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Archived updates for Monday, December 06, 2004

Twenty Steps for Pricing a Patent

The ability to appraise patents can be important for GAAP financial reporting purposes under FASB nos. 141 and 142, especially for auditors and valuators in high-tech industries in which there are lots of business combinations. Here are the "20 Steps for Pricing a Patent" according to J. Timothy Cromley, CPA, an accredited senior appraiser with the Valuation Advisory Services Group of JPMorgan Chase & Co:
  1. Check whether the patent is in force.
  2. Identify the business context.
  3. Gather information including file history, business plans, licenses, etc.
  4. Assemble a valuation team with expertise in patent law, an understanding of monopolies, business valuation skills, and a background in the technology of the patent
  5. Read the patent or carefully interview an independent patent attorney who has.
  6. Investigate the patent's claim scope.
  7. Talk with a patent attorney.
  8. Inquire about the patent's validity.
  9. Inquire into blocking patents.
  10. Investigate foreign patent protection.
  11. Consider synergies among patents
  12. Consider the remaining life of the patent.
  13. Analyze any prior royalties paid for the patent.
  14. Inquire into any actual or threatened litigation involving the patent.
  15. Identify the next-best alternative technologies.
  16. Estimate a demand curve for the patented item.
  17. . Determine the patented product's point of profit maximization.
  18. Consider the applicability of traditional valuation approaches.
  19. Do an income-approach valuation.
  20. Write the patent valuation report.

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Anonymous Anonymous said...

This is a good outline of the patent valuation steps. Are there more insights on some of them, like: - (3)how and why are the business plans important. And before that; - (6)how to determine the scope of a patent appication? Is it by comparing it to other patents in the same domain, or are there additional mechanisms?; - (9)What are blocking patents?; - (18)What are the traditional valuation approaches?


December 06, 2007 4:57 AM  

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