Valuing patents on cost-reducing technology: A case study [An article from: International Journal of Production Economics]

This digital document is a journal article from International Journal of Production Economics, published by Elsevier in 2007. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
We present an approach for valuing patents on production process improvements. Specifically, we focus on valuing a patent on cost-reducing process improvements from the viewpoint of the patent holding firm. We do this by considering the relevant cash flows that result from owning the patent. The patent value is determined by (1) licensing fees and royalty income, (2) competitive advantage resulting from the patent, (3) patent maintenance costs. We discuss a case study that presents the difficulties and challenges in finding the relevant information that is needed to estimate the cash flows. We show that valuation of patents on production process improvements cannot be done without good knowledge of technology, markets and competitors.