Valuing a Patent - Twelve Questions to Ask
1. Is the patent in force and are the fees current?
Patent fees must be paid at 3, 7, and 11 years from issuance.
Failure to pay these fees within specified grace periods can result in
abandonment ofthe patent.
2. What is the potential to license the patent?
Ask about the license and royalty arrangements for similar patents.
3. Analyze the actual sales history of the invention.
Try to obtain objective past data, if this information is available. If
not, what is the projected user base? On what assumptions are these
projections based?
4. Are there related patents in foreign or related domestic applications?
If so, who holds these rights? Are the related patents listed on the
face of the patent application as "prior art"? If they are listed, it is
assumed that the patent examiner has already considered and
distinguished them from the invention. If they are not listed on the
patent, it is more likely these related patents be asserted in a future
infringement action.
5. What is the scope of the patent claims?
Claims are the portion ofthe patent which legally identify what is
protected. Claim language is subject to interpretation. Have an
attorney and persons skilled in the field help you evaluate the scope
and meaning ofterms used in the context of other issued patents, and
terms used in the art or industry in which the patent is practiced.
6. Has the scope of the claims been limited by the patent's "prosecution history"?
Ask an attorney to research the patent file maintained by the United
States Patent and Trademark Office. Were there any amendments
made during the patent application (prosecution) process that narrow
the scope of the patent claims?
7. Ask about past, pending or anticipated litigation.
What are the potential damages that could be obtained if the patent is
infringed? Obtain appropriate representations from the patent holder
about litigation. For example, are there potentially undisclosed coinventors?
Has the patent been properly assigned, or is it subject to
the rights of an employer?
8. Obtain copies of any contract, licensing agreement or offers to license pertaining to the patent.
These documents should always be specifically requested.
9. Ask about "blocking" patents.
Owning a patent doesn't mean the patent holder has the right to "practice
the invention" if doing so infringes someone else's underlying patent.
Is the patent more valuable because it is part of a portfolio of related
patents?
10. Is the patent protected in foreign jurisdictions?
This is an important issue if foreign sales are being considered in
determining the patent's value.
11. Are there alternative technologies?
Universities may be a good resource in this area. So can trade and
technical journals. Alternative technologies impact the value of a patent
because they impact its market.
12. Thoroughly analyze the anticipated demand curve for the patented technology over time.
Put simply, is it expected to increase or decrease over time?
Copyright 2006 Jill Gilbert Welytok - Absolute Technology Law Group |