10 Key Parameters That Determine Your Patent’s True Value

Ever wondered what makes one patent worth millions while another struggles to find a buyer? Patent valuation is not just about having an invention on paper. It is about understanding the factors that drive its real-world value.

When valuing a patent, traditional methods like cost, market, and income-based approaches are often used. But what if we told you there is more to the story?

Here are 10 key parameters that add depth and accuracy to patent valuation:

1. Inventive Energy (IE): Measuring Invention Trends

Inventive Energy helps assess the level and pace of innovation in a given technology domain. By analyzing keyword trends and patent classifications over the past five years, we can determine how active and dynamic the space is. A higher IE indicates a rapidly evolving field, which can impact valuation.

2. TRIZ Level of Invention: Understanding System Evolution

TRIZ methodology helps classify patents based on the level of inventive steps. By comparing the system, subsystem, and supersystem changes with prior art, we assign an Invention Level Index (ILI). The higher the TRIZ level, the greater the potential value of the patent. (please see Quantifying the TRIZ Levels of Invention by Navneet Bhushan )

3. Height of Inventive Step: Quantifying the Breakthrough

How far has the invention pushed the boundaries? By analyzing the claimed features against prior art using 20 system evolution lines, we measure the exact technical improvements. The more significant the advancement, the stronger the patent’s competitive edge.

4. Remaining Life: More Years, More Value

A patent with a longer remaining life holds more value, as it offers exclusivity for a longer duration, allowing more time for commercialization and licensing.

5. Independent/Total Claims Ratio: Strength of Protection

A high ratio of independent claims to total claims suggests broader protection. Stronger patents with enforceable claims have higher licensing potential and are more attractive to investors.

6. Technology Readiness Level (TRL): Market-Readiness Matters

Patents with a higher TRL (closer to commercialization) carry more value since they require less R&D effort to bring to market, making them attractive for investment and licensing deals.

7. Legal Status: Active vs. Expired

An active and enforceable patent holds greater value. If a patent is abandoned, expired, or lapsed, its commercial worth significantly drops.

8. Citations: Influence and Technological Impact

The more a patent is cited by others, the more influential it is considered. High citation counts indicate relevance and technological significance, which increases its perceived value.

9. GDP of the Countries: Market Potential

Patents granted in high-GDP countries are generally more valuable due to larger market size, better IP enforcement, and stronger commercial potential.

10. Family Size: Global Reach Matters

A patent filed in multiple jurisdictions has a broader market reach and is more attractive for global commercialization. A large patent family increases its strategic and financial worth.

By incorporating these parameters with traditional valuation methods, we can ensure a more accurate, thorough, and reliable assessment of a patent’s true worth. Understanding these factors can help businesses, investors, and inventors make informed decisions about patent portfolios.

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