A patent portfolio is a valuable asset owned by an individual or company, consisting of patents developed or purchased. The value of a portfolio depends on the patents within it, which have a limited duration and can change in value. Patent holders can license their technology to third parties for separate income streams, but must be careful due to patent infringement cases. Companies that develop and patent their own technology can more easily license their patents. International organizations rank the value of patent portfolios, but valuations are difficult due to changing patent values and prior art. The value of licensed patent portfolios cannot change based on licensing revenues.
A patent portfolio is the set of patents owned by a single owner. These patents may have been developed by the owner individually or may have been purchased by the original patent owner. A patent portfolio can be a valuable asset to its owner.
The value of a specific patent portfolio depends on the patents within it. Each patent has a limited duration under the patent protection regime. The value of a specific patent within a portfolio changes constantly based on where the patent is in its useful life. In some cases, a firm may use its patent portfolio to determine its overall value, especially if its portfolio is one of its largest assets.
Many patent holders license the technology included in their patent portfolios to third parties. These licenses are separate income streams for these patent owners. How the patentee attempts to find licensees of his patents is important. Because of the way patent infringement cases are prosecuted, the patent owner must be very careful in licensing the patents within his patent portfolio.
In general, companies that develop and patent their own technology can more easily license their patents. An organization that purchases patents from the original owner with the intent of licensing them to another party might walk a finer legal line. The value of licensed patent portfolios cannot change, as the value is normally attributed to the patents themselves and not to any licensing revenues.
Some international organizations rank the value of patent portfolios so that the public can determine portfolio values and how much of the owner’s value is based on his patent portfolio. These valuations are difficult to determine since a patent can change in value overnight. Patents are also based on prior art: to the extent that a new patent is issued and incorporates an existing patent, the existing patent can be invalidated or can coexist with the new patent if it is needed to create the new technology.
It is unclear whether a patent within a patent portfolio will generate licensing revenue based on whether or not a new patent is granted. In general, when both patents are owned by the same company, the old patent retains more value than when it’s owned by separate parties. These types of problems are on the rise with the increase in the patent protection regime.
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