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Archived updates for Thursday, December 02, 2004

Better Valuation Needed in "The Patent Lottery"

According to an article in Issue 17 of the IPR Helpdesk Bulletin by Dr. Meir Perez Pugatch, tutorial Fellow at the School of Public Health, University of Haifa, the successful utilization and commercialization of patents is akin to playing the lottery - while the rewards from a successful patent can be vast, the chances of obtaining a truly successful patent is slim. The problem primarily derives from the huge gap between the expectations of the patentee and the overall results of patent exploitation and commercialization.

On the one hand, the individual inventor or patent owner considers his patent as a ticket to considerable financial rewards. Indeed, to many researchers and inventors, a patented technology is considered a benchmark of commercial success, merely because it is patented. We all like to believe that our patent could become that next commercial blockbuster.

On the other hand, a more structural and statistical observation suggests that only a fraction of patented technologies are commercialized or used. It is estimated that less than 80 percent of patents worldwide are utilized. Even worse, it would seem that most of the patented technologies are worth less than their registration and maintenance fee. For example, an analysis of the value of patents in France between 1969 and 1982 found that the median dollar value of patents in different technology fields is surprisingly low: $1,631 in pharmaceuticals, $1,594 in chemicals, $2,930 in mechanical and $7,933 in electronic patents. Another researcher reports that only one percent of pharmaceutical patents exceed a value of $US 50,000.

Nevertheless, although the above data provides a somewhat discouraging picture about the commercial viability of the patent exploitation process, it says nothing about the value of the single patent. Accurate methods for valuation can thus help us to get a better grasp of the value of our patent, as well as assisting us in taking informed decisions about the manner in which we wish to exploit (or abandon) our patents.

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