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The Use of Patent Valuation Tools

EPO Seminar Athens March 2014
by

IPEG IP Expert Group

on 29 January 2016

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Transcript of The Use of Patent Valuation Tools

Logic
The Art of Using Valuation
Tools
The Science of Being
Realistic
"Risk comes from not knowing what you're doing" (Warren Buffett)


"Price is what you pay. Value is what you get." (Warren Buffett)
The Practise of Being
Smart

"Nowadays people know the price of everything and the value of nothing" (Oscar Wilde)
The Three Parts of Reaching a Patent Value
Any Asset has a Value
Patent is an Asset
Every Patent has Value
Tools
Patent Experience
}
Common Sense
Which One to Use?
Be Realistic
Being Smart
Premises
Conclusion
Value
Gold is a yellow substance
Copula
Predicate
Subject
Categorical

Conditional
Propositions
:= a proposition which makes a general (or unconditional) statement, where the predicate applies to the subject in all circumstances.
:= a proposition which makes a conditional statement, where the predicate only applies to the subject given a specified condition; the condition is usually marked with a word such as "if" or "when".
- Hypothetical
- Disjunctive
Affirmative

Negative
Universal

Particular
Definite

Indefinite
:= a proposition which asserts a certain agreement between the subject and predicate, so that the qualities or attributes of the predicate belong to the subject
:= a proposition which asserts a difference or discrepancy, so that some at least of the qualities of the predicate do not belong to the subject.
:= a proposition which affirms the predicate to belong to the whole of the subject.
:= a proposition which affirms the predicate to belong to only
part
of the subject.

The
part
could be from the smallest fraction up to nearly the whole.
Particular propositions do not include cases where a predicate is affirmed of the whole or of none of the subject, but they include any between these limits.
:= a proposition which contains a mark of quantity that informs us whether the predicate is applicable to the whole or only part of the subject.
:= a proposition which is devoid of any mark of quantity, so that the form of words gives us no mode of judging whether the predicate is applicable to the whole or only part of the subject.
:= indesignate

Propositions of this kind cannot be treated by logic, until it is first clarified whether the proposition is particular or universal.
A
E
I
O

Universal & Affirmative
Universal & Negative
Particular & Affirmative
Particular & Negative

(
A
ffirmo)
(N
e
go)
(Aff
i
rmo)
(Neg
o
)

The 4 Varieties of Propositions

Ambiguous Forms of Expression
- Mistaking E and O
- Mistaking I and O
- Mistaking subject and predicate
- Exclusive expressions
- Exceptive expressions
- Omission of the copula
- Expressions of multiple propositions
Tautologous

Explicative

Ampliative


:= a proposition which merely affirms of their subject a predicate which is known to belong to it by all who can define the subject
:= a proposition which joins a new predicate to the subject
:= a proposition which merely affirms the subject of itself, and give no information whatever
True

False
It is wholly beyond the province of the logician to consider whether a proposition is true or not in itself; all that he has to determine is the comparative truth of propositions — that is, whether one proposition is true when another is.

It is only in converting or transmuting certain propositions into certain others that the work of reasoning consists,

When the reasoning is valid, the conclusion can be said to be true so far as the premises can be said to be true.
Proposition
A
expresses the fact that the thing or class of things denoted by the subject is included in, and forms part of the class of things denoted by the predicate.
Proposition
I
exactly resembles A in meaning, except that only part of the subject is brought into question.
Proposition
E
denies the existence of any agreement or coincidence between the subject and predicate
Proposition
O
distributes subject only
distributes neither subject nor predicate
distributes both subject and predicate
distributes predicate only
A proposition
distributes
a term when it gives us information about the
whole of the class
denoted by the term.
contraries
contradictories
subalterns
subalterns
subcontraries

If
A
is true…………….
If
E
is true…………….
If
I
is true…………….
If
O
is true……………
O
is...
False
True
Doubtful
True

A
is...
True
False
Doubtful
False

E
is...
False
True
False
Doubtful

I
is...
True
False
True
Doubtful

Conversion of Propositions
To convert a proposition is to
transpose
its subject and predicate
2 rules

1) the quality of the proposition (affirmative or negative)
must be preserved

(2) no term must be distributed in the converse proposition
unless it was distributed in the original proposition
Conversion by Limitation - converting A to I
Simple Conversion - converting I to I and E to E
Conversion by Negation - converting O to I
Conversion by Contraposition - converting A to E
Immediate Inferences
- by Privative Conception


- by Added Determinants

- by Complex Conception
:= consists in passing from any affirmative proposition to a negative proposition implied in it, or equivalent to it,
(or vice versa in passing from a negative proposition to its corresponding affirmative.)

A all metals are elements --> E no metals are compounds
E no men are perfect --> A all men are imperfect
I some men are trustworthy --> O some men are not untrustworthy
O some men are not trustworthy --> I some men are untrustworthy

:= consists in joining some adjective or similar qualification both to the subject and predicate of a proposition, so as to render the meaning of each term narrower or better determined.
:= consists in employing the subject and predicate of a proposition as parts of a more complex conception
Tools and Methods
Important: differentiate between
Methods
and
Tools
Methods: question which valuation methods are available?
Tools:
(i) Patent analytics and portfolio review
(ii) Market and financial information
(iii) Landscaping tools (dealt with by Irene Kitsara)

(i) and (iii) are mostly software application, free or proprietary
Dos and Don’ts of using commercial Patent Valuation Tools
by Severin de Wit, IPEG, Intellectual Property Expert Group The Hague, Netherlands
Valuation Skills
all patents have value
Commercial Tools for Patent Valuation
1. Patent Evaluator:
Comment:
Rather narrow scope, limit usabilitity as PatentEvaluator is based on bibliometric indicators:
1. size of patent family
2. backward & foreward citations
Not
valuation
tool, rather
visualization
tool
Comment:
online intellectual property and business intelligence collaborative application
Reliable valuation cannot be
performed based on (1) and (2) alone
Caveat Authors of the IPScore program (EPO)

When trying to download a test
program, this is what you get:
NO TOOLS AVAILABLE
Difference between Methods and Tools
Methods
are the procedures used to gather and analyze data related to answering specific questions (i.c. leading to Patent Valuation)
Tools
are the instruments used while undertaking these procedures
Citation from
: “Improving statistical patent valuation models using citation data” by Tommy van der Vorst (Master Study TU/e, Department of Industrial Engineering and Innovation Sciences, Eindhoven, Netherlands (2011)
PLATO "Patent Landscape Analysis Tool"
Do not rely (only) on IPScore to get a monetary value
Conclusion: no Shortages of Valuation Tools online, better named "Vizualisation Tools"
claim interpretation
technology savvy
financially capable
market knowledge
valuation output
communication skills
is really a matter of taste & experience
Patent Optimizer
PatentCluster
Intellixer
Innography
IPriori Dashboard
Patent Insight Pro
PIUG
Dolcera
Patent Evaluator
IPScore
Espresso
Mixing "Tools"and "Methods"
Even Valuation Experts are mixing the terms:
The words “tools” and “methods” are often intertwined, not sharply defined (see e.g. Report Expert Group on Intellectual Property (EU commissioned experts)

data from visualization tools
Valuation of company holding patents for M&A, J/V, bankruptcy
Licensing in or out
Patent conflict or dispute
Acquisition of patent(s) for litigation balancing (counteraction)
Internal discussions for protection strategies (R&D or Patent Dep.)
Taxation or accounting
Academic research
Patent Valuation For What?

working assumptions
only 5-10% of patents have real value
To pick the
among the
Example of a Unrealistic Valuation
The KODAK Story
Kodak files for Chapter 11 bankruptcy succumbed to a digital revolution in photography
Ken Luskin of IVAM puts value on Kodak's
patent portfolio of 4,5 billion US$ due to "potential blocking of competitors' products
(smartphones & tablets)"
284 Partners
, a valuation firm hired by Kodak, puts potential price tag on patent portfolio of 2.4 billion US$
Unrealistic valuations hurt investors
Short term valuations can be irrelevant
December 2012
Kodak opens bidding on its patent portfolio
Google
Apple
Intellectual
Ventures
HTC
Samsung
RPX
Microsoft
Fujifilm
Huawei
1,700 patents & 655 patent applications sold for US$ 94 million

remaining 20,000+ patents licensed to a consortium of technology companies for only US$ 433 million, severely restricting future earnings from the patents
which is less than the licensing fees Kodak collected in its worst-ever year in recent history
source
: "The Lowballing of Kodak's Patent Portfolio" by Mark Harris (Jan. 31, 2014), IEEE Spectrum
July 2011
January 2012
30 July 2012
September 2013
Kodak out of bankruptcy. Standard & Poor gives the slimmed down "Kodak-B" junk status rating
Good old saying
"The worth of a thing is what it will bring"
Jeffrey Robertson, "Kodak learns a hard truth about patent valuation or: The worth of a thing is what it will bring" (2014)
source
: "The Lowballing of Kodak's Patent Portfolio" by Mark Harris (Jan. 31, 2014), IEEE Spectrum
}
It's easy to say "
be realistic"
, but what if you were a Nestle patent valuator and were asked in 1991 what the Nespresso patent would be worth?

Nespresso is one of Nestle's fastest-growing brands and racks up an estimated 4.5 billion Swiss francs (US$4.96 billion) in annual sales
so let's see, the VALUE of the Nespresso patent is.....
Nestle Patent was
revoked
by the Board of Appeal EPO on October 10, 2013, based on issue of "added matter" (Article 123(2) EPC)
So the value of the patent is:
(c) 2014 Severin de Wit (info@ipeg.com)
Intellectual Property Expert Group www.ipegconsultancy.com
see also IPEG blog: www.ipeg.com
Twitter: @PatentTwit
But in all fairness.....the patent was the piece of puzzle that helped the uphill marketing success of the Nespresso coffee machine
patent
All illustrations are copyright protected and obtained via a fully paid-up license from Fotolia.com
November 2013
Full transcript