Monday, April 03, 2006

How much is a patent worth?

One way to figure out what a patent is worth when it is licensed is to do some sort of calculation of:
1. the expected cash flow from the patent
2. the expected growth rate of the cash flow
3. the risk of the cash flow and growth estimates being wrong
4. and the length of time the cash flow is expected to be recieved.
The less the inventor has defined these factors, the greater the uncertainly and the less a potential licensee would likely pay.
Rodney D. Ryder

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