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Title: Enhancing Patent Valuation with the Pay-off Method
Authors: Collan, Mikael
Heikkilä, Markku
Keywords: Pay-off method;Patent valuation;Discounted cash flow method
Issue Date: Sep-2011
Publisher: NISCAIR-CSIR, India
Abstract: Numerical valuation of patents is a difficult task due to great uncertainty regarding the future and inaccuracy in estimation. The pay-off method is an easy to use and understand analysis method that is based on using value scenarios and real options-thinking. The method is designed for the analysis of assets that suffer from difficulties in estimation precision and often face high uncertainty. This paper shows how patent valuation can be enhanced with the help of the pay-off method, based on any of the three ‘conventional’ patent valuation methods. A numerical case about how the pay-off method can be used together with the discounted cash flow method is presented. The method is already in use by a number of multi-national companies for valuation of R&D and is on its way to be introduced into the IPR functions of a number of corporations.
Page(s): 377-384
ISSN: 0975-1076 (Online); 0971-7544 (Print)
Appears in Collections:JIPR Vol.16(5) [September 2011]

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