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Say that "Juan" has a patent with a legal life of ten years. However, because the patent applies to an extremely niche area with no competitors, he estimates that its actual useful life is thirteen years.

All the textbooks, tutorials, and so on that I have read over the years say to amortize patents according to their useful life. However, the justification they give is always that the useful life may be less than the legal life; they say nothing about when it is the other way around.

In this situation, do I go with the legal or useful lifetime of the patent?

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    Surely the useful life of the patent still ends after 10 years, since it can no longer protect the invention. If you can still make money from the product (because it does not have competition), that's a different question (and there's no guarantee there won't be competition in 10/13 years time, especially if it's still making money).
    – TripeHound
    Commented Apr 27 at 14:48

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As @tripehound said in the comments, don't confuse the lifetime of the patent (after which it's worthless) with the lifetime of the invention's value (which is unbounded except by competition from other ways if accomplishing the goal).

You would normally amortize over the former.

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Keshlam gives you the technically correct answer: the patent can do nothing after it's life is over and you should amortize over it's lifetime.

However if you are absolutely sure that there will be no competitors to your product for 13 years, and nobody will develop a product that the patent would protect against, then the patent is worthless. Taking it out will give you no benefit.

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