I.P. Blog: Top Five Patent Due Diligence Components

By Pellegrino & Associates

As patents continue to provide value to companies, more companies are interested in discovering how much patents are worth. Many elements play a part in determining patent value. You may be surprised by some of the top components. Read below to discover five of the biggest factors to consider when determining a patent’s value.

1. Patent owner density. Is there a lot of art already in the market? Is it a crowded space? If the door to getting into the space is narrow, there may not be much opportunity for a company’s patent; thereby, reducing its worth. Yet, a crowded space could also mean that interest is high and looking for new inventions. On the other hand, if the space is not crowded, it may mean that there is little interest in that space. This would also mean that the patent may not be worth as much. As you can see, this component must fall into place just right in order for patent success.

2. Main players. Discovering the main players can make it easier to plan future success for your patent. If you know who the main players are, you can plan an exit strategy early. You will learn what you are up against by identifying your competitors. You will know who to approach to sell your invention to.

3. Transaction activity. Are there transactions occurring? If transactions are occurring, then there is interest in that space. With this information, you can see who is buying what. What is the market interested in? What is hot? Does your patent fall into this category? Are others interested in what you’ve invented? Are patents being granted, sold, or applied for?

4. Geographic location. Where is activity occurring? Surprisingly, location matters in the patent industry. For instance, if a patent for genetic disorders resides in Iowa, chances of the patent owner making deals is not near as high than if the patent were in another state where pharmaceutical patent concentration is higher. While this is just an example, the type of patent matters when it comes to geographic location.

5. Prosecution activity. The amount of prosecution activity is important for patent success because it helps determine where interest lies. Learning about prosecution activity helps you discover which development classes are the hottest, what the market is most interested in, where new trends are occurring, what the rate is for applications and grants, and whether interest is shrinking.

As noted, these five components reveal a lot of information needed to determine your patent’s value. When you do your research and perform the necessary due diligence, you will have a better grasp on where your patent stands in the industry.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

 

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