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Harry
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Patent valuation companies...
« on: May 3rd, 2007, 8:28am »
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Hi All,
 
Is anyone familiar with the "patent value" and "patent factor index reports" that Patent Cafe cranks out?  I understand that they have quite the list of credible resources that they used to develop the software to produce the noted reports.  
As a potential seller/licensor/investor of IPs. I assume that this would be a valuable resource, much like an appraisal for my home and property.
   
Some feedback would be appreciated.
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CriterionD
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Re: Patent valuation companies...
« Reply #1 on: May 7th, 2007, 10:51am »
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I'll chime in on this subject.  As noted, software is used to "crank" out these reports in "two hours" (according to patentcafe.com)
 
Especially given that humans have a hard time agreeing on any standard model of patent valuation, I have a hard time believing that any computer software can singlehandedly provide a meaningful patent valuation (or patent portfolio evaluation).  And, the value of a paent is affected by so many variables, many of which cannot be found and/or accurately analyzed by searching any database.
 
My opinion, despite all that may be written on the subject, there are ony three simple aspects required for a good patent valuation - knowledge, intelligence, and common sense.  If you already have all three, then in my opinion your main motivation for a formal patent valuation should simply be whether or not the valuation would be respected in court, for accounting and/or alternate legal concerns when applicable....and/or to impress investors.
 
Patent Cafe's software might be damn good, but in this day and age computers still have limitations, and patent valuation is complicated.  The bigger question to me is how credible a Patent Cafe valuation might be considered by a court of law.
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Harry
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Re: Patent valuation companies...
« Reply #2 on: May 8th, 2007, 8:32am »
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Very good points... Thanks.  I guess it is like, we don't know how accurate anything really is, such as what we type on here, even though this software was programed based on some formula... It is the meaning behind it all.
 
I appreciate the insight... and points are very well taken.
 
Harry
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Wiscagent
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Re: Patent valuation companies...
« Reply #3 on: May 8th, 2007, 1:07pm »
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Here's a hypothetical scenario showing an example of why it is so difficult to accurately establish the value of a patent.  
 
1) I was granted US Patent 6,543,210 on a balmy Tuesday morning.  My competitor wants to make a product that would infringe patent.  
 
2) I negotiate with the competitor, and I am unwilling to sell an exclusive license the patent for less than $1,000,000.  My competitor is willing to pay no more than $500,000.  So we don't reach a deal.  At that point it would probably be reasonable to say that the market value of the patent is roughly between $500,000 and $1,000,000.
 
3)  My competitor goes back to the R&D group and asks them to figure out a way to get around the patent.  The bright men and women in R&D come up with an alternative that may cost a few pennies more, or perhaps is not quite as good in some way.  But ... the alternative is marketable and makes a viable business proposition.
 
4)  Given market and business fluctuations, it turns out that my claimed product or process is not useful in my business.  So I go back to my competitor and offer to sell the patent to them for $500,000.  They say "No thanks, we're no longer interested regardless of the price."  They have moved on with their new project and my patent became irrelevant.
 
In this scenario the value of the patent was (1) perceived by me as $1,000,000; (2) perceived by my competitor as (a) $500,000, and (3) then as $0.
 
Oh, and by the way all of the negotiations were conducted under a secrecy agreement.
 
I can't imagine a computer program that would accurately reflect this scenario.
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Harry
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Re: Patent valuation companies...
« Reply #4 on: May 21st, 2007, 10:28am »
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Hi,
 
Thank you both for your input.  There is a lot to consider when valuation is investigates whether you are an investor or licensor.  Thank you once again
 
Harry
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