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Pulling Back the Curtain

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:

  • Why is it important to measure ROI?
  • Is Portfolio ROI too difficult to measure?
  • The building blocks of ROI analysis
  • Applying the ROI calculation to a hypothetical company

See below for more information on how this calculation was done.

Download Report PDF

If you’d like to be able to print a copy of the full report, download the printable version here. The abridged version of this report first appeared in IAM on 19 May.

An example of applying the ROI calculation to a hypothetical company

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:

Example ROI Calculation                         Complete your own ROI

To find out more about the benefits of calculating Return on Investment of your patent portfolio, please get in touch

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Improve your patent strategy now

Speak to the Cipher team today.