Patent Valuation Standards Patent Valuation Standards In The United States Applying Existing Standards And Terminology To A Developing Field Of Practice By Glenn Perdue I. Introduction standard terminology and conceptual models in an ntellectual property continues to develop as an attempt to provide greater consistency, comparability asset class worthy of ever increasing levels of and reliability. Iinvestment. The last two years have seen some In considering standards relevant to patent valua- of the biggest patent-related transactions ever with tion, we can look to existing standards, particularly Nortel’s patent portfolio being purchased out of bank- within the business valuation domain. Some of these ruptcy for $4.5 billion; Microsoft’s acquisition of 800 standards address intangibles directly. Given the rich AOL patents for more than $1 billion; and Google’s body of existing work acquisition of Motorola Mobility—and its expansive that extends back near- ■ Glenn Perdue, patent portfolio - for $12.5 billion. Yet beyond these ly one-hundred years, Kraft Analytics, LLC, intellectual property headline-grabbing deals, patents are being bought, Managing Member, sold, licensed, financed and infringed every day. In- professionals need not creasingly, we must reasonably estimate and account re-invent the valuation Nashville, TN, USA for the value of patents in business. standards wheel. E-mail:
[email protected] When it becomes necessary to estimate and account For purposes of this for the value of a certain type of asset on a recur- article, standards are viewed broadly to include cer- ring basis, standard approaches, terminology, and tain legal, regulatory, and professional definitions and conceptual models tend to emerge.