Value Shares of Technologically Complex Products
51 Pages Posted: 2 Jul 2014
Date Written: April 16, 2014
Although patent law requires the apportionment of profit between an asserted patent and other inputs, the typical analysis need not (and often demonstrably does not) satisfy a simple adding-up constraint on the value of the apportioned inputs. This problem is especially acute for "complex" products that may embody hundreds of patents. Based on a wide range of studies of the patent value distribution, I present simple but robust guidelines for determining the share of value contributed by any given patent, and apply them in several familiar contexts. I find that fewer than 1% of all patents are likely to be worth even 15 times the value of the mean patent. This finding underscores the difficulty that patentees face in obtaining full value for global patent portfolios, when the value in litigation of any individual patent's contribution to a complex product is likely to be small.
Keywords: intellectual property, patent, portfolio, valuation, litigation, profit, apportionment, evidence, royalty, damages
JEL Classification: K21, L60, O31, O34
Suggested Citation: Suggested Citation