A patent can have an economic value. That value may come up when a patent is sold as an asset, licensed, in company mergers, in investment discussions or in restructuring processes. Patent valuation is the analysis that estimates this value using a reasonable approach.

A valuation does not produce a single figure; it is an estimate that shows the assumptions on which the value rests. For this reason, different experts may reach different results for the same patent.

Commonly used valuation approaches fall into three main groups:

• Cost approach: the expenses incurred to develop and maintain the invention are used as a basis. However, cost is not always equal to value.
• Market approach: the terms of similar patents or licence agreements are compared. This requires similar transaction data to be available.
• Income approach: the income the patent may generate is estimated and brought back to its present value. This method depends on assumptions about the market, competition and the protection term.

The remaining protection term is an important variable in valuation. Patent protection has a statutory term of 20 years from the filing date, subject to maintenance requirements; for a utility model this period is 10 years. As the remaining term shortens, the total value of future income tends to decline. Non-payment of annual fees or the termination of the right are also issues that affect valuation.

Other factors affecting valuation include the technical effect of the invention and its position against competitors, the scope of the claims, the risk of an objection to the validity of the patent, the size of the relevant market and the possibility of licensing. A patent with narrow claims, or one that overlaps with the prior art, may end up with a lower value.

There is also a difference between licensing and sale. A licence allows others to use the invention under specific terms while the owner keeps the right. A sale means transferring the right. Which is suitable depends on the company's strategy and on market conditions.

Before starting, state the decision the valuation will support. Partnership discussions, licensing negotiations and internal investment decisions may rely on different assumptions. Separate patent records, product maturity, test data and existing agreements in the review file. Then develop favourable, middle and weaker commercial scenarios. Clearly identify which assumption changes in each scenario so the findings can be discussed. Uncertain market information should not be hidden behind a single figure. Record the valuation date and the scope of documents used; new technical information or market developments may justify revisiting the assessment. A valuation does not mean financing or a buyer will follow.

Comparing more than one approach, rather than relying on a single method, helps to interpret the result more soundly. For a detailed valuation, see our service page: /en/hizmetler/patent-degerleme This article is for general information only; for an assessment specific to your file, please consult our patent attorney.

This article is for general information only; consult our attorney for an assessment of your specific case.