Calculating Return on Investment of Patent Portfolios
Return on Investment (ROI) is a widely used measure of efficiency or profitability of an investment. It measures the return on a particular investment relative to its cost and has been applied across virtually every area of business from R&D, brand, marketing and information technology. Although ROI is routinely used to identify ways to enhance the performance of investments, it has not been applied to patent portfolios.
Jeremiah Chan and Jonathan Liu from Facebook, Nigel Swycher and Steve Harris from Cipher authored a report titled, Pulling Back the Curtain: Calculating Return on Investment of Patent Portfolios. The report covers the following areas:
See below for more information on how this calculation was done.
This is an application of the technique for a hypothetical company, their threat list, and existing cross-licences. It considers two technologies X and Y. Some factors have been removed, in order to make the table of results more compact.
An Excel sheet with the complete calculation, as well as a blank one for completion for your own company or client is available to download:
To find out more about the benefits of calculating Return on Investment of your patent portfolio, please get in touch