A View of Valuation and Licensing of Standard Essential Patents
As standard essential patents continue to gain economic importance, disputes surrounding them see no end in sight. Given the economic benefits at stake, the question arises how to come to grips with the valuation of standard essential patents.
The Top Down approach seeks to identify a cumulative rate for the standard as a whole. In a subsequent step, it then aims to divide this rate between the patents that read on the standard. As such, this valuation approach aims at splitting a given rate for a standard among patents pertaining to that standard.
The Comparable Licenses approach is easily understood. It seeks to establish a valuation by reference to other licensing transactions. As such, it allows to model real world licensing transactions. Being rooted in historical transactions, it offers insights into licensing contracts that have actually been concluded.