What is Patent Valuation

Meaning of patent valuation

Patent valuation is a process of calculating the actual market value of patent or a patent portfolio. Patent holders and firms must conduct a complete patent valuation before possession, merger, sale or licensing of patents.

How do you value a patents?

Conducting a patent valuation is very important especially before applying for a patent. Attempting a patent valuation can be a hard task but at the same time, it is an essential part of the expansion of your business.

Once you did the successful patent valuation, it is easy for you to make the right decisions in patenting inventions and also speculate on how much revenue you will be able to make through product

Below are the methods of how you can value your patent.

1.QUANTITATIVE APPROACH

• Cost method.

In cost method value is calculated by the basis of cost spent on the development of the patent.

• Income method

In the income method, the patent’s value will be calculated by the total amount of money being transferred into and out of business

Therefore, when using the income method, the amount determined will be the value of the patent which can be split into revenue made by the invention through sell and royalty.

• Market method.

Using the market method, you will have to look at what a conceivable consumer would pay for the same product or service. Therefore, you can determine a patent valuation by considering the analysis of value based on this assumption.

2. QUALITATIVE APPROACH

This technique does not only depend on purely monetary logical data. It performs through the research of different indicators by estimating the rating of patent rights.

Generally, the qualitative method is implemented through questionnaires. Some examples of questions that likely to be asked during this method are:

• What is the geographical coverage of the recommended market?
• AT Which depth of its life cycle has the patent extended?
• How would you define the patented technology innovation distinguished from the real state of the design?