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When valuing patents, Intangible Business adopts a rigorous process to uncover the patent’s true commercial value, taking an in-depth view of the market. Valuing patents is required for a number of reasons, including sale, acquisition, management and patent litigation. There are three main methodologies used when valuing patents, once the validity and strength of the patent and the patent’s remaining lifetime has been established.

How to value patents

1. Income approach to valuing patents
The income approach to patent valuation forecasts how much revenue is likely to be attributed to the patent over its lifetime. This future revenue is then discounted to produce a single net present amount. As patent valuations are inherently subjective Intangible Business ensure every assumption is supported fully to eliminate as much subjectivity as possible.

2. Cost approach to valuing patents
The cost approach to valuing patents calculates both the amount that was invested in the patent’s development and the cost of an alternative. While this approach can have limitations it can be a useful sense check to support other patent valuation methodologies.

3. Market approach to valuing patents
Comparable transactions indicate both the value placed on a patent by a buyer and a value acceptable to a seller. If comparable transactions can be identified this approach can be a useful way of establishing likely patent value. While it can be difficult finding appropriate transactions, it is generally possible to find enough useful information to make the study meaningful.

The most appropriate methodology can vary according to the circumstances and patent requiring valuing. Intangible Business has significant experience valuing patents in many industries including pharmaceutical, telecoms, technology, chemicals, retail and consumer goods.

If you have any questions, or would like us to value a patent in dispute, please call us on + 44 (0)20 7089 9236 or send us an email.