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14 J. High Tech. L. 148 (2014)
An Ex Ante Theory of Patent Valuation: Transforming Patent Quality into Patent Value

handle is hein.journals/jhtl14 and id is 148 raw text is: AN EX ANTE THEORY OF PATENT VALUATION: TRANSFORMING PATENT QUALITY INTO PATENT VALUE Maayan Perel* ABSTRACT This Article presents a novel, ex ante method of patent valua- tion for licensing purposes. It suggests that the value of patents should correlate with their technological contribution for our pa- tent system to adequately reward innovation. The proposed meth- od deviates from existing methods in at least four aspects. First, it adopts a social-normative perspective instead of a positive- economic one. Thus, it asks what should be the license value, from the standpoint of the patent system, and not what would be that value in a world with no regulatory intervention. Second, it is performed ex ante, upon the grant of patent protection, far before any licensing negotiations are initiated. Third, it recommends set- ting flexible limitations over the ultimate license value, rather than setting a single fixed price. Fourth, it suggests subjecting the pro- cess of patent valuation to external regulation, instead of leaving it to the exclusive control of free market powers. Accordingly, this Article advances a two step, novel method of patent valuation: first, determining the quality of a given patent according to the proposed quality indicators, and then, assigning flexible price limitations that correlate with the patent's quality. Such a social-normative method of patent valuation, this Article contends, would promote at least four significant objectives. First, by translating patent quality into a numerical patent value, it could encourage high quality innovation and improve patent quality. Second, by setting ex ante limitations over the licensing price the patentee may ultimately demand, it would downgrade Copyright C 2014 Journal of High Technology Law and Maayan Perel. All Rights Reserved. ISSN 1536-7983.

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