Patent Valuation – Improving Decision Making through Analysis

<p>Preface ix</p>
<p>Acknowledgments xiii</p>
<p>PART ONE Foundations for Patent Valuation and Decision Making 1</p>
<p>CHAPTER 1 Valuation Basics 3</p>
<p>What Is Value? 5</p>
<p>The Valuation Process 7</p>
<p>Identifying the Subject Matter of the Valuation 9</p>
<p>Valuation Misconceptions 12</p>
<p>The Three Basic Valuation Methodologies 16</p>
<p>Limitations on Rationality in Valuation and Decision–Making Exercises 20</p>
<p>References 20</p>
<p>Notes 21</p>
<p>CHAPTER 2 Patent Basics 23</p>
<p>What Is a Patent? 26</p>
<p>Anatomy of a Patent 32</p>
<p>Criteria for a Patent 33</p>
<p>Transferring Patent Rights 36</p>
<p>Nationality of a Patent 39</p>
<p>References 40</p>
<p>Notes 40</p>
<p>CHAPTER 3 Using Valuation Analysis to Improve Patent Decision Making 43</p>
<p>Patent Decisions 45</p>
<p>Maximizing, Optimizing, and Satisficing: How Much to Invest in Valuation Analysis 52</p>
<p>Preliminary Portfolio Valuation Audit: A Practical Valuation Technique 58</p>
<p>References 65</p>
<p>Notes 65</p>
<p>CHAPTER 4 Disassembly 67</p>
<p>Disassembly and Decision Trees 69</p>
<p>Using Disassembly to Develop Higher–Quality Data 75</p>
<p>Using Disassembly to Understand Data Better 84</p>
<p>References 86</p>
<p>Notes 87</p>
<p>PART TWO Patent Valuation Techniques 89</p>
<p>CHAPTER 5 Preparing for the Valuation 91</p>
<p>Understanding the Bundle of Legal Rights 91</p>
<p>Ownership Interest in the Patent 93</p>
<p>Description of the Patent Rights 99</p>
<p>Encumbrances on the Patent Rights 100</p>
<p>Understanding the Patent Rights Neighborhood 102</p>
<p>Exploiting the Patent Rights 103</p>
<p>References 117</p>
<p>Notes 119</p>
<p>CHAPTER 6 Income Methods: Discounted Future Economic Benefits Analysis 121</p>
<p>Basic Arithmetic of the Discounted Future Economic Benefits Analysis 124</p>
<p>Garbage In, Garbage Out: The Challenges Lay in the Inputs, Not the Math 131</p>
<p>Projecting Future Net Economic Benefits 133</p>
<p>Developing Projections from Analytical Analyses 143</p>
<p>Estimating the Discount Rate 151</p>
<p>References 159</p>
<p>Notes 160</p>
<p>CHAPTER 7 Advanced Income Methods: Incorporating the Value of Future Decision Opportunities 161</p>
<p>Option Contracts and Their Value 164</p>
<p>Real Options 168</p>
<p>Valuing Patents Using Option–Pricing Insights 170</p>
<p>Using Decision Trees to Incorporate the Value of a Patent s Future Decision Opportunities 174</p>
<p>References 185</p>
<p>Notes 186</p>
<p>CHAPTER 8 Market Methods 189</p>
<p>Markets and Patent Rights 191</p>
<p>Competitive Exchange 198</p>
<p>Comparable Transactions 205</p>
<p>Alternatives to the Core Market Methods 207</p>
<p>References 214</p>
<p>Notes 216</p>
<p>CHAPTER 9 Cost Methods 219</p>
<p>A Few Accounting Principles 220</p>
<p>Cost of Development: Questionable Valuation Tool 224</p>
<p>Cost of Reasonable Alternatives: Establishing a</p>
<p>Maximum Price 227</p>
<p>References 230</p>
<p>Notes 231</p>
<p>PART 3 Patent Valuation in Practice 233</p>
<p>CHAPTER 10 Pricing Patent Licenses 235</p>
<p>Payment Structures 236</p>
<p>Determining the Price for a License 246</p>
<p>Less Formal Valuation Techniques for Setting Royalty Rates 248</p>
<p>References 264</p>
<p>Notes 265</p>
<p>CHAPTER 11 Patent Infringement Damages 269</p>
<p>U.S. Legal Framework for Calculating Damages in Patent Infringement Cases 271</p>
<p>Lost Profits 275</p>
<p>Reasonable Royalty 285</p>
<p>Additional Patent Damages Matters 297</p>
<p>Answering the Sue or Settle Question 299</p>
<p>References 306</p>
<p>Notes 307</p>
<p>CHAPTER 12 Unlocking the Potential Value within Patents 313</p>
<p>Keeping Pace with Economic Changes 316</p>
<p>Patents as Collateral for Secured Loans 317</p>
<p>Securitizing Patents 325</p>
<p>References 333</p>
<p>Notes 334</p>
<p>CHAPTER 13 Valuation in Patent–Based Tax–Planning Strategies 337</p>
<p>Examples of Patent–Based Tax–Reduction Strategies 339</p>
<p>Transfer Pricing 344</p>
<p>Determining Transfer Prices for Patent Rights 348</p>
<p>References 358</p>
<p>Notes 359</p>
<p>About the Authors 363</p>
<p>Index 365</p>