Reitzig, Markus --- "Valuing Patents and Patent Portfolios from a Corporate Perspective: Theoretical Considerations, Applied Needs and Future Challenges" [2006] ELECD 358; in Bosworth, Derek; Webster, Elizabeth (eds), "The Management of Intellectual Property" (Edward Elgar Publishing, 2006)

Book Title: The Management of Intellectual Property

Editor(s): Bosworth, Derek; Webster, Elizabeth

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845421120

Section: Chapter 15

Section Title: Valuing Patents and Patent Portfolios from a Corporate Perspective: Theoretical Considerations, Applied Needs and Future Challenges

Author(s): Reitzig, Markus

Number of pages: 24

Extract:

15. Valuing patents and patent
portfolios from a corporate
perspective: theoretical
considerations, applied needs
and future challenges1
Markus Reitzig

1 INTRODUCTION

Patent laws (or their legal predecessors) have existed in France since 1790,
in the USA since 1791 and in Germany since 1877. Despite their longevity,
however, patent valuations are not yet routine procedures for practitioners
in the corporate world.
Some of the oldest uses for evaluations have been for damage payments
arising from litigation, and accordingly, most of the corresponding literature
in this field stems from lawyers.2 Since the 1960s patents have also attracted
the interest of theoretical3 and empirical economists4 accountants5 and,
most recently, management scholars.6 However, the different disciplines
have substantially different understandings of what the value of a patent
is and how it can be assessed (see Reitzig 2002).7 This finding very much
corresponds to the understanding of Pitkethly (1999, p. 3) who says `[t]he
first questions to be asked of any valuation are: who is doing the valuation?,
for whom? and for what purpose?'
This chapter takes a strategic management perspective. Valuation
considerations are not bound by any formal legal constraints or accounting
standards. Patents are regarded as an asset for a corporation whose value
is determined by the value of its underlying technology; its technical, legal
and market uncertainty; and the competition scenario as perceived by the
patent holder. In this sense, it views patents akin to real options.8
This chapter takes the discussion one step further than Pitkethly ( ...