Valuing patents and licenses from a business strategy perspective – Extending valuation considerations using the case of nanotechnology

Abstract

Currently there is a debate in the field of nanotechnology about the evolving IP landscape and its impact on innovative progress based on technological discovery in the future. Nevertheless, nanotechnology patents will serve as an important securitization instrument for future financing and business strategic purposes. Valuation know-how of nanotechnology patents will therefore become critical in deal-making and in bringing about innovation. Like many innovative products today, nanotechnology enabled products also consist of a multitude of patented technological components from different stages in a value chain and belonging to a multitude of owners. Complex IP landscapes along entire value chains give rise to a tendency to over-value one’s own patented technology from an ex-ante and individual company’s perspective. Thus the sum of individually estimated values of patented technology can exceed the value that can be realized ex-post in a given value chain. We extend current valuation considerations of patented technology from a static perspective to include a dynamic view using nanotechnology as an example. Furthermore, in addition to single value chain stages as a level of analysis (level A) we also take into account the complex technology landscapes in entire value chains (level B) as well as patented technologies’ potential value in different current or future value chains (level C). We derive conclusions with respect to valuation approaches for the discussed levels of analysis from a static and dynamic perspective.