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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

 

3316 W. Wisconsin Avenue | Milwaukee, Wisconsin 53208 | Phone: 414-223-1670 | Fax: 414-223-1671 | jw@abtechlaw.com