IP-Value and Finance
- 15 Jan 2021
• Not every patent is valuable based on the facts;
• 10% of the worldwide patents reflect 90% of the patent value.
• 15% of all patents are able to exclude competitors from entering the market for more than four years;
• the average value of a patent is 500,000 Euros in the EU; and
• 60% of all patents do not guarantee exclusivity at all.
• Method of IP Valuation: Each of these valuation approaches has its own limitations
1. Cost Approach; - the historic cost method; the replacement cost method; and the replication cost method
2. Market Approach; -as it is not that easy to gather data associated with patents, which are not already priced and traded. Secondly, it will be difficult to find a fair market price if the technology in question is fundamentally novel, and there is no analogous technology.
3. the Income Approach -centred on evaluating these future cash flows and then discounting them back at a discount rate to achieve a present value
• Patent value funds (PVFs) offer one opportunity to finance the incubating phase. The PVF is not only offering finances, it also provides for the efficient management of the incubating and commercialization process
• Other methods for valuing a technology:
• Industry Standards Method;
• Rating/Ranking Method;
• Rules of Thumb Methods;
• Discounted Cash-Flow Analysis with Risk-Adjusted Hurdle Rates Method;
• Advanced Tools Method; and
• Auctions Method.