A Macro-Economic
Model Providing Patent Valuation and Patent Based Company Financial Indicators[1]
I.Introduction
A.Summary
I present a new and useful macro
economic model for valuing patents.The
model provides equations predicting the market share for products and services
covered by a patent.One benefit of the
macro economic model is that it enables inexpensive automated determination of
the value of any patent.One drawback
of the macro economic model is its reliance on a nominal determination of
market share.However, the reliance
upon a nominal determination of market share obviates data defining the actual
market and actual sales covered by the patent, and that twist is what makes the
model feasible to implement!
Applying income valuation theory
to the annual net earnings provided by the patent for the remaining term of the
patent results in a valuation for the patent.Extensions of the model to the time dependence of company patent portfolios
provides patent based company financial predictors.
I have implemented the macro
economic model in a programmed computer system, and I have used that system to
automatically generate valuations for all enforceable non-expired U.S.
patents.Valuations resulting from the
model shouldavailable by the time this
article is in print at www.patentvaluepredictor.com.Patent values obtained in January 2001 (for
three patents issued in each of the last 10 years) appear in the following
table.
PN
IssuedSD
ExpDate
Value
Title
Assignee
4890341
1/2/90
1/2/07
$1,652,873.84
Invalid's bathtub
Joycelyn Forbes
4890335
1/2/90
1/2/07
$363,834.27
Ventilated welding shield
Arnold E. Crowson
4890336
1/2/90
1/2/07
$2,420,845.75
Welding protected
coveralls
Barry Worton
4980936
1/1/91
1/1/08
$4,970,871.56
Closed cell foam ground
pad and methods for making same
James M. Lea
4980930
1/1/91
1/1/08
$1,136,480.94
Garment waistband
construction
Crown Textile Company
4980939
1/1/91
1/1/08
$461,331.15
Water filled cushion
Peter A. Smith
4980935
1/1/91
1/1/08
$2,327,225.60
Beach towel and pillow removably
contained within carrying bag
Cambridge Products
5079000
1/7/92
1/7/09
$1,714,534.23
Clathrate composition
including essential oils and method of using same
Kurita Water Industries
Ltd.
5078013
1/7/92
1/7/09
$2,212,703.13
Ultrasonic measuring
apparatus using a high-damping probe
Shimizu Construction Co.,
Ltd.
5078481
1/7/92
1/7/09
$9,018,874.57
Magnification changing
lens
Canon Kabushiki Kaisha
5175904
1/5/93
1/5/10
$563,518.11
Wringing device in
particular for fringed strips for cleaning floors
VDM S.r.l.
5175897
1/5/93
3/24/09
$357,107.24
Cover for hospital bed
rails
John J. Marra, Jr.
5175898
1/5/93
4/22/03
$2,490,031.01
Sculptured, stretchable waterbed
mattress with aesthetic appearance
Advanced Sleep Products
5274856
1/4/94
1/4/11
$2,607,921.01
Portable hygenic apparatus
Les Placements Jean-Claude
Lemyre Inc.
5274857
1/4/94
1/4/11
$685,513.69
Bath and shower device with
a bath tub and a related shower partition
Ideal-Standard GmbH
5274858
1/4/94
1/4/11
$2,018,302.01
Shower soap system
Gerald W. Berry
5377376
1/3/95
1/3/12
$3,650,697.23
Mobile surface cleaning
machine
Advance Machine Company
5377369
1/3/95
1/3/12
$19,431,862.27
Bottom structure of a bed
Paramount Bed Company
Limited
5377370
1/3/95
1/3/12
$10,104,193.05
Hospital bed with
collapsing wing
Hill-Rom Company, Inc.
5479666
1/2/96
1/2/13
$35,128,362.16
Foot egress chair bed
Hill-Rom Company, Inc.
5479668
1/2/96
1/2/13
$374,448.41
Revolving suntan bed
Richard W. Cooper, Jr.
5479658
1/2/96
1/2/13
$10,252,291.15
Face mask and face mask
cover
Daniel S. Harris
5590429
1/7/97
1/7/14
$3,200,181.41
Electrophysiology table
General Electric Company
5590430
1/7/97
1/7/14
$10,335,770.40
Gel filled deformable
cushion and composition contained therein
Joel L. Sereboff
5590431
1/7/97
1/7/14
$4,770,054.25
Stretcher frame clamp
Kevin R. O'Connell
5704072
1/6/98
1/6/15
$2,183,190.04
Occipital retention strap
for cyclist headgear
9001-6262 Quebec Inc.
5704074
1/6/98
1/6/15
$919,808.94
Toilet gas suction vent
Pavel Baldea
5704075
1/6/98
1/6/15
$4,497,005.84
Stay-dry toilet seat
Mindy Machanic
5855031
1/5/99
1/5/16
$532,160.60
Crib with infant hammock
Wade Swift, Jr.
5855032
1/5/99
1/5/16
$5,102,405.13
Quilt
Kimberley D. Field
5855033
1/5/99
1/5/16
$3,418,122.16
Inflatable beach bed
Marinus Anthonius Maria
Van Tol
6009566
1/4/00
1/4/17
$1,407,191.09
Head and neck support for
racing
Robert P. Hubbard
6009567
1/4/00
1/4/17
$1,407,156.88
Inline sanitary
conditioning system
Waterbury Companies, Inc.
6009568
1/4/00
1/4/17
$4,568,312.86
Opening-closing device of
western style toilet seat and seat cover
Katoh Electrical Machinery
Co., Ltd.
The model predicts much larger
values for some patents.The largest
patent value determined using the model is $6.2 billion.
In sequence below, I discuss the
importance of patent valuation, define valuation, discuss conventional valuation
of patents, define the macro economic model, discuss the reasonableness of the
axioms defining the macro economic model, extend the model to provide patent
based company financial predictors, and then discuss methods for validating the
results of the model.
B.The Significance of Patent Valuation
Valuing patents is important for
many purposes including determining business values, capital allocations,
taxes, licensing rates, and patent infringement damages.There is a growing interest in valuing
patents because our economy is shifting from a tangible assets based economy to
an intangible assets based economy.[2]The business world has recognized that the
intangible assets of many companies exceed the value of their tangible assets,[3]
and that patents are part of these intangible assets.[4]
C.Conventional Patent Valuation
Valuation is an accounting term
which means a lump sum of money payable to receive the future benefits of an
asset at a particular time.
