PATENT/ROYALTY EVALUATION

What is a patent worth? What is a reasonable royalty? We apply our extensive experience in litigated intellectual property matters to answer these questions before litigation occurs. The knowledge our clients gain from our pre-litigation analysis often gives them the upper hand once a lawsuit is filed.

We look at:

Market assessment/growth potential: Not all property is valuable. This is true with real property, and is true with intellectual property. One of the most important determinants of the ultimate value of intellectual property is the potential size and growth opportunity of the market into which the property will be sold. We utilize state-of-the-art techniques to help determine how large a market may become and how it likely will evolve over time.

Assessing competitive alternatives: How much market power will the intellectual property provide to its owner? The answer to this question is another key input into the valuation assessment. Are there alternative solutions to the problem a client’s intellectual property is designed to solve? How many? How likely are they to grow or diminish in competition with a patented process or product? Econ One helps its clients understand the competitive landscape now when strategic decisions about how to deal with that landscape have the greatest chance of leading to success.

Bargaining strength: Along with market size and competitive alternatives comes the question of bargaining strength. How strong a hand do you hold in negotiating a license? A full house? A royal flush? A pair of deuces? Knowing not only what you are holding, but also what your adversary is holding allows you to maximize your gains from the negotiation. Providing clients with a realistic assessment of their property’s bargaining strength allows them to negotiate intelligently, thereby reducing the guesswork in the negotiation process.

Likely royalty schemes and the determination of an appropriate and reasonable royalty: Using information gleaned from the above three areas of inquiry, Econ One uses cutting-edge bargaining theory to derive a theoretically sound answer to the question: “So what rate should I expect?” More importantly, we provide a thorough explanation of why the rate (or range of rates) is appropriate. Such information enables our clients to maximize the probability of obtaining an appropriate value for their intellectual property.

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