North Carolina Law Review

University of North Carolina School of Law

160 Ridge Road

Chapel Hill, NC 27514

Teaching Patents as Real Options

June 30, 2017

95 N.C. L. Rev. 1433 (2017)

 

As a framing device for an introductory course in patent law, the study of patent valuation can deepen students’ understandings of patents as business assets and as instruments of industrial policy. In particular, the real options approach to patent valuation highlights patent owners’ strategic postures toward future income opportunities in the face of legal uncertainty and change. This Article describes the author’s experience with teaching patent valuation in connection with a show-and-tell exercise in which students consider the economic role of patents in markets for products they have purchased. The exercise utilizes an online calculator designed by the author to foster student intuitions regarding the financial implications of characterizing the option to commercialize a patent as an American call option. 

 

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