A Research On Patent Valuation Based On Real Options

In the context of knowledge-based economy, patent-oriented business has alreadybecome not only the highlight of the World Trade, but also the important means ofcompetition in the market. Nowadays, the patent portfolio value can exceeded onehundred billion, which means research and investment of patents is a vital part fortechnological enterprises. However, because of the complicated quality of patents,traditional valuation methods have been difficult to meet the requirements of patent assetsevaluation. Therefore, the need for new valuation methods to cope with the new demandsof the growing patent market is urgently needed.Option pricing theory is the core of the financial sector. Its advantage is that it canreflects potential investment value of the patents according to the historical volatility ofthe market price. Option theory attaches great importance to the application of probabilitytheory, so it means a lot to the valuation of long value circle assets such like patents.Besides, option pricing model can compensate for other evaluation method due to theirunderestimate of the volatility.Patent itself has the option property, prediction to the research and income of patentscan be transmitted to the analytical process of option form. One or a group of of patentscan be seemed as one option or a portfolio of options, through this method that we canquantify our problems. Black-Scholes model is one of the option valuation models, bywhich can work out the problem that patents value varies too much. Furthermore, it hasmany other advantages.In summary, Black-Scholes once brought glorious past to financial field, so it will bein patents valuation field. With the rise of science and technology trade and thepromotion of the venture capital, reasonable patents valuation means more and more tothe enterprises, and shows traditional methods are inadequate. In this context, it isimportant to start analysis and research on option valuation of patents. In the last chapterof the article, the author summarized the key points and put forward the prospects of howoption valuation of patents will go.