How to Determine the Worth of a Patent
More than 3260,000 patent applications are filed every year, according to the United States Patent and Trademark Office. While these patents may go on to earn income for their owners, there's no guarantee that any individual patent will generate any money at all. While any patent can be bought and sold, determining how much to pay for a patent, or how much it's worth, is often a challenging prospect. A patent's value isn't the function of simple arithmetic formula --- determining its worth involves a lengthy process of evaluation that takes numerous variables into account.
Other People Are Reading
Instructions
-
-
1
Determine the potential importance of the patent. The two most valuable types of patents are those that solve a longstanding problem and those that introduce a new technology or area of technology, according to the World Intellectual Property Organization. Even if your patent doesn't fit into these two categories, it can still be valuable. A good way to look at this aspect of an invention is to ask whether or not a competitor would pay to use the invention.
-
2
Evaluate the size of the market. A patent that only a handful of people would be interested in probably won't be worth a lot. On the other hand, a patent for an item such as a new type of television or an airplane could be worth an incredible amount of money because of the size of the potential market.
-
-
3
Research prior inventions. You aren't the only inventor in the world, nor the first to try to patent a product. Even if you've already been granted a patent, you must still search patent office records for examples of prior creations similar to your invention. If there are a number of similar products already out there, your invention has less value, while fewer similar products means your invention is more unusual, which raises its value.
-
4
Measure the remaining life of the patent. Patents are issued for a maximum length of 20 years. If all other factors are equal, a new patent with 20 years of protection left is worth a lot more than an old patent with only a few years to go.
-
5
Determine the significance of the patent in relation to other patents. You can invent and patent a product that relies upon previously patented products. In such cases, determine how these previous patents affect your patent, and vice versa. If your patent allows a previously patented work to be used in a new and unique way, for example, the owner of the prior invention might be interested in buying your patent to maintain or increase the value of his own property.
-
1
References
- Photo Credit idea image by caironbohemio from Fotolia.com
