Patent valuation method uses discounted present value analysis and statistical risk adjustment techniques to compute an estimate of the value of a patent or portfolio of patents. The present value of the projected incremental annual income generated by the patent monopoly is adjusted for the probabilities of actual infringement, the owner's willingness and ability to enforce the patent rights, and the probabilities that the individual patents will be held not invalid, not unenforceable, and infringed. A formal matrix approach is used to construct a patent portfolio weight matrix and arrive at an estimate of the relative values of the individual patents within the portfolio.