Method
The economic-analysis
valuation method has three approaches: cost, income and market.
Cost Approach
This approach states that a patent's value is the
replacement cost, or the amount that would be necessary to replace the protection right on the invention. The replacement cost of an item refers to the amount of money that would be paid, at the present time, to replace the item. If an inventor has an item that he or she has patented, the patent's value would be the amount of money required to replace that invention. A prospective client would not be willing to pay more for a patent than the amount he or she would have to pay to obtain an equivalent protection right.
Income Approach
This method looks to future
cash flows in determining valuation. It states that a patent's value is the present value of the
incremental cash flows or cost savings it will help provide. When a company or individual develops a product that has the potential to be patented, the underlying hope is that the patented product will cause an increase in sales, or at least be a cost-saving measure in the company. This approach states that the patent's value is the current cash value of these future benefits.
Market Approach
This methodology involves determining what a willing buyer would pay for similar property. In other words, the patent's value is approximately equal to the value of similar patents or patented products that have been sold and purchased before.
Two things must be in place for this approach to be used for patent valuation:
- Existence of an active market for the patent, or a similar one
- Past transactions of comparable property
Look for similar values for the following items when looking for comparable patents:
- Industry characteristics
- Market share or market share potential
- Growth prospects
Read more:
Patents Are Assets, So Learn How To Value Them
As was previously posted, I believe (correct if wrong) that all patents registered, paid for and granted are owned by WBT. This also includes any patents registered by Edwin Jay Sarver and Stephen Mason (only patents related to biometrics of the eye, devices for biometrics of the eye etc).
Bear with me folks....I have never valued a patent. I suspect it will be intricate and complicated. Probably completely over my head .
Worth a shot.... I'll return to the announcements and media frenzy (New York times, Alan Kohler, fran Kelly interview with Steve Mason, Sunday morning herald, brokers reports, wise owl etc) . They certainly pulled out some big numbers at the time. Time to dig them out again.
Cheers
