Adopting real estate valuation methodology to value patent

Abstract

The need for an effective patent valuation methodology has being greatly spoken among researchers in recent years. An appropriate patent valuation method had become one of the factors in determining the success or failure of patent-based companies. However unlike real estate valuation methods, the accounting method is said to be incapable in representing the worth of patent in which it was often undervalued. Apart from that, lack of universally agreed patent valuation model and no uniformity in patent valuation standard has become a hurdle towards computing the real value of patent. By exploring the characteristics and attributes of patent, it can be noted that the patent has many features that are synonymous with real estate. The aim of this study is to evaluate the similarities and differences between patent and real estate characteristics, and to assess real estate valuation methods capability to be adopted in valuing patent. Literature review, interviews as well as focus group discussions with experts in the various areas based study related to patent were conducted and analyzed through Content Analysis method in order to achieve the objectives of the study. As a result, characteristics between patent and real estate has been identified which are on the aspect of tangibility, interest, approach of methods, scope of right to exclude, obsolescent and duration of rights. These findings revealed that it is possible to value patents by adopting the real estate valuation methods especially when using the cost method and income based method. Future research specifically on the methodologies is needed to convince the market to adopt the real estate valuation methods in valuing patent as well as extended study on the promotion of real estate valuer’s role in patent valuation.