External technology commercialization: policy guidelines

A growing number of publications are addressing the issue of intellectual capital. Patents are one form of intellectual capital. Patents play an important role in the appropriation of rents for firms. This is exactly what makes them valuable. However, the question arises: what is constituting the value of a patent? What is discerning a valuable from a nonvaluable patent? In the past, economists were measuring the value of a patent in an ex-post way by counting the number of renewals: patent which was renewed 15 times was seen to be more valuable than a patent which was renewed a mere 5 times. However, such ex-post analysis is not of use to the people in firms who are challenged with managing portfolios of patents. This paper addresses this problems and provides a solution to the patent manager.