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Intellectual property:

Patents play major role in the new economy and are key metrics to gauge business proposition based on innovation. They lead economy to stable horizon with quantum changes. Leading nation have realized importance of patents and are aggressively promoting Investment in R&D.

With rapid research in life science and technology patents have become center of concern for research activity and proportionate commercial value

Strategy for Patent Valuation

Patent valuation has got popularity to the traditional asset valuation provided by the cost, market, and income approaches. These fundamentals, when applied to the valuation of brands have proven to be entirely satisfactory when supplemented with an integrative calculus that allows a qualitative assessment of a brand per se. Why hasn't’t patent valuation reached such a broadly accepted practical capitalization a patent? Yet these special circumstances are no less existent in brand transactions.

With the exception of a breakthrough patent, patents are usually incremental improvements to known devices or processes, thus submerging their respective value within the overall invention or procedure. But this obstacle is only superficial, and falls away upon closer examination. In fact, we have a patent valuation method for any patent or set of patents when we look at it in the right manner, i.e., following the same model employed with brands and traditional tangible assets to achieve consensus and set acceptable value.

We have an approach that ensures both adequacy and completeness and allows patent valuation decidability. Building on the foundation used to assess other assets; we need only proceed to assess the qualitative value dimensions of the asset. The primary dimensions for patent strength assessment can be portrayed along a five-point scale from least to most. As generally practiced by patent managers, these are, briefly:

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1) Innovation scope

Innovation falls into three general categories: breakthrough, major, minor. Breakthrough patents, ones that establish whole new platforms or paradigms, are among the most valuable, with each of the other classifications falling along the scale.

2) Market/Industry Applications

The number and value (dollar size) of markets and industries for which the patent has significance is a leading indicator of the potential value of the patent. Similarly, we must consider whether or not a patent is central to the core of an enterprise, is more tangential, or is relevant to a non-business application.

3) Term

Early-term patents are generally more powerful than those that have been in force beyond a few years, and certainly more valuable than those which are beyond their midpoint.

4) Third-Party Citations

While clearly a “lagging indicator,” the degree to which other patents have been issued around the technology of a given patent is a measure of the significance of that patent. Patent citation mapping can quickly suggest the significance of a patent and its contribution to subsequent invention.

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5) Special Considerations

Ability to expand patent scope: Are there significant areas within which an invention may be subject to further expansion?

Use in bracketing or clustering strategies and tactics: Can this patent be instrumental in blocking another patent, or providing additional competitive advantage by filling out an existing portfolio?

Patent equity transfer into a brand: Can the equity in this patent be converted into a brand?

As we consider and balance these various perspectives we derive the value of the patent. At the same time we see that we do have the theory, with asset-specific modifications, for valuing any intangible asset, since the valuation of any intangible asset can be approached in this same manner.

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With patents increasingly sharing the spotlight with brands in the world of intellectual capital assets and market capitalization analyses, it has become essential that patents join brands in lining up against traditional approaches to setting asset values. Despite the many factors impacting the value of a patent, the methods successfully pioneered by brand valuation provide the model for patent valuation methodology and the key to intangible asset valuation. A composite valuation, which consists of the three core elements of all asset valuation (cost, market, assessments) coupled with a patent strength assessment, provides a reliable method for setting patent valuations.

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