What Is My Patent Worth?

Inventors or companies who are successful in obtaining a patent will often wonder what it is worth.

They do not question the ability to use it to enforce rights to their intellectual property but they would like to know how to account for its value.

The value of a patent can play a huge role in valuations as part of a merger, acquisition, sale, bankruptcy, and so forth.

Three factors can affect the valuation of a patent: revenue, cost, and market potential.

Revenue

This factor looks to current and future cash value coming in. The patent has a measurable value if it contributes an influx of cash. For example, when a patented product is introduced into a line-up of offerings, a quantifiable bump may be measured. Projections may be made for future valuation based on a trend or other historical behaviors.

Cost

The cost factor considers the potential cost that would need to be undertaken in the event of a loss or need to replace the functionality of the patent. This may also include the cost to replace a total loss of the patented product to the company or inventor.

Market Potential

This factor is a bit more intuitive as it asks simply “what price would this patent fetch if sold on the open market?” Intellectual property rights are bought and sold. While this may sound like a strange concept, you may be interested to know that, as of the writing of this article, American-owned intellectual property is valued at approximately $6.6 trillion US dollars and makes up a massive portion of the national GDP. The only difficulty in this factor is finding a comparable patent/product sold as the idea of a patent is to protect some new invention.

Next Steps

If you would like to discuss how a patent or other IP might give your company a boost in valuation or how you might be able to strategize around your intellectual property portfolio, reach out to us at Miller IP for a free strategy session.

Miller IP Law is a firm that focuses on small businesses, startups, and entrepreneurs/solopreneurs. We’re easy to use. We offer affordable pricing that’s transparent and flat-rate. We focus on the little guys who actually need our help. If you’d like an attorney on your team, simply schedule a Zoom call, and we’ll take care of the rest.

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