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Enhancing Patent Valuation with the Pay-off Method

Mikael Collan, Markku Heikkilä, Enhancing Patent Valuation with the Pay-off Method. Journal of Intellectual Property Rights 16(5), 377–384, 2011.

Abstract:

Numerical valuation of patents is a difficult task due to the great uncertainty regarding the future and inaccuracy in estimation. The pay-off method is an easy to use and understand analysis method that is based on using value scenarios real options-thinking. The method is designed for the analysis of assets that suffer from difficulties in estimation precision and often face high uncertainty. This paper shows how patent valuation can be enhanced with the help of the pay-off method, based on any of the three "conventional" patent valuation methods. A numerical case about how the pay-off method can be used together with the discounted cash flow method is presented. The method is already in use by a number of multinational companies for valuation of R&D and is on its way to be introduced into the IPR functions of a number of corporations.

BibTeX entry:

@ARTICLE{jCoHe11a,
  title = {Enhancing Patent Valuation with the Pay-off Method},
  author = {Collan, Mikael and Heikkilä, Markku},
  journal = {Journal of Intellectual Property Rights},
  volume = {16},
  number = {5},
  pages = {377–384},
  year = {2011},
  keywords = {Pay-off method, patent valuation, discounted cash flow method},
}

Belongs to TUCS Research Unit(s): Institute for Advanced Management Systems Research (IAMSR)

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