Patents play a fundamental role in innovation. In the absence of patents, technology and economic growth would be seriously hampered. Yet, in spite of their vital role, the economic worth of patents goes by and large unnoticed. Seen at best as a necessary evil, many companies see patents and the professionals that manage them as a cost centre. This can depress fees of outside counsel and lower salaries of in-house IP professionals. Also, it can result in inadequate budgets available for intellectual property.

Yet, there are numerous examples, where patents have played the key element in a commercial transaction. Patent Acquisitions such as the sale of the Nortel Portfolio for 4.5 billion Dollars or the billion dollar patent fight between Apple and Samsung illustrate the importance of patents.

But how much more IP sits gathering dust because of an inadequate capture of its economic relevance?

The valuation of patents is crucial to help unleash the economic importance of technology. A patent valuation helps associate technical features claimed in a patent with a pound (£) value. This in turn, helps professionals outside the IP community come to grips with patents. By establishing the economic relevance of Intellectual Property (which at times can also be zero!), patents can become an economic asset, a unit of exchange (like money) and bear the potential to turn around the entire management of the company. An Intellectual Property valuation can also be instrumental in a litigation, arbitration or mediation.

The adequate valuation of patents plays a crucial element in vital markets for technology, while at the same time allowing IP managers and litigators alike make educated decisions.  In spite of that, Intellectual Property professionals lack adequate information and knowledge on the topic. Current accounting standards that allow to only partially reflect the value of patents, do not make things easier. This leads to inefficiencies, potential under payments and missing out on potentially attractive opportunities.