The value of 'weak' patent
by Linlin Liu
International Journal of Intellectual Property Management (IJIPM), Vol. 6, No. 1/2, 2013

Abstract: This paper revisits the issue of valuing patent under litigation risk, which is called 'weak' patent. Drawing on real options theory, the valuing model of weak patent explicitly considers the patent owner holds long the commercialisation project and sells short an option to litigate. Considering the interaction between options, the least squares Monte Carlo approach is employed rather than pure Monte Carlo in the model. It is shown that the patent value is decreasing under litigation risk. Sensitivity analyses help to understand the determinants of weak patent value. Finally, the results yield new policy perspectives that may alleviate the harm raised by litigation risk.

Online publication date: Mon, 31-Mar-2014

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