Posts Tagged: "valuation"

Typically in our experience only about 3% to 5% of a patent portfolio consists of “star patents.” These are the patents that are demonstrably valuable because they claim technology that is commercially useful today or in a very near future market. Finding this small percentage of good patents is the name of the game. That’s why until very recently the prevailing strategy for many companies was “the more the merrier” with a strategy that focused more on quantity. Companies filed as many applications as they could, fueled by the belief that they would ultimately hit pay dirt with a percentage of the resulting patents generating value.

Is Uber really a technology company? Essentially, Uber runs a car service and at first glance the company is no more a technology company than any other company that happens to have an app, such as your local grocery store. But as you dig deeper you start to see that Uber’s value is not in running a car service, but rather in mining all kinds of data from the devices of those using its service. In fact, Uber’s privacy policy, which governs the information users allow them to collect from their devices, is substantially longer than the document labeled “terms of service.”

Techniques for valuing intellectual property continue to develop, especially as access to information becomes easier and more efficient. The practice of valuing intellectual property has only been around for the past few decades, during which time the practice itself has grown and refined. The decision of which approach to use is generally based on four factors: (i) how unique is the asset; (ii) how much data is available and verifiable; (iii) what is the context, purpose or objective of the analysis; and (iv) the judgment of the analyst which (one would hope) is based on extensive earlier experience. In addition to the traditional methods used to value intellectual property, several alternative methods are available. Some are modifications of the orthodox approaches with which most are familiar, but many other choices exist to value these complex assets.