributory infringers; how easily infringing activity can be moved offshore; and many more that don't come to mind right now...
As others mentioned, entire books have been written on this question. Having said all that, it is my firm conviction that most patents are ultimately worthless. The relatively few that are not, however, are waaaay not!
Look for the full development of Green's thoughts on patent valuation and our joint thoughts on negotiating the resolution of patent litigation before everyone leaves for the winter holidays.
In the meantime, thanks to LinkedIn member Vinod Kumar Singh's blog Competitive & Technical Intelligence Toolbox, we give you this basic article on valuing patent rights -- Patent Valuation: is Fair Market Fair by David E. MARTIN and Jason O. WATSON at M•CAM, Inc in Virginia.
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