Patent Valuation is a Myth

Patent valuation is really slippery, and completely depends on the context.

Patents can be thought of as call options on technology.  They are a time-limited bet that the market will adopt a technology.

At the beginning, the patent is an out-of-the-money call option and has only potential value.  Once infringement occurs, the patent turns into an in-the-money call option, since we now have some basis to recover licensing fees.

Sky-high valuation numbers that come with many patents are terribly unreliable.

The only valuation that is trustworthy is one where someone is writing a check.  Anything else is pure speculation.

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