Brokers: Facilitors of Patent Sales, For a Price Brokers such as ThinkFire, IPotential;and IP Transactions Group can assist IP owners in presenting their patent to a likely buyer, the most likely of which are patent aggregators, non-practicing entities ("NPE's") and, sometimes, corporations. By leveraging their relationships and reputations, brokers effectively serve as "filters" for potential patent acquirers to streamline and improve the quality of patent buying opportunities. ;Put simply, patent buyers trust their patent brokers to "separate the wheat from the chaff" to make it easier for them to identify and act on good patent buying opportunities. Patent brokers also require exclusivity.
Patent Auctions: Selling in the Open to the Highest Bidder The final common vehicle for selling patent rights is the public auction setting. Of course, you can say that patent licensing and sale applies market theory to reach a market price. Patents have known finite terms. Conventional methods using income theory to value a patent analyze micro economic data to determine the anticipated economic benefit of owning the patent. This micro economic data includes market data indicating the gross sales and net income derived from the sale of products attributable to the patent, and any revenue derived from licensing the patent. Applying income theory to micro economic data to value a patent is labor intensive, costly, and complex. A micro economic analysis can be used to prove damages in patent infringement litigation. As a result, you cannot simply evaluate the value of a patent once you know the financials relating to certain products that the patent covers. Do you allocate all value to the first patent? Surely the other nine patents have actual value to the company! Patents 1, 2 and 3 each cover the first product. Patents 1, 2, and 4 cover a second product. Patents 2 and 5 cover the third product. The model generates a nominal annual sales covered by the patent based solely upon measurable properties of the patent document and the value of the Gross Domestic Product (GDP). You can those details of the model in my earlier article entitled "A Macro-Economic Model Providing Patent Based Company Financial Indicators and Automated Patent Valuations " posted in the publications sections of both and Suffice it to say here that there is a heuristic relationship between measurable properties of patent documents and patent value. Finally, as the size of an evaluated patent portfolio grows, the PatentValuePredictor model's portfolio valuation becomes statistically more accurate. See for example the corporate patent portfolio value charts in my earlier article "A Macro-Economic Model Providing Patent Valuation and Patent Based Company Financial Indicators" posted in the publications sections of both and Finally, there are some other interesting statistics I would like to share with you that relate to valuation of patents. These statistics are derived from the PatentValuePredictor model.First, there are currently 1,726,307 enforceable patents. The chart below shows the currently ten most valuable patents and their technology area.TEN CURRENTLY MOST VALUABLE PATENTS (AS OF 3/11/2004)Patent Issued Current Value ($) Assignee Technology 6,517,866 2/11/2003 1,797,722,689 Pfizer Inc. Pharma/Bio 6,500,987 12/31/2002 1,570,968,527 Teva Pharmaceutical Industries Ltd. Pharma/Bio 6,566,344 5/20/2003 1,481,848,538 Idenix Pharmaceuticals, Inc. Pharma/Bio 6,465,496 10/15/2002 1,408,931,126 Teva Pharmaceutical Industries, Ltd. Pharma/Bio 6,452,054 9/17/2002 1,220,308,695 Teva Pharmaceutical Industries, Ltd. Pharma/Bio 6,221,640 4/24/2001 1,194,927,644 Cubist Pharmaceuticals, Inc. Pharma/Bio 6,071,970 6/6/2000 1,107,999,343 NPS Pharmaceuticals, Inc. Pharma/Bio 6,319,919 11/20/2001 1,081,784,355 Davis; Bonnie (Syosset, NY) Pharma/Bio 5,610,034 3/11/1997 1,071,288,767 Alko Group Ltd. Pharma/Bio 6,022,716 2/8/2000 1,069,310,287 Genset SA Pharma/Bio While the Pharma/Bio tech area has held the lead for most valuable patents, the relative value of the most valuable patents has been increasing for decades. Note in the sequence of three charts below the trend of the relative value to increase over the decades.TEN MOST VALUABLE PATENTS ISSUED IN 1983Patent Issued Relative Value When Issued Assignee Technology 4,399,282 8/16/1983 1,343 Kabushiki Kaisha Yakult Honsha Pharma/Bio 4,375,514 3/1/1983 1,256 Schering, Aktiengesellschaft Pharma/Bio 4,372,948 2/8/1983 974 Kureha Kagaku Kogyo Kabushiki Kaisha Pharma/Bio 4,374,829 2/22/1983 661 Merck ; Co., Inc. Pharma/Bio 4,396,617 8/2/1983 660 Duphar International B.V. Pharma/Bio 4,399,276 8/16/1983 605 Kabushiki Kaisha Yakult Honsha Pharma/Bio 4,369,189 1/18/1983 551 Union Carbide Corporation Pharma/Bio 4,410,537 10/18/1983 507 Burroughts Wellcome Co. Pharma/Bio 4,399,148 8/16/1983 499 Union Carbide Corporation Pharma/Bio 4,372,953 2/8/1983 490 Otsuka Pharmaceutical Company, Limited Pharma/Bio TEN MOST VALUABLE PATENTS ISSUED IN 1993Patent Issued Relative Value When Issued Assignee Technology 5,252,474 10/12/1993 1,696 Merck ; Co., Inc. Pharma/Bio 5,256,558 10/26/1993 969 The Trustees of Rockefeller University Pharma/Bio 5,258,502 11/2/1993 868 Massachusetts Institute of Technology Pharma/Bio 5,268,273 12/7/1993 824 Phillips Petroleum Company Pharma/Bio 5,182,263 1/26/1993 823 Hoffmann-La Roche Inc. Pharma/Bio 5,187,241 2/16/1993 763 International Business Machines Corporation Pharma/Bio 5,262,568 11/16/1993 756 State of Oregon Pharma/Bio 5,198,563 3/30/1993 695 Phillips Petroleum Company Chem/Polymer 5,227,405 7/13/1993 690 Duke University Pharma/Bio 5,196,524 3/23/1993 679 Eli Lilly and Company Pharma/Bio MOST VALUABLE PATENTS ISSUED IN 2003Patent Issued Relative Value When Issued Assignee Technology 6,517,866 2/11/2003 3,374 Pfizer Inc. Pharma/Bio 6,566,344 5/20/2003 2,646 Idenix Pharmaceuticals, Inc. Pharma/Bio 6,602,861 8/5/2003 1,252 Research Corporation Technologies, Inc. Pharma/Bio 6,531,282 3/11/2003 1,225 Oligotrail, LLC Pharma/Bio 6,605,606 8/12/2003 1,109 Miravant Pharmaceuticals, Inc. Pharma/Bio 6,665,641 12/16/2003 884 ScanSoft, Inc. Software 6,602,503 8/5/2003 861 Biogen, Inc. Pharma/Bio 6,596,332 7/22/2003 841 Nestec S.A. Foods products 6,602,499 8/5/2003 824 The General Hospital Corporation Pharma/Bio RE038073 4/8/2003 804 Research Corporations Technologies, Inc. Pharma/Bio VI. ConclusionConventional valuation models are not generally applicable to patents.
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