Forward-Looking Valuation of Strategic Patent Portfolios Under Structural Uncertainty

Abstract

Strategic patent portfolios are intangible assets that technology oriented companies hold to secure their competitive advantage in the future. Traditionally, valuation of forward-looking strategic patent portfolios is more an art than a science, nevertheless, they play an important role in the future competitive advantage positioning of high-tech oriented companies.<br>

This paper discusses forward-looking strategic patent portfolios and presents some new ideas on how numerical valuation methods could be used in framing the valuation of these portfolios. The basis on which the forward-looking far away from exploitation strategic patent portfolios are valued is crucially different from the valuation of ‘in production’ patents or already existing licensable IPRs, since future strategic patents must be based on vague information with structural uncertainty about the future. The authors show how flexible tools and analysis using the pay-off method can be used to solve these complex problems faced by companies; and illustrate the same using a numerical example.

</span></span>