tag:blogger.com,1999:blog-7923005810906159036.post5780819207253912854..comments2024-03-27T12:49:05.975+00:00Comments on IP finance: Rockstar and IP GovernanceAnne Fairpohttp://www.blogger.com/profile/02579190868405783459noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-7923005810906159036.post-86237976593471281392013-12-16T00:06:00.032+00:002013-12-16T00:06:00.032+00:00A patent not asserted or licensed has zero value b...A patent not asserted or licensed has zero value beyond that already accounted for the business the patent protects. <br /><br />In theory it might be possible to break out from existing line items, how much would be at risk of competition if not for the deterrent effect of a patent. However, the exercise in practice would be expensive, merely speculative, and in the end would produce no actionable data.<br /><br />On the other hand, each patent does have a basis (cost of obtaining the patent), which can be depreciated.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7923005810906159036.post-24296825216254936842013-12-15T09:47:00.822+00:002013-12-15T09:47:00.822+00:00You state:
"Clearly there is / was a mismat...You state: <br /><br />"Clearly there is / was a mismatch between these two values." <br /><br />From an accounting point of view this is not correct. Where a valid market value can be assigned, e.g. due to a purchase or sale, GAAP allows this value to be used in accounting. As you point out correctly t: "Currently it's considered to be too hard to place any value for IP normally onto a balance sheet."<br /><br />However the reference to Black-Scholes is not helpful. Black-Scholes works where the value can be described as a Gaussian distribution about a mean value. This is not a bad assumption for a share price but it does not work for patent value. Patent value follows something like a log-normal curve at best and that results in no analytic solution. One could do it with finite difference methods, perhaps.<br /><br />Also Black-Scholes can be seen as one of the major reasons behind the recent financial crisis as it rates volatile stock highly. In other words it drives investors towards risky investments and if everybody goes for the same risky investments the whole system collapses if the risk does not pay off.<br /><br />Just as with derivatives there is a danger because to do this properly you need to understand<br /><br />a) patent law<br />b) accounting<br />c) how the mathematics works and what risks are hidden in the analysis and assumptions used. <br /><br />Allen Greenspan got it wrong when only dealing with the last two of these. <br /><br />Regards, <br /><br />William BirdAnonymoushttps://www.blogger.com/profile/12617891158916271851noreply@blogger.comtag:blogger.com,1999:blog-7923005810906159036.post-77350652640929414972013-12-09T22:20:05.806+00:002013-12-09T22:20:05.806+00:00Chuck - you are right. And I think John would agre...Chuck - you are right. And I think John would agree with you. It was only when Motorola's stalking horse bid came out at USD 900 Mio that the investors really began to take the IP asset value seriously.Anonymoushttps://www.blogger.com/profile/02789591295998616170noreply@blogger.comtag:blogger.com,1999:blog-7923005810906159036.post-18230169718051147432013-12-09T14:21:53.614+00:002013-12-09T14:21:53.614+00:00If Nortel had been willing to sell the patent port...If Nortel had been willing to sell the patent portfolio prior to 2009 as a way of raising cash, I'm sure he is correct. One could say the same, of course, about Nortel's divesting any of its assets or businesses prior to meltdown.<br /><br />It's less clear, however, whether <br />Nortel's short-term lenders would ever have had so much faith in a ten-figure valuation of the portfolio that they would have been willing to extend Nortel further credit on that basis alone -- or to have taken the portfolio into consideration when evaluating pass/fail against the covenants on existing loans to Nortel.Chuck Tillhttps://www.blogger.com/profile/15855060003411813328noreply@blogger.com