Patent Value Appraisal Based On Real Option Theory

With the advent of Knowledge Economy Age, The value of knowledge factor brings to the enterprise more and more. As an important part of intangible assets, the role of patents in economic production has become increasingly apparent. Patent value evaluation is the indispensable link to patent investment, patent technology implementation and transfer transaction. Currently the patent is becoming a powerful tool for business, and it is a major growth point of enterprise value and profit, which is a key link in the process of building business vision. The traditional income approach and other methods to evaluate the value of the patent right has a very important role, But in some ways they have some shortcomings. The real option method provides decision makers with a chance to choose on the decision-making period. Which give full consideration to the uncertainty of patent value evaluation. And the application prospect of the real option method is very broad.Firstly, this paper expounds present situation and the development of the real option theory at home and abroad.Secondly the paper introduces the option and real option theory concretely, and compares the difference between the traditional financial option and real option. Then, the article introduces three kinds of commonly used methods and their limitations.Thirdly this paper introduces two kinds of real option model for the patent value evaluation commonly used, and by using one of the binary tree model to build the binary tree model of patent value evaluation. Then we use DerivaGem software to calculate the value of real options, and plus the net present value of earnings before, the final result is the evaluation of the value of a patent. Finally, we select a patent about "desalination technology", we assess the evaluation results with income method and real options method respectively. This assessment provides value reference basis for the decision-making for investors.This paper is based on the theory of binary tree model of real option model, then analyzes the real option characteristics of patent right fully, and builds the binary tree model of the patent right. Which provides a new train of thought for the study of the patent value evaluation. As well as provides the owner with the new pricing method of value investment decision-making.