If you can't see it, then it doesn't exist. Suppose science successfully perpetrated that medieval philosophy and we never accepted the existence of neutrons, protons, electrons, germs, bacteria, viruses or DNA. Today's science would not exist and we would still be living in the dark ages. Just as with physical science, economic science and theories have evolved as the world in which we live continues to change.
My colleague Grover Rutter (see his article in this edition) has presented an excellent review of how to treat patents from a financial and tax reporting standpoint. However, how do you determine the real value of a patent? That begs the question: What factors are relevant to the real value of a patent? You have to know what factors into a valuation before you can address the valuation issue. Let's start with some definitions, and then address this issue. After that, lets look at the PatentValuePredictor model and some actual valuation data and trends provided by the model.
A new and useful macro economic model for valuing patents is presented. 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!
I developed a macro economic model for automatically valuing patents, which is presented elsewhere. In this paper, I present some individual automated patent valuations and company-wide automated patent portfolio valuations resulting from the model (sections II and III), summarize the model (section IV), correlate results from the model for company-wide patent portfolios to market capitalizations of publicly traded companies and explain why those correlations show that certain basic assumptions of the model are valid (sections V and VI), discuss validating the model's individual automated patent valuations (section VII), and draw certain conclusions (section VIII).
