Perhaps the biggest impediment to investing in patent assets stems from an inherent level of risk regarding assessing a patent asset’s value.
At best, you can only predict the value of a patent asset and, more specifically, predict how a court would make an assessment regarding the patent asset’s validity, enforceability, and claim scope. Not all patent assets will necessarily go into litigation, but if you attempt to monetize an asset, you may need to enforce it in the court system to extract its value (e.g., if brokering or licensing attempts fail).
To illustrate, if you spend $200,000 to purchase a patent asset, but if a court determines that the patent asset is invalid or unenforceable, then your patent asset is essentially worthless. Alternatively, if a court determines that the patent’s claims do not cover a key market or industry, then such a ruling may significantly reduce its value, especially if you purchased the asset on the assumption that it reads on the market or industry.
As such, to assess a patent’s value, you must have some ability to accurately predict how a court would make a ruling relating to the patent.
How do you improve your ability to predict how a court would make such a ruling? I will be discussing this in a series of future posts.