Setting the selling price for patents
One of the accepted ways to value a patent is the market approach which looks at comparable sales. There was a period where it was easy to find prices paid for large portfolios of patents and applications. Now you are better served retaining analysts that track the market including asking and sale prices. In many cases, patents sell for way more than the cost to develop the assets.
Introduction
How much is a patent or application worth? Some patents are worthless because they contain an error such as patent profanity. By hiring a patent agent you are far more likely to avoid adding uncorrectable errors in patent drafting and prosecution. Some patents are valuable enough to save a company. Some are worth way more than the cost to develop them.
Three valuation methods
The valuation methods of cost, income, and market are sound but their application in patents is a bit different than for other assets. Cost values are generally the replacement cost but since you can’t go back in time to file a patent application the cost value of a patent is what you paid to develop it. The income approach looks at the future benefits provided by the patent – income or savings. The income value is the present value of the total of these benefits over the lifetime of the patent. The market value is determined by what a willing buyer would pay or did pay for a similar asset. This splits into sales and asking price data.
Prices
Here are two sets of prices.
Sales data for patents
The sale prices of patent documents (i.e., patent or patent application) were publicly known for a stretch as large companies rushed to buy. These prices are per document from deals each involving hundreds of assets. The subject matter is telephoned including mobile, imaging, IT, and more.
| Date | Seller | Price per document |
| 2010 – November | Novell | $510,204.08 |
| 2011 – July | Nortel | $750,000.00 |
| 2011 – August | Motorola Mobility | $510,204.08 |
| 2012 – January | RealNetworks | $267,000.00 |
| 2012 – March | IBM | $111,000.00 |
| 2012 – April | AOL | $1,060,000.00 |
| 2012 – April | Microsoft | $677,000.00 |
| 2012 – June | InterDigital | $221,000.00 |
| 2012 – July | Digg | $267,000.00 |
| 2012 – July | FujiFilm | $87,500.00 |
| 2012 – December | Kodak | $477,000.00 |
| 2013 – December | IBM | $38,000.00 |
| 2014 – December | Rockstar | $225,000.00 |
| 2017 – February | IBM | $39,000.00 |
| 2017 – April | Mobli | $7,700,000.00 |
The lowest prices per document are from IBM. The highest price paid was 7.7M$ for a patent application.
The mean price per document over the 43,000 documents is $483,924. Here is the data per deal with the deal size as the area of the markers.
Summary of 2021 asking prices
Richardson Oliver, analysts writing in IAM magazine, provided more recent information on the asking pricess for brokagerages involving five or more patent assets. These are asking prices and will not dictate what a patent is worth in your industry. But they are a good starting point.
| Asking price | Per document | Per US patent | Per Family |
| Min | $18,000 | $31,000 | $61,000 |
| Median | $108,000 | $163,000 | $250,000 |
| Mean | $146,000 | $208,000 | $330,000 |
| Max | $500,000 | $700,000 | $1,000,000 |
Getting more information
For more information please contract us. Perpetual Motion Patents Ltd. is pleased to share our list of well documented patents deals. Here is a short sample.
- In 2010 CPTN Holdings owned by Apple, EMC, Microsoft, and Oracle, paid $450m to Novell, a software firm, for 882 patents and applications. See SEC Form 8-K dated 2010 Nov 21. The price per patent was $510,204.08 – remember that number.
- In 2011 the assets of Nortel, the then bankrupt telecom company, were put up for action. Rockstar Bidco beat Google to pay $4.5 billion for 6,000 patent documents. The consortium included Apple, BlackBerry, Ericsson, Microsoft, and Sony, who paid $750,000 per patent document.
- Google walked away from the auction empty-handed. They then bought substantial business assets (e.g., goodwill, trademarks, source code, real property, and patents) of Motorola Mobility. Paying 12.5G$ for everything including 24,500 patents and applications. Analysts from Frost & Sullivan noticed that $510,204.08 per patent is exactly what Novell sold patents for in 2010. Craig Cartier, an analyst in the firm said “The Google-Motorola deal is not about hardware – it is about patents”. They paid for patents getting a lot for free including trademarks and real property.
If you want the notes on all the deals cited please do contact us.