Valuation within 72H

Contact          hello [@] ipnuts.fr      +33 (0)1 44 69 50 60
Contact      hello [@] ipnuts.fr
  +33 (0)1 44 69 50 60

How to protect your R&D? What is the value of a patent?

Willing to strengthen your market position, you invest in research and development, for which you may benefit from tax or innovation support measures. Sooner or later, these questions inevitably arise:

  • how to protect our developments?
  • is it necessary to file a patent? And is it worth it?

If you know how much it will cost, it is more difficult to know how your protection strategy will impact on the value of your company.
Behind the reluctance to file a patent, there is undeniably this fear of not being able to defend it against competitors.

As a reminder, if patenting is not a freedom to operate guarantee, there is still a right to prevent others from exploiting your invention. This is where the fear of trial and disputes arises. Before reaching this point, it is important to know that patenting is a bargaining tool, an exchange value. Whatever the situation, you will be stronger with a patent than without it. This is essentially what makes the value of a patent.

The counterpart to filing a patent is the disclosure of certain technical information. This should drive your decision: do I patent or not?

From a business valuation perspective, a patent is likely to provide increased value. Without a patent, it will be necessary to refer to intangible assets such as know-how and trade secrets. These elements are particularly difficult to assess because their value also depends on various criteria, in addition to those usually considered for a patent. In particular, the company must be able to easily claim ownership and control of these know-how and trade secrets. This implies an effort of internal formalization, rigorous monitoring of the internal processes for securing these know-how and trade secrets, rigorous monitoring of contracts and exchanges with any partner, service provider, or customer, monitoring of the economic benefits provided, etc.
So, opting for the non-disclosure option does not imply money saving. Indeed, the company will have to demonstrate it owns its know-how, secrets or expertise, to demonstrate they are original and actually secret, and worth, whenever a third party is willing to prove otherwise.

If know-how is secured, it is often more valuable than a patent!

Once the strategy has been determined and maintained, if you have chosen to file a patent, it is interesting to know that, in addition to its cost and this right to prohibit, this patent makes it possible to crystallize, in the company and in the world (thanks to the disclosure), different types of knowledge and know-how.

A patent is an intangible asset (but relatively tangible for a trusted third party recognizes it) around which you can:

  • communicate (commercial impact, brand image, competitive positioning)
  • justify a higher profit margin
  • contract: the patent is then an exchange value or a form of guarantee in different partnerships, whether industrial, R&D, commercial or even financial…
  • grant licenses in other industries or territories, and thus increase your revenue
  • capitalize: the patent, as a valued asset, can be the subject of equity-related operations (contribution to capital) or be highlighted as future income potential when discussing with investors (provided that the business plan is convincing of course!)
  • threaten and slow down other market players

In fact, even at the application stage, a patent can :

  • contribute to a company’s capital (generally before its creation),
  • be estimated if you anticipate the entry of investors and want to be armed for negotiations.
  • be valued during asset transfers to another company in order to include them in the balance sheet.

Thus patents’ financial valuation is a strategic matter.

How to determine the value of a patent as objectively and indisputably as possible?

We must consider several criteria, and not only the content and legal aspects!
Indeed, your patent’s value depends very much on the response your patented invention provides to a problem, its adaptation to market demand, its maturity, the opportunities it offers, the threats it lifts, and also… its profitability.
To get a better idea of the potential value of your patents, here is a non-exhaustive list of the criteria we use when estimating the value of a patent or patent application.

The patent, its content, and the quality of the protection it offers:

  • The nature of the product or process described
  • The nature and extent of the claims
  • The legal status
  • The search report if it was published
  • The geographical coverage
  • The presence of co-owners, several inventors
  • The dependence of the company or patent operating on the inventors
  • The protection (remaining)duration
  • The strength of the patent in its industry
  • The counterfeiting risks

The technology itself:

  • the technology positioning regarding the state of the art and the target market
  • the technology maturity
  • its strengths and weaknesses

The market:

  • Companies, products, processes that are directly or indirectly competitors
  • The differentiation potential, the advantages provided
  • The business model (product variations, cost price, profit margins, etc.)
  • Marketing strategy (pricing, distribution, market segmentation, communication)
  • Potential market shares
  • Expected revenue for the remaining life span of the project, associated profit margins:
  • Possible past sales (direct sales, maintenance, licenses…)
  • Prices
  • Estimated life span
  • An estimate of future sales, market penetration modalities and speed, sales curve
  • Associated costs (direct and indirect, such as maintenance)

Operational risks and ratios, increasing or decreasing value:

  • contribution of IP rights to profit generation
  • Risks of copying, counterfeiting, litigation
  • The loyalty of inventors and owners of complementary know-how
  • Current operational risks
  • Identified opportunities

In light of these elements, a patent will be all the more valuable if:

  • it protects a highly differentiating product or process on its market, in a sufficiently complete and specific way, throughout the trading and production area
  • this product/process meets a specific market demand (traction),
  • the operating and use of the product/process match the description made in the patent,
  • the business model adopted allows for significant profitability,
  • the patent is strong enough to deter infringers (prevention, amicable defense, or amicable or legal dispute settlement)
  • the patent plays a key role in achieving the targeted market share
  • the patent’s remaining life span covers at least the remaining life span of the products/processes
  • the patent is supplemented by know-how or trade secrets to prevent third parties, potential infringers, copiers to operate it
  • the patent protects likely product/process variations

To get an idea of your patent’s financial value, you can first use our online service ip-nuts.com to get an estimate within 3 working days.

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Online value estimation

You hold a brand, a trademark, a patent, a patent application, or a registered design, and you want to get an idea of its financial value.
We produce within 3 days a value estimate of your asset.
We carry out this study on the basis of various information collected through a dedicated online evaluation form, and by implementing the Net Present Value valuation method.

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Detailed in-depth valuation

Do you need an estimate of your intangible assets, with a well-suported report issued by an independent expert? 
We conduct in-depth studies in legal, tax, accounting or equity related operations contexts. We carry out independent consistency checks and implement various valuation methods, depending on the asset and the context.