Tuesday, December 16, 2008

The valuation of claims of patents

The blog INTANGITOPIA discusses patent valuation and RPX and Article One and the like in a post titled: The IP Store?. There is some interesting text about academics:

I would believe that many people want to look at the IP market the way we have looked at every other marketplace the last half century or so. Now pursuing a thesis within Patent Valuation I can also conclude that academics sometime try and fit a square peg in a round hole with applying classical financial theories to an IP setting. The most striking being that not even all authors are clear on what a patent actually is and many also dive head into the logic of patents=products. Whether you are pro or con NPEs they at least crush that myth with their business model. Looking at a (IP) market with the view that it is a means of generating revenue elsewhere (i.e. products or services), then it is not difficult to see how people are working hard to closing the NPEs "loophole".

At least square pegs and round holes are tangible. One Stanford academic invoked a non-existent article in the New York Times to justify his IP theories. See 8 JMRIPL 80.

Separately, it's hard to see the evidence for a "loophole" as to NPE's. Patent law is, and has been, about the exchange of knowledge for a right to exclude. Never said anything about the patent holder having to make a commercial product, or even worrying about whether a commercial product could be made. People who think of "loopholes" here don't understand what patent law is about.

Additionally, on the valuation front, LBE wrote in 2005 text including-->

Chesbrough addresses IP valuation and emphasizes that IP can be valued only in the context of a business model. He notes: "[IP enthusiasts] claim that IP has enormous potential value, if only companies would pay proper attention to managing it. These proponents have half a point. There is indeed latent economic value in companies' IP, and some of that value has not been realized. Yet most patents are worth very little, and it is hard to know in advance which patents are valuable and which are not. Moreover, the claim as it stands is incomplete, because it assumes that technology assets have some inherent value, independent of any business model used to employ them. Technology by itself has no inherent value; that value only arises when it is commercialized through a business model. As with xerography and some other PARC spin-off technologies, the same technology commercialized through two different business models will yield two different economic outcomes. Much of [other people's] work on managing IP assumes that there is some objective value for a technology separate from how it is commercialized."

**See also

WSJ mentions RPX again

IEEE to get into the patent pool business?


Blogger Marcus Malek said...

Dear Lawrence,
thanks for an interesting blog, however I feel the need to clarify my "loophole" statement you mentioned.

I am not at all claiming NPE:s to be a loophole in the patent system - rather the opposite. They drive it forward. I fully agree with your statement regarding the reason for patents.

The "loophole" I think of is where big actors are trying to solve a market situation one (i.e. the big actors) could regard as a "loophole". As they manufacture, and have for a long time, products mainly using patents to protect inventions, and litigate only if necessary. So when NPEs enter their spehere with a totally different use of patents they try their best to look after their interests. Being as influential as they are, they will naturally also try to use the regulatory arena when counteracting NPEs, which is the discussion where I got the "loophole" expression from, said by someone from the big actors.

9:11 AM  

Post a Comment

<< Home