Companies that have identified IP as an area of focus have quickly identified the need to be able to value their IP. Whether they are trying to prioritized invention disclosures, determine what patents in their portfolio need to be vigorously defended, asserted, maintained, or decide what value to place on IP that might be apart of a license (in or out). Without this capability IP organizations are dependent upon individual perception as to value. These valuations are often skewed by the biases of the evaluator. Not having a reliable valuation capability can cause IP and business leaders to be very tentative in trying to make decisions involving their IP. Companies need to make this competence a fundamental prerequisite to building a well-managed IP process.
The biggest obstacle in building an IP valuation is making the valuation method simple and accurate. In the absence of a simple valuation approach IP professionals will use unreliable approaches or none at all. Without a reliable valuation or “evaluation” methodology companies are vulnerable to making bad deals and decisions or miss opportunities because of unrealistic and inaccurate valuation of their IP.
Building an “evaluation” capability can be simple and inexpensive. Evaluation is defined differently than valuation. Evaluation results are used to make decisions regarding IP. The approach uses a consistent and disciplined method that can be accomplished in a few hours with the right people doing the analysis. An evaluation is particularly good for determining relative values and for doing a preliminary valuation that may justify a more complex and expensive “valuation”. This ability can play a key role in evaluating the portfolio and exploring growth opportunities. Additionally, IP and business leaders that have a good handle on their IP assets will be more effective negotiators both internally and externally.