How to Value a Patent

"Inventors help solve vexing problems, both sophisticated and simple, and as a result sometimes enjoy considerable celebrity and rewards. Our society’s economic success, too, is based on innovation. To encourage public disclosure of inventions, the U.S. Patent and Trademark Office (USPTO) issues an inventor a patent, which excludes others from making, using, selling or importing that invention into U.S. territories for a limited period of time.

The three kinds of U.S. patents cover living plants, ornamental designs and useful inventions (the latter are called “utility” patents). Familiar products once protected by U.S. utility patents include Alexander Graham Bell’s “improvement in telegraphy” (the telephone), the Wright brothers’ “flying machine” and Thomas Edison’s “incandescent lamp” (the light bulb)."

This article [20 Steps for Pricing a Patent] provides an excellent and detailed set of basic procedures for valuing U.S. utility patents.

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To Patent or Not to Patent, that is the Question

Guy Kawasaki recently posted:

"The most valuable outcomes of a patent are often impressing your parents and filling up space in your MySpace profile. (The exception to this rule is biotech, chip design, and medical devices where a patent really means something.)

As a startup, it’s highly unlikely that patents will make your company defensible because you won’t have the time or money to do battle with a Microsoft-esque competitor. Sure, every few years you hear that Microsoft has to pay a company tens of millions of dollars, but 'suing Microsoft' isn’t a viable (or attractive) business strategy."

Guy Kawasaki then asked the intellectual property attorneys at Rethink(IP) to respond to his comments. They did, noting that:

"Sometimes, you've got to realize that 'patent everything' is not the best strategy...and then develop a big-picture intellectual property strategy that is custom-tailored to the startup and its industry. Be brave and accept the fact that patents just might not be the whole enchilada in that picture."

Read the complete Rethinker's response here.

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