For businesses, innovation is the most important means of staying competitive in the marketplace, and the only way to keep that competitive advantage is to protect innovative ideas and prevent other companies from using them. Patents provide a way for businesses to keep their ideas safe from other users, at least for a period of time. Since patents are assets to companies, it is important for investors to know how to calculate a patent’s value and account for it.

It is very important for businesses to account for a patent’s value in their books. This value is especially important to businesses in transactions involving mergers and acquisitions, business dissolution, bankruptcy and infringement analysis.

A key part of valuing a patent is to obtain a value of the invention in question. Because patents are intangible assets, it is often difficult to assign a monetary value to them. However, it does makes a good business sense to file at least a PROVISIONAL PATENT on an invention that will help protect a suitable return for the inventor.