Cost approach

Cost approach

1. Carbonell (2002)

   • The value of a patent is equal to the cost of acquiring it
   • • human capital
       • higher cost component for intangible assets

2. measure the future benefits of intellectual property

3. Use

   • in limited circumstances
     • when the replacement cost is estimated with a reasonable degree of reliability
   • In a recent patent
     • the cost
       • • is a bechmark tool

4. Types

   • historical costs
     • creation of a patent
   • Replacement cost
     • patent innovation

5. Failures

   • does not take into account future benefits
   • does not capture patent demand trends
   • does not relate the risk associated with the benefits
   • some patents are not replaced
   • Does not distinguish
     • Investment expenses
     • normal operating expenses

6. advantage

   • objective and consistent
   • reliability of historical cost data
   • the acquisition cost is a reliable indicator of value

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